NEW JERSEY COMMERCIAL REAL ESTATE MARKET on New Jersey.… · Apartments, office facilities and...
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D espite a proliferation of store closings and record surges in e-commerce, developers and managers of enclosed shopping centers around New Jersey are not running for their lives. Malls in the Garden State are alive and well, although shifting dramatically in their scope. They are turning away from a predictable, primarily retail, formula and embracing a livelier mix that includes fewer stores and more entertainment venues. Going beyond the traditional multiplex, these venues include fitness centers, rock-climbing walls, trampoline parks, bowling alleys, grocery stores and many more restaurant options. Millennials, who spend more money eating out than any other age group, are driving the move to experiential malls, said Steve Winters, a vice president at CBRE Group Inc. “They want to be where the action is,” Winters said. “As a group, they love convenience, and want to work and play and eat without going out of their way. They want to live in a condo, not own a home, and walk to the movies or maybe to a park they’ve created. They want different food options.” Rouse Properties and Kushner Companies are in the process of repositioning and refurbishing the 1.5 million-square-foot Monmouth Mall in Eatontown, a $500 million project that will be renamed the Heights at Monmouth when it opens in 2020. Apartments, office facilities and landscaped grounds will be added to create a true “lifestyle center,” where patrons can live, work, shop and play year-round. The move is in response to the urban sensibilities and the habits that mall customers developed while living in cities when the Great Recession shifted jobs there from the suburbs, said Eric Dinenberg, executive vice president of development, operations and anchor leasing for Rouse. The timeline got pushed back, he explained, with people marrying later, moving to the suburbs later and having children later, leaving them time to develop different habits. “They want their grocer a walk away, the fitness center 30 seconds away and to be able to walk to a number of restaurant options on a Saturday evening,” Dinenberg said. The recession that began in December 2007 is credited with bringing fitness centers and grocery stores into the mall mix. The Norwalk, Conn.-based Stew Leonard’s supermarket that’s about to open in the Paramus Park mall is a case in point. The old mall model called for retail; like anything else, it was feared patrons might linger too long without shopping and cause a parking problem. A lot of vacant space during the recession proved to be a good reason for letting other venues into the mix, CBRE’s Winters said, leading to the discovery that a “number of uses could co-exist with peak hours.” Medical facilities, doctor’s offices and urgent-care centers are part of some new mall configurations, particularly where a department store has left the space and support services like labs or alternative practitioners can share it, Winters said. “Doctors offer a service, and being on a major highway with constant traffic is a plus,” he added. Other malls around the state being repositioned include Woodbridge Center, owned by GGP Inc., where part of a former Sears store will be replaced by a Dave & Buster’s restaurant and entertainment arcade. Mall managers hope Dave & Buster’s will generate traffic by attracting families in the afternoon and, with a lively dining and bar scene, adults at night, said Wayne Kasbar, a managing director at Colliers International, which is building up its retail brokerage business to meet demand in the sector. Recent changes in New Jersey’s regulations governing gaming and alcohol sales now allow Dave & Buster’s to expand aggressively in the state. The Simon Property Group, which owns the Livingston Mall and Menlo Park, took the upscale Shops at Riverside and added valet parking and a new dining and entertainment component called Grand Court to a list of luxury retailers that include Hermès, Louis Vuitton, Ferragamo and Coach. Triple Five Group’s beleaguered American Dream project underway in the Meadowlands also will have a luxury retail wing, in addition to being the mother of all experiential shopping centers. Saks Fifth Avenue’s New Jersey flagship store has forsaken The Mall at Short Hills for American Dream, and an Hermès store will be alongside an extensive list of theme-park attractions. They include a DreamWorks water park, an observation wheel, an NHL- size ice rink, a ski slope, an aquarium, a Nickelodeon theme park and a Legoland, among others. Retail stores at American Dream will be shuttered on Sundays because of local blue laws, but entertainment venues will remain open. In an ironic mall industry twist, customers will compete for parking with sports fans at the adjacent MetLife Stadium, home to the Jets and Giants football teams. American Dream is expected to open next year. Saks’ defection from Short Hills, meanwhile, is viewed as a mere blip for the facility, whose remaining anchors are Bloomingdale’s, Nordstrom and Neiman Marcus. Such Class A malls, defined as having luxury