Retail Rising
Pennsylvania and New Jersey are seeing more and more retail construction due to the area’s high population numbers and strong demographics.
Lara Fuller

The Northeast has long been a hot spot in terms of development. Within a small land area, there are a number of very large cities. In addition to the dense population, the area is well connected by networks of highways and railways. These factors make most northeastern states an ideal spot for development. Pennsylvania and New Jersey, in particular, are seeing more and more retail projects and redevelopments. This is primarily because both states have large populations and strong demographics.

Dennis Connolly, vice president of development with Centro Watt in Plymouth Meeting, Pennsylvania.

Adds Scott Loventhal, director of development with Short Hills, New Jersey-based Garden Commercial Properties, “New Jersey and eastern Pennsylvania enjoy remarkably strong demographics rivaled by only a handful of other markets in the United States. Although the barriers to entry are high, retailers recognize that these opportunities historically lead to some of the highest per-square-foot sales in the country.”

Developers build projects in these states because there are still many retailers looking to make a mark in these markets or to expand existing operations. “Population density and an aging retail landscape make these markets attractive to new development,” says James Steuterman, senior vice president with Horsham, Pennsylvania-based Toll Brothers. “Retailers are continuously upgrading their prototype to meet competition and the needs of customers. Redevelopment of proven retail corridors and new development in densely-populated markets fill that retail need. We still see retail and restaurant concepts that are expanding their national programs and requesting locations in these markets.”

And while each state is seeing its share of retail development, the type and scope vary from Pennsylvania to New Jersey.

Pennsylvania Progress

Most of the cities and towns of Pennsylvania are well established. This provides developers the benefit of seeing tried and true examples of what works and what doesn’t for the area residents. However, established cities tend to have less available land, making the development of new centers more difficult. “The markets here are generally mature and stable,” says Jeff Hoffman, director of acquisitions with WP Realty in Bryn Mawr, Pennsylvania. “Additionally, the stable markets generally equate to higher barriers to entry. Redevelopment of existing properties in mature markets enables us to get to market faster than new ground-up developments.”

Because of the high barriers to entry, many of the current projects in the state are redevelopments. This is especially true as issues regarding the conserving of land and reducing sprawl come into play. Some developers are tearing down older shopping centers and starting from scratch, while others are renovating and revitalizing existing buildings.

One example of a teardown redevelopment project in Pennsylvania is the Delco Plaza in York. The plaza had originally been an open-air center but was later converted to an enclosed mall. The developers knew that more than a face-lift was needed. “This project was as close to a new development as one can get,” says Hoffman. “It was a true tear down.” When complete in the next month or so, the 346,000-square-foot center on Route 30 will feature a Lowe’s Home Improvement, Giant Food, Ross Dress For Less, OfficeMax and T.J. Maxx.

WP Realty is also handling the repositioning of a 402,000-square-foot center along Route 11 South in Edwardsville, near Wilkes Barre. The West Side Mall will be complete in early 2007 and will feature a Lowe’s Home Improvement, Price Choppers, AJ Wright and Jo-Ann Fabrics.

In Malvern, Philadelphia-based O’Neill Properties is developing Worthington, a mixed-use project that will contain 600,000 square feet of  retail, 800,000 square feet of office space and 700 residential units. Coronado, California-based The McGarey Group is leasing Worthington while BMAC Real Estate is engaged as a development consultant for the project, located along Philadelphia’s Main Line.

Also in Pennsylvania, ARC Properties is currently involved with two retail projects, including a redevelopment. Willow Grove is a Pennsylvania city that is currently undergoing revitalization efforts. As a part of that, ARC Properties is developing a 140,000-square-foot retail complex, which is expected to open in late 2007. Also in Willow Grove, but out near the Pennsylvania Turnpike, ARC Properties is involved with a 160,000-square-foot shopping center anchored by The Home Depot.

Developers and retailers will continue to seek out sites in Pennsylvania because of its population density and the numbers of ready shoppers, even though the state has high barriers to entry. “Pennsylvania’s — and specifically greater Philadelphia’s — market maturity combines high population density with above average incomes and low costs of living when compared with similar mature markets such as Boston, New York, Chicago and Washington, D.C.,” says Hoffman. “This translates into greater disposable income, which drives the tenant’s desire to locate here. Additionally, with high barriers to entry, once a development is completed, competition is not close on the heels, enabling tenants to secure their markets.”

