New Jersey retail market still among nation's most viable.

It is November, and we are coming to the close of another amazing year for New Jersey's retail real estate sector.

In northern and central New Jersey, the retail market continues to outperform other markets with very high leasing velocity and very low vacancy rates. That's due to the strength in the region's demographics and high incomes, as well as the state's highway infrastructure, which are factors contributing to the impressive roster of national and regional retailers in the state.

Still considered one of the most viable markets in the country, New Jersey's retail sector is reporting vacancy ratesaveraging two to six percent in the northern and central regions of the state, much lower than the national average.

Despite the economic "bumps" in 2006--volatile gas prices and increasing interest rates--New Jersey continues to draw retailers and consumers because of its extremely high demographics. In 2005, the median household income was $61,700, which is 33% higher than the national average of $46,200.

Even if the economy slows and vacancies become available, New Jersey's absorption rate will continue to thrive due to the high desirability of the state.

In 2006, we saw several retailers vacating stores for a variety of business reasons, only to see an onslaught of new retailers moving into some key locations.

Retailers closing their doors this year have included Treasure Island, which closed 16 stores leaving 350,000 s/f of space on the market; Office Max, which closed 10 stores leaving 200,000 s/f of space on the market; as well as selected store closings by Seamans/Levitz, Harrows, Pathmark, Toys "R" Us, Sears Hardware, Acme and Carpet Depot. New players entering or expanding in the state absorbing these vacancies have included Wegmans, Whole Foods, Wild Oats, Christmas Tree Shops, Raymour & Flanigan, Marshalls, TJ Maxx, Applebees, Fuddruckers, Five Guys Burgers, Destination Maternity, UPS Stores, H&R Block and an enormous roster of banks.

Growth and continued retail success is coming from several regions in New Jersey. Paramus remains one of the best markets not only in the state, but in the country. Paramus annually records the largest dollar volume in retail sales--more than $5 billion--than any other zip code. It is a very desirable location for retailers because of its location at the crossroads of many of New Jersey's highways and its close proximity to New-York City.

Other successful retail markets in the state include the Route 23 corridor from Wayne to Butler because of its proximity to 1-287 and the growing housing market; the Route 3 corridor in Clifton because of its seven-day-a-week commuter traffic which heavily draws the Bergen County customer who can't shop on Sundays due to the blue laws, and the Monmouth and Ocean County markets because of their growing population, region-wide lower housing costs and convenient highway accessibility. New Jersey's retail climate has witnessed a few trends in 2006:

Supermarket-anchored neighborhood centers are in high-demand amongst investors. These centers have high daily consumer traffic counts, and were a slight recession to occur, this type of center will always prosper due to the fact that it provides the basic necessities for consumers.

Lifestyle centers, such as The Grove at Shrewsbury, The Shops at Union Hill in Denville, Tices Center in Woodcliff Lake, Brook 35 Plaza in Wall, Chester Commons in Chester and The Village at Bridgewater Mall, are in high-demand amongst shoppers who prefer high-end shopping as opposed to visiting the enclosed shopping malls. There are a few centers currently under construction and several more that are proposed throughout the state in Old Bridge, North Brunswick, Flemington, Clifton, Mahwah, Metuchen and Montgomery.

Restaurant locations are still in high demand in retail corridors as new concepts continue to enter the state and existing chains expand into new locations. Active players include Applebees, Red Robin, Fuddruckers, Panera Bread, Five Guys Burgers, El Pollo Loco and Saladworks. Another hot concept is mixed-use developments which combine retail on the ground floor with residential units on the upper floors. Examples can be found in Rutherford, East Orange, Garwood, Bloomfield, Englewood, Fort Lee, Morristown, Bound Brook, Westfield, Harrison, Jersey City and Newark.

In 2007, as long as the economy continues on a positive path, retail will flourish. Rising and falling gas prices and the state sales tax increase may take more disposable income from consumers' wallets forcing them to prioritize their spending but, overall, demographics will keep New Jersey retail strong.

BY CHUCK LANYARD, PRINCIPAL

THE GOLDSTEIN GROUP