brands, high rents and high occupancy levels, are “bulletproof,” one broker said. While stores like Toys R Us have closed completely, other mainstream retailers seek to shrink their footprint to stay the course in an e-commerce-driven economy. They see the solution in omnichannel retailing, which incorporates retail, online and rapid delivery to end consumers. Some experts speculate that major retailers would love small “showroom”-style, $400-per- square-foot selling floors with only samples on display, website-style, attached to warehouses — on adjacent site fulfillment centers — for $30 per square foot. That model may evolve, but for the moment New Jersey’s malls are changing with the times. “It is a question of integrating old and new and how to capture both,” said Kasbar of Colliers International. “Malls are not going away. Malls, once-thriving shopping-only meccas, turn experiential S POTLIGHT ON N EW J ERSEY An Advertising Supplement to Crain’s New York Business O ffice and industrial markets on New Jersey’s Gold Coast are seeing important shifts in the landscape that will affect price and supply in both sectors for months to come. Large chunks of warehouse space have been scooped up by e-commerce giants Amazon, Wayfair, Ikea, and Wal-Mart with Jet.com, putting a squeeze on available space with little new space available anytime soon. Many leases in the 20 million-square-foot office market that were signed in 2007 are coming to an end, creating a shift in the kinds of tenants coming to Jersey City complexes like Harborside and the build- ings along River Street. The vacancy rate for individual buildings swings between 7% and 30%, brokers say, with the average for the region around 21%. The Hudson River waterfront market has been up and down since 2015, but it has picked up this year, said Stan Danzig, a vice chairman at Cushman & Wakefield. “We had two unprecedented leasing years in 2015 and 2016, then it got quiet,” he said. “But we seem to be rebounding in 2018.” In what is considered a mature market, Gold Coast properties traditionally housed back-office operations for Manhattan-based insurance and financial services companies, and they remain a part of the mix, but footprints are changing. JPMorgan Chase and AIG are undergoing signif- icant retrenchments as is the Zurich Insurance Group. It has split its operation between the New Jersey waterfront and 4 World Trade Center, said Adam Foster, an executive vice president at CBRE. Such shifts are typical along the river, he said, but the area remains robust. “It will continue to have its ups and downs but will continue to be a viable part of the office market,” he said. Last year accounting giant EY, formerly known as Ernst & Young, leased 168,000 square feet of space at the Waterfront Corporate Center in Hoboken. Increasingly fashion brands like Tory Burch and Kate Spade are moving over, as are media companies like Omnicom and manufac- turers like Newell Rubbermaid. The technology sector also is booming, and that’s in large measure because of the talent pool of young professionals and immigrant groups now liv- ing in Jersey City and Hoboken, said Mike DeMar- co, the chief executive officer at Mack Cali. Mack Cali is seeking a lead tenant for a planned new office building at Harborside. Rents there will be in the low $50-per-square-foot range, DeMarco said. In the sector, rents are said to have stagnated in the high $30-per-square-foot range for 10 years, but they are now averaging $40 to $45 per square foot, said John Obeid, New Jersey senior director of research for Colliers International. Rents on industrial properties have increased markedly in the past five years. They are now approaching about $12 per square foot for new products, up from between $2 and $4 per square foot in 2013, said Andrew Judd, a senior managing director for Cushman & Wakefield. Prices will undoubtedly rise as more of the “last mile” e-commerce operations jockey for position in a tight market that has 22 million consumers with $800 billion of disposable income within a two-hour drive of New Jersey’s distribution cen- ters, said Noah Balanoff, an executive managing director at Colliers International. Prospective tenants can’t afford to wait. “They will have to be proactive, not reactive, and make some pretty quick decisions,” Balanoff said. “High-quality space is not sitting around long at all.” cushmanwakefield.com CUSHMAN & WAKEFIELD IS THE LEADER IN THE NEW JERSEY COMMERCIAL REAL ESTATE MARKET WE ARE PROUD TO BE THE #1 FIRM BY: Number of Transactions Square Footage Leased/Sold Production Per Broker EAST RUTHERFORD One Meadowlands Plaza, 7th Floor East Rutherford, NJ 07073 201 935 4000 ISELIN 99 Wood Avenue South, 8th Floor Iselin, NJ 08830 732 623 4700 MORRISTOWN 1150 Headquarters Plaza, West Tower Morristown, NJ 07960 973 993 1200 To learn more, contact: Andrew Judd Managing Principal, New Jersey Market Leader [email protected] *Source: NJBIZ 2017 Data Shifting office, industrial markets on N.J.’s Gold Coast to impact price, supply An Advertising Supplement to Crain’s New York Business
Transcript of NEW JERSEY COMMERCIAL REAL ESTATE MARKET on New Jersey.… · Apartments, office facilities and...