Jam-Packed Jersey

Due to its proximity to New York City, in addition to other major northeastern cities, New Jersey is one highly-populated state. For this reason, and its strong demographics, developers continue to come in droves, looking for space for shopping centers. “New Jersey is densely populated, has high income and high average household income,” says Jaime Weiss, president of Moonachie, New Jersey-based Jaime M. Weiss Realty Co. So despite the lack of available land, retailers and developers are finding ways to get into the market.  Everything from previously-occupied retail properties to old industrial sites is up for grabs.

“Retail development demand continues to be strong in densely-populated areas of north, central and southwest parts of the state, wherever land is available,” says Robert Carson, executive vice president with Levin Management Corporation in North Plainfield, New Jersey. “Redevelopment of former industrial sites to retail or mixed-use is also strong, since unused land is so scarce in these areas and because of the state’s Smart Growth initiative.”

Retail will be a major component of the mixed-use Maxwell Place in Hoboken, New Jersey.

In regards to new development, the types of shopping centers being developed vary from market to market, but lifestyle centers usually dominate new development. “We continue to see strong demand from regional and national retailers to open new stores in New Jersey,” says Loventhal. “With the big box format becoming increasingly more difficult from an entitlement perspective, as well as the difficulty in finding available sites, the lifestyle centers are becoming more prevalent.”

An aerial landscape of Toll Brothers’ Maxwell Place project along the Hudson River in Hoboken, New Jersey.

Garden Commercial Properties is currently involved with the Riverdale Crossing development at the intersection of routes 23 and 287 in Riverdale. The 258,000-square-foot center is set to open in October and will feature tenants such as Wal-Mart, The Sports Authority, Borders, Linens n’ Things, Pier 1 Imports and Chili’s.

In Princeton, Levin Management Corp. is handling the repositioning of the Princeton Forrestal Village, a 770,000-square-foot mixed-use development. The retail portion of the project totals 187,000 square feet and will soon feature a CAN DO Fitness and Koi Spa, a 12,000-square-foot Salt Creek Grille and an 11,000-square-foot Lux Home.

Centro Watt is currently developing Ocean Heights Shopping Center in Somers Point, New Jersey.

Weiss Realty is involved with the development of an approximately 3,000-square-foot project at 2215 Route 4 East in Fort Lee. “We are planning a 1,200-square-foot free standing food retail store and 1,750-square-foot to 2,150-square-foot freestanding building with a drive-thru, also designated for a prominent food-type retail use,” says Weiss. The project will be completed in spring 2007.

Retail is booming, even though there are several obstacles facing retail developers. “A lengthy approval process and the NIMBY (not in my back yard) factor, as well as high land cost, are the primary barriers to entry,” says Carson. “But there continues to be low GLA per capita, so many will continue to try to overcome these barriers.”

Pennsylvania-based Toll Brothers is involved with Hudson Tea, a 60,000-square-foot retail center with 1,200 condominiums in Hoboken, New Jersey.

Levin Management had to overcome a set of obstacles in order to develop a 200,000-square-foot open-air center in Hamilton. The town rejected the original application for development, but Levin Management was able to win through an appeal in the superior court. The company now expects to begin development on Klockner Corner in the near future.

Even though issues arise, developers are finding ways to bring residents new retail developments.

Fast-Forward

In the foreseeable future, both Pennsylvania and New Jersey expect to see no slowdown in retail development. There are certain areas, however, that are expected to see an even greater concentration of shopping center projects. In Pennsylvania, the Lehigh Valley is one area that is considered a hot market. “It has excellent highway access to east New York City, west and south to Philadelphia,” says Hoffman. “The New York City market continues to expand and the Lehigh Valley is benefiting from that growth.”

Garden Commercial Properties’ Riverdale Crossing is currently under construction in Riverdale, New Jersey. Sports Authority, Borders and Linens ‘n Things will soon be joining the space shown here.

“The South Jersey shore areas are in great demand now,” says Ambrosi. “Many people are moving there — critical mass has finally occurred.”

Says Weiss, “Englewood and Fort Lee are emerging as ‘high class’ shopping areas. Englewood’s Palisade Avenue corridor and Town Center in Fort Lee are areas to watch in Bergen County.”

Levin Management has seen significant retail activity in Newark and Philipsburg. “Newark is starting to see some retail and other development and re-development,” says Carson. “And Philipsburg is something of a surprise, with its heavy concentration of retail but relatively light population. Its location — in New Jersey but very close to Pennsylvania — may be driving retail here. Also, U.S. 1 from North Brunswick to Princeton is particularly hot.”

In Princeton, New Jersey, Levin Management Corp. is leasing the retail portion of Princeton Forrestal Village, a 770,000-square-foot mixed-use development.

