Market Spotlight: New Jersey

New Jersey is unique in many respects, but perhaps the thing that differentiates it most from neighboring states is that it is split into two separate markets:  North Jersey and South Jersey, each of which is tied to a major city outside of the state.

While each has different, diverse populations, with North Jersey centered around the New York metropolitan area, and South Jersey localized near Philadelphia, the population, the history, and the new developments statewide combine to create new opportunities for retailers and owners alike.

The residents of New Jersey

New Jersey is the most densely populated state in the U.S., with some of its cities among the most densely populated on the planet. Its strong, diverse population is an asset to any shopping center, bringing a variety of demographics and retail needs.

Between 2010 and 2030, New Jersey is expected to grow by 9.7 percent to 9.6 million people. Currently, at 8.9 million, New Jersey is the 11th most populous state, but its population is also one of the most stable in the country. Expansions in states like Texas and Florida are hard to compete with, but that growth can just as quickly reverse in a crash. While New Jersey can’t match that rate of growth, it holds steady when there’s a downturn.

New Jersey has the highest property taxes in the nation and ranks third among the states with the highest taxes overall. As a result, New Jersey consumers tend to be more value-oriented, and this, coupled with the lack of any large downtown shopping areas means you’ll find fewer specialized, upscale shopping venues, and more power centers with discount retailers.

Retail in New Jersey: Past and present

Over the past 30 years, New Jersey has seen retail trends come and go. Consumers hailed the rise of big-box development in the 90s, even as it ran some mom-and-pop retailers out of business. Now big-box has scaled back and large retailers are finding that smaller storefronts are the only way they’ll fit into certain New Jersey locations.

De-malling has accelerated as regional and smaller malls are eliminating interior layouts for tenants. Harbor Square — still known locally as the Shore Mall — in Egg Harbor Township, recently de-malled and shifted to an open-air shopping center model where all retailers have exterior storefronts.

Burlington Center Mall in South Jersey shut down in 2018, but could soon be transformed into an industrial site. Further, Cumberland, Cherry Hill, Moorestown, and other malls have enhanced their designs to feature exterior storefronts — a formula that’s been quite successful at Harbor Square and elsewhere across the state.

What’s on the horizon in New Jersey

Two major projects are in the pipeline right now in North Jersey.

The first, American Dream Meadowlands, is set to open this year. Its 3 million square feet of retail and entertainment space will contain more than 500 stores. Retail will take up approximately 45 percent of the space, with 400,000 square feet dedicated to luxury brands. Entertainment attractions make up the other 55 percent and include an indoor theme park and water park complete with a roller coaster and water slides, as well as an indoor ski park, an aquarium, an ice rink, and a dine-in 4-D movie theater.

Second, the Riverton Waterfront Project in Sayreville, New Jersey is still in the planning phase, but will eventually sit on more than 400 acres along where the Raritan River empties into the Raritan Bay. The plan would essentially create “a town within a town,” with 1.5 million square feet for retail space, 2 million square feet for office and commercial space, 800,000 square feet for hotels and conference centers, 2,000 residential units, and a 400-slip marina.

Mixed-use shopping centers are seeing a boom nationally, but these two projects are more the exception than the norm in densely populated New Jersey. Vacant land is hard to come by, and mixed-use centers tend to utilize quite a bit of acreage.

But we should start to see more conversion of traditional retail space to include non-retail uses as some big boxes continue to downsize. Malls with vacant Sears boxes, for example, could welcome medical centers, grocery stores, or even climate-controlled storage into those spaces.

Metro’s brokers have watched all of this unfold over the last 20 to 30 years. We closely monitor the trends in the market and what’s changing, so we can show prospective tenants what’s available in real time. We also have great relationships with our New Jersey landlords and can guide them to professional assistance, whether they need attorneys, architects, or construction managers.

If you need to quickly fill vacant space or are interested in what opportunities are available, we are here to help you find success in New Jersey and beyond.

Copyright 2019 Metro Commercial Real Estate, LLC