Despite a proliferation of store closings and record surges in e-commerce, developers and managers of enclosed
shopping centers around New Jersey are not running for their lives. Malls in the Garden State are alive and well, although shifting dramatically in their scope.
They are turning away from a predictable, primarily retail, formula and embracing a livelier mix that includes fewer stores and more entertainment venues. Going beyond the traditional multiplex, these venues include fitness centers, rock-climbing walls, trampoline parks, bowling alleys, grocery stores and many more restaurant options.
Millennials, who spend more money eating out than any other age group, are driving the move to experiential malls, said Steve Winters, a vice president at CBRE Group Inc.
“They want to be where the action is,” Winters said. “As a group, they love convenience, and want to work and play and eat without going out of their way. They want to live in a condo, not own a home, and walk to the movies or maybe to a park they’ve created. They want different food options.”
Rouse Properties and Kushner Companies are in the process of repositioning and refurbishing the 1.5 million-square-foot Monmouth Mall in Eatontown, a $500 million project that will be renamed the Heights at Monmouth when it opens in 2020. Apartments, office facilities and landscaped grounds will be added to create a true “lifestyle center,” where patrons can live, work, shop and play year-round.
The move is in response to the urban sensibilities and the habits that mall customers developed while living in cities when the Great Recession shifted jobs there from the suburbs, said Eric Dinenberg, executive vice president of development, operations and anchor leasing for Rouse. The timeline got pushed back, he explained, with
people marrying later, moving to the suburbs later and having children later, leaving them time to develop different habits.
“They want their grocer a walk away, the fitness center 30 seconds away and to be able to walk to a number of restaurant options on a Saturday evening,” Dinenberg said.
The recession that began in December 2007 is credited with bringing fitness centers and grocery stores into the mall mix. The Norwalk, Conn.-based Stew Leonard’s supermarket that’s about to open in the Paramus Park mall is a case in point.
The old mall model called for retail; like anything else, it was feared patrons might linger too long without shopping and cause a parking problem.
A lot of vacant space during the recession proved to be a good reason for letting other venues into the mix, CBRE’s Winters said, leading to the discovery that a “number of uses could co-exist with peak hours.”
Medical facilities, doctor’s offices and urgent-care centers are part of some new mall configurations, particularly where a department store has left the space and support services like labs or alternative practitioners can share it, Winters said.
“Doctors offer a service, and being on a major highway with constant traffic is a plus,” he added.
Other malls around the state being repositioned include Woodbridge Center, owned by GGP Inc., where part of a former Sears store will be replaced by a Dave & Buster’s restaurant and entertainment arcade. Mall managers hope Dave & Buster’s will generate traffic by attracting families in the afternoon and, with a lively dining and bar scene, adults at night, said Wayne Kasbar, a managing director at Colliers International, which is building up its retail brokerage
business to meet demand in the sector.
Recent changes in New Jersey’s regulations governing gaming and alcohol sales now allow Dave & Buster’s to expand aggressively in the state.
The Simon Property Group, which owns the Livingston Mall and Menlo Park, took the upscale Shops at Riverside and added valet parking and a new dining and entertainment component called Grand Court to a list of luxury retailers that include Hermès, Louis Vuitton, Ferragamo and Coach.
Triple Five Group’s beleaguered American Dream project underway in the Meadowlands also will have a luxury retail wing, in addition to being the mother of all experiential shopping centers.
Saks Fifth Avenue’s New Jersey flagship store has forsaken The Mall at Short Hills for American Dream, and an Hermès store will be alongside an extensive list of theme-park attractions. They include a DreamWorks water park, an observation wheel, an NHL-size ice rink, a ski slope, an aquarium, a Nickelodeon theme park and a Legoland, among others.
Retail stores at American Dream will be shuttered on Sundays because of local blue laws, but entertainment venues will remain open. In an ironic mall industry twist, customers will compete for parking with sports fans at the adjacent MetLife Stadium, home to the Jets and Giants football teams. American Dream is expected to open next year.
Saks’ defection from Short Hills, meanwhile, is viewed as a mere blip for the facility, whose remaining anchors are Bloomingdale’s, Nordstrom and Neiman Marcus. Such Class A malls, defined as having luxury brands, high rents and high occupancy levels, are “bulletproof,” one broker said.
While stores like Toys R Us have closed completely, other mainstream retailers seek to shrink their footprint to stay the course in an e-commerce-driven economy. They see the solution in omnichannel retailing, which incorporates retail, online and rapid delivery to end consumers.