Both states will continue to be centers of retail development because of their location and accessibility. “The strong demographics and shopping habits of the consumer provide retailers with strong incentives to continue to expand, thus providing developers with opportunities,” says Loventhal. “Although these opportunities are becoming more difficult to execute, the value created makes them attractive.”

GARDEN STATE PARK This site, which is the former Garden State Park race track, was a unique opportunity for the owners to combine their knowledge and talents and put together a landmark development addressing the community’s needs for open space combined with upscale living, a convenient place for shopping and dining and a “downtown” setting, which is something that the residents of Cherry Hill have not been able to previously enjoy. The Who’s Who list of elite national retailers and restaurants and the focus and attention to architectural and landscape details is one of the most unique aspects of this project. This project will create more than 3,000 jobs. Location:  Northwest corner of Route 70 and Haddonfield Road, Cherry Hill, New Jersey. Property Type and size: Mixed-use mega-complex.  226 acres Breakdown: Garden State Park includes a 530,000-square-foot regional shopping center known as Market Place at Garden State Park that will include Wegman’s, Home Depot, Bed, Bath & Beyond, Christmas Tree Shops, Best Buy and Dick’s Sporting Goods; a 230,000-square-foot lifestyle center known as Towne Place at Garden State Park that will include Cheesecake Factory, Barnes & Noble, McCormick & Schmick’s Seafood, Jake’s Steakhouse, Brio, Talbot’s, Coldwater creek and J. Jill; approximately 1,700 luxury rental units, including townhomes, condominums, and rental and rental apartments;  approximately 1 million square feet of office space; and a 150-room hotel.    Amenities: The complex includes a 10-acre park with an amphitheater and three ball parks, a trolly system that is reminiscent of the old San Francisco street cars, and the site has a railroad crossing for the residents, where approximately 4,500 people can get to the train station with direct access to Philadelphia.    Construction schedule: Market Place is just completing construction, all anchors are open and all other phases in this portion of the project should be complete by first quarter 2007.  Towne Place is under construction with The Cheesecake Factory open for business while all other buildings in this portion of the project should be complete by the final quarter of 2007. The residential components should be complete beginning with the first quarter of 2007 and finishing by final quarter 2008.  The office/hotel component schedule is not complete, but a reasonable estimate for this phase is 2009. Cost of development: The overall cost of the project is close to $1 billion. Companies involved: JMP Holdings Corp. and Edgewood Properties. — Stephanie Mayhew

THE VILLAGE AT BRIDGEWATER COMMONS The Village at Bridgewater Commons will bring premier restaurants and shops to Somerset County, New Jersey, and will be a natural gathering place for the area’s residents and visitors can shop, dine and stroll through a beautifully landscaped setting. Major interstates, such as I-287 and routes 202/206 and 22 in Bridgewater Township, allow the area to function as a major retail anchor for the surrounding area and make it a natural focus for commercial activity. The Village at Bridgewater Commons will bring 300 jobs to the area. Location: The Village at Bridgewater Commons is located at the intersection of I-287, Routes 202-206 and Route 22 in Bridgewater, New Jersey. The Village is located on land adjacent to Bridgewater Commons mall and directly across from the Bridgewater Marriott on Commons Way.  The new lifestyle center development is connected to the existing center by a connecting road and walking path but has its own dedicated parking. Property type and size: An open-air, upscale 95,000-square-foot lifestyle center that is an expansion of Bridgewater Commons. Breakdown: The Village has the look and feel of a Main Street with a landscaped boulevard leading traffic into the center.  The center will be composed of separate buildings with a common look, yet carrying the flair of each individual retailer, much like a downtown. The entire lifestyle center will be heavily landscaped, with Kwanzan cherry and yew plantings interspersed with evergreen and deciduous trees.  The buildings will be adorned with awnings, providing attractive, shaded walkways between stores.  The Village will include a 35,000-square-foot Crate & Barrel flagship store, a 15,000-square-foot, first-in-the-market Maggiano’s Little Italy Restaurant,  Ann Taylor Loft, Banana Republic, bluemercury, Brooks Brothers, Coldwater Creek, Origins, White House/Black Market, Johnston & Murphy and SGH. There will be 14 stores and restaurants in all.   Amenities:  besides the many shops and restuarants, 465 new parking spaces will serve the lifestyle center. Construction schedule: Completion is scheduled for September 2006. Cost of development: $40 million. Companies involved: General Growth Properties and JPMorgan Asset Management. — Stephanie Mayhew