New Jersey retail vacancy rates continue to drop
Available retail space in New Jersey is on pace to hit a record low of 3% by the end of the year.
The Garden State is on track to set a new record-low vacancy rate for the third consecutive year, according to according to brokerage firm Marcus & Millichap’s 2Q 2024 Northern New Jersey Retail market report. The data comes as New York City’s vacancy rates continue to drop as well, especially in select submarkets.
New retail space deliveries in New Jersey are projected to hit an all-time low in 2024, with only 270,000 sq. ft. expected to be completed, pushing more retailers toward existing properties. The average asking rent in New Jersey is forecasted to rise by over 5% for the third time in four years, reaching $28.60 per sq. ft.
Rent growth is particularly strong in Morris County, where rates have increased by a double-digit percentage over the past year, while Passaic County is leading the vacancy rate trend, with a 50-basis-point decrease in vacancy during the first quarter.
Marcus & Millichap says that affluent areas like the suburban Morris County are seeing strong demand from home goods, leisure, and fitness retailers, with local vacancy dropping to a record low of 4.7% in March. The area is expected to see an additional 200,000 sq. ft. of move-ins in 2024. Investor interest is high in well-leased single-tenant properties, especially in Morris and Bergen counties, with the latter’s low vacancy rate and rising prices leading to a resurgence in multi-tenant trading.
“New Jersey’s retail market is thriving, with record-low vacancy rates and robust rent growth, driven by strong tenant demand and limited new supply,” said Alan Cafiero, senior managing director investments in Marcus & Millichap’s New Jersey office. “New Jersey’s combination of low vacancy, limited new supply, and strong rent growth makes it one of the most competitive retail markets in the country.”
[READ MORE: Retail occupancy levels at five-year high — so are costs]
Marcus & Millichap closed 7,546 transactions in 2023, with a sales volume of approximately $43.6 billion.