Some experts speculate that major retailers would love small “showroom”-style, $400-per-square-foot selling floors with only samples on display, website-style, attached to warehouses — on adjacent site fulfillment centers — for $30 per square foot.
That model may evolve, but for the moment New Jersey’s malls are changing with the times.
“It is a question of integrating old and new and how to capture both,” said Kasbar of Colliers International. “Malls are not going away.
Malls, once-thriving shopping-only meccas, turn experiential
Spotlight on new JerSey
An Advertising Supplement to Crain’s New York Business
Office and industrial markets on New Jersey’s Gold Coast are seeing important shifts in the landscape that will affect price
and supply in both sectors for months to come.
Large chunks of warehouse space have been scooped up by e-commerce giants Amazon, Wayfair, Ikea, and Wal-Mart with Jet.com, putting a squeeze on available space with little new space available anytime soon.
Many leases in the 20 million-square-foot office market that were signed in 2007 are coming to an end, creating a shift in the kinds of tenants coming to Jersey City complexes like Harborside and the build-ings along River Street. The vacancy rate for individual buildings swings between 7% and 30%, brokers say, with the average for the region around 21%.
The Hudson River waterfront market has been up and down since 2015, but it has picked up this year, said Stan Danzig, a vice chairman at Cushman & Wakefield. “We had two unprecedented leasing years in 2015 and 2016, then it got quiet,” he said. “But we seem to be rebounding in 2018.”
In what is considered a mature market, Gold Coast properties traditionally housed back-office operations for Manhattan-based insurance and financial services companies, and they remain a part of the mix, but footprints are changing.
JPMorgan Chase and AIG are undergoing signif-icant retrenchments as is the Zurich Insurance Group. It has split its operation between the New Jersey waterfront and 4 World Trade Center, said Adam Foster, an executive vice president at CBRE.
Such shifts are typical along the river, he said, but the area remains robust. “It will continue to have its ups and downs but will continue to be a viable part of the office market,” he said.
Last year accounting giant EY, formerly known as Ernst & Young, leased 168,000 square feet of space at the Waterfront Corporate Center in Hoboken. Increasingly fashion brands like Tory Burch and Kate Spade are moving over, as are media companies like Omnicom and manufac-turers like Newell Rubbermaid.
The technology sector also is booming, and that’s in large measure because of the talent pool of young professionals and immigrant groups now liv-
ing in Jersey City and Hoboken, said Mike DeMar-co, the chief executive officer at Mack Cali.
Mack Cali is seeking a lead tenant for a planned new office building at Harborside. Rents there will be in the low $50-per-square-foot range, DeMarco said. In the sector, rents are said to have stagnated in the high $30-per-square-foot range for 10 years, but they are now averaging $40 to $45 per square foot, said John Obeid, New Jersey senior director of research for Colliers International.
Rents on industrial properties have increased markedly in the past five years. They are now approaching about $12 per square foot for new products, up from between $2 and $4 per square foot in 2013, said Andrew Judd, a senior managing director for Cushman & Wakefield.
Prices will undoubtedly rise as more of the “last mile” e-commerce operations jockey for position in a tight market that has 22 million consumers with $800 billion of disposable income within a two-hour drive of New Jersey’s distribution cen-ters, said Noah Balanoff, an executive managing director at Colliers International.
Prospective tenants can’t afford to wait.
“They will have to be proactive, not reactive, and make some pretty quick decisions,” Balanoff said. “High-quality space is not sitting around long at all.”
cushmanwakefi eld.com
CUSHMAN & WAKEFIELD IS THE LEADER IN THE
NEW JERSEY COMMERCIAL REAL ESTATE MARKET
WE ARE PROUD TO BE THE #1 FIRM BY:
Number of Transactions
Square Footage Leased/Sold
Production Per Broker
EAST RUTHERFORD
One Meadowlands Plaza, 7th Floor
East Rutherford, NJ 07073
201 935 4000
ISELIN
99 Wood Avenue South, 8th Floor
Iselin, NJ 08830
732 623 4700
MORRISTOWN
1150 Headquarters Plaza, West Tower
Morristown, NJ 07960
973 993 1200
To learn more, contact:
Andrew Judd
Managing Principal,
New Jersey Market Leader
*Source: NJBIZ 2017 Data
Shifting office, industrial markets on N.J.’s Gold Coast to impact price, supply
An Advertising Supplement to Crain’s New York Business
