Redevelop, Reuse, Make Retail

By Arthur Weiss
Globe St. Retail
February 28, 2005

As a densely populated state, New Jersey offers the retail community a combination of outstanding demographics and one of the nation’s highest per capita incomes. These two factors put New Jersey dead center in a retailer’s sights when considering expanding or entering into new areas. Unfortunately, however, the state is also one of the most difficult places to find buildable sites zoned for retail development. If one is lucky enough to locate such an opportunity, chances are the land cost is astronomical and the approval process is daunting.

The strong desire for space, combined with the scarcity of new development opportunities in northern and to a lesser degree central New Jersey, is resulting in very creative approaches by developers. What are these savvy developers doing to build in a market where land and approvals come at such a premium?

One trend that has been the redevelopment of underutilized or outdated industrial and office facilities into the more economically feasible retail and mixed-use projects. For instance, a short while ago, my company represented Automatic Data Processing in the sale of its 160,000-sf office facility on New Jersey (route) 3 in Clifton (this and all of the following examples involved CB Richard Ellis). We worked with the purchaser, the Related Cos., in developing and leasing the 300,000-sf Clifton Commons retail/entertainment center, which now occupies the site.

Another such project involved the assembledge of three adjacent industrial/quasi-retail properties on New Jersey (route) 15 in Wharton, and the redevelopment of those properties into a new 90,000-sf ShopRite retail center. We also assisted a Chicago-based owner in leasing a 90,000-sf warehouse property on US 46 in Fairfield to a regional furniture operator. It was another case of taking an under-utilized facility and reconfiguring it into retail.

A somewhat different niche in which developers are finding success is with small downtown and “transit village” projects. Taking the hint from Gov. McGreevey’s Smart Growth legislation—and transit-oriented redevelopment in other parts of the country—many regional developers are looking at the small suburban “cities” for redevelopment opportunities, where they’re buying multiple properties at key intersections and train stations and proposing the redevelopment of these sites into multi-story retail/residential projects.

One only needs to look at the Morristown Train Station, the Epstein’s Department Store project and the proposed developments in downtown Livingston to see activity in this market niche. Developers today are honing in on these projects because they’re win-win situations for both them and the municipalities. The developers win because the approval process is less onerous and time-consuming. The municipality wins because it has found a way of bringing its downtown into the 21st century, gaining a strong addition to its tax base, and creating new amenities and jobs for its community.

Arthur Weiss is a VP with CB Richard Ellis, specializing in retail sales, retail leasing and land development in the northern and central New Jersey.