Retail Vacancy Rate in Springfield and the rest of County Climbs
Route 22 retail stores part of new study examining North Jersey’s major highways.
Springfield is part of a recent survey that outlines the vacancy rate for retail space in North Jersey.
Conducted by Old Bridge real estate firm R.J. Brunelli & Company, the study reveals that Union county's rate has increased to 8 percent. The number is up from last year's 6.6 percent.
Issued this April, the overall report focused on the vacancy rate in retail properties along North Jersey's six major shopping highways. Included among them were stretches in Morris, Bergen, Essex, Somerset, Passaic, and Union counties.
The reason for Union county's increase, the study claims, is due to the closing or downsizing of many "big-box" retail chains such as Circuit City, Office Depot, a 43,000 square foot Pathmark in North Plainfield, and the Home Depot Expo. When paired together, those spaces caused 48 percent of the corridor's vacancies. Many businesses have also fallen prey to bankruptcy.
Considered North Jersey's most heavily-retailed thoroughfare, Route 22's vacancy increase resulted in a 10-year high. The rate, which was 7.4 percent last year, was as low as 2.4 percent in 2007. R.J. Brunelli's study of the area covered the 21-mile length of Route 22 from Union to Somerville. It also included intersecting areas on Routes 202/206 and Routes 28/287. The report found 627,331 square feet of vacancies in the 7.83 million square feet reviewed. There were also 44 "For Rent" signs up in 237 properties.
Despite the county's challenges, retail property on major highways appears to be more viable than in local townships.
"In New Jersey, the majority of national retail chains prefer locations on local highways," said Dean Tselepis, Associate Vice President, Retail Department, Grubb & Ellis in Fairfield. "The reason buyers would lean more toward highways over towns is because that is where all your major national retailers are. Retailers want to be near other retailers."
So even though both highway and local town retail properties have suffered over the past few years, Tselepis feels that once the big money does come back, it will go to the highways before the towns. "Please keep in mind that I'm speaking generally here," he added. "There are always situations where a buyer could value an in-town property higher than a highway property."
Unfortunately, as a result of the economic downturn the country has encountered during the last few years, small retail spaces within towns and on highways has suffered as well. To add to the problem, the lending environment has changed drastically over the past year and a half. The criteria has gotten more stringent, making it harder for small businesspeople to obtain loans to purchase or to obtain the credit to lease property. Springfield is one of the towns that's bore the brunt of the problem, with a number of vacancies lining Morris Avenue. Local residents' decision to patronize larger retail chains instead of area shops has contributed as well.
So when will the climate for retail space in Springfield and the rest of Union county experience an upswing? "There is still a ways to go," said Tselepis. "There may be a better feeling out there, but retailers aren't expanding like we wish. Some retailers' business plan calls for rentals and others for purchases. The numbers for both are down compared to several years ago. Also, it is still quite difficult to get financing."
Mr. Brunelli sees a bright spot in Union county's future. He credits the positivity to Unique Thrift obtaining 23,000 square feet of the former 70,000-square-foot National Wholesale Liquidators space in Union. In addition, the Bed Bath & Beyond company took over former Linens 'N Things locations to open Christmas Tree Shops in Springfield and Bridgewater.
"Route 22 provided the foremost example of how a major, locally-based retailer with an entrepreneurial spirit can jump on unusual opportunities in prime spots," he said.
The eventual filling up of empty retail spaces in Springfield and the rest of the county will be the true barometer of success.