By Joshua Burd
Even in Bergen County — the home of the highest-grossing retail ZIP code in the U.S. — owners and operators are in a race to evolve and face no shortage of challenges.
That’s according to a panel of industry experts, who spoke to public- and private-sector leaders last week about the future of retail in northern New Jersey. For an area that is renowned for its malls and highway shopping centers, Bergen County and Paramus are as strong as ever, even while they serve as a laboratory for the changes that are taking hold across the retail sector.
“Retailers, when they come to New Jersey, they oftentimes come here first,” said Marta Person Villa, a broker and senior vice president with JLL, who moderated the panel discussion during the Bergen Volunteer Center’s Fifth Friday luncheon in Hackensack.
That’s not to say that retail in Bergen County is immune to the impact of e-commerce, changing consumer preferences and demographic shifts.
“It’s really a tenant’s market — they write their own tickets,” said Nick Laganella, the president of Laganella Property Management, who detailed the evolution of the retail property known as the Paramus Design Center on Route 17 North. The firm in 2013 completed a new Equinox fitness club on the site, while also subdividing two retail spaces that previously housed PetSmart and Pearl Art & and Craft Supply into six units.
The effort has attracted a mix of high-end home furnishing retailers — Mitchell Gold + Bob Williams, Roche Bobois, Natuzzi Italia, CB2, The Shade Store, Z Gallerie and Tempur-Pedic — for what is now a destination along the highway’s northbound side.
“Because of the way that retailers are operating these days, they want smaller spaces,” Laganella said. “They want to rent half the amount of square footage and pay half the rent and then sell twice as much from there, which they’re doing because of the internet.”
Retailers in Bergen County and elsewhere have moved increasingly toward experiential and lifestyle-oriented uses in response to the growth of e-commerce, Villa said. But Paramus has also showcased the so-called clicks-to-bricks phenomenon, in which online retailers open brick-and-mortar locations in an effort to grow their business.
She pointed to the recent opening of a Warby Parker store inside the state’s largest mall, Westfield Garden State Plaza in Paramus, the first New Jersey location for what had been an online-only eyeglasses retailer. Villa and other panelists also cited the growing importance of omni-channel retailing, which is built on a belief in both online and in-person sales.
“I think that most of the successful retailers that are going to be here for the long haul have both,” Villa said. “So they’re marketing, they’re Instagramming, they’re providing incentives to the consumer to bring them to the physical store or buy online. They treat their stores more like showrooms — because the online experience is obviously so much different from the real experience — to be able to touch and feel and test the products.”
That approach is on full display for major operators such as Nordstrom, which is among the anchors at Garden State Plaza.
“Nordstrom does a really good job with that,” said Lisa Herrmann, senior director of marketing for Unibail-Rodamco-Westfield Group. “If you look at their store every morning, they have a huge area that’s just dedicated to shopping bags that are already purchased online for people that come into the store to pick it up and then they’ll also see something and buy something buy else.”
Herrmann also said Westfield is nearing the final stages of a plan to update the 2.1 million-square-foot Garden State Plaza, under a project that has already resulted in modernized dining hall. Other plans include new landscaping, upgraded restrooms and building systems and a commissioned art exhibit, all of which will create a more cohesive feel across the property after decades of piecemeal expansions and renovations.
Paramus and Bergen County face other headwinds, many of which affect the entire state. Chief among them is the high price and scarcity of liquor licenses, due in part to decades-old limits on the number of licenses that local governments can issue.
Gary Albrecht, co-chair of the real estate department at Cole Schotz P.C., highlighted the ongoing legislative effort to reform the system and expand the pool of licenses, but said lawmakers are grappling with the need to compensate existing license holders for the loss in value of their investment.
“It’s a very arcane law that really doesn’t fit today at all,” Albrecht said, while pointing to other examples of hurdles for retailers, such as home rule and the so-called blue laws in Bergen County that cause most retailers to close on Sundays. “There are a lot of issues that I think are pretty unique to New Jersey.”
Still, Villa pointed to the strength of the Bergen County retail market, which continues to be attractive in spite of those challenges and the fact that much of the stock is older or different from what operators see elsewhere in the country.
“They drive up and down the highways and they look at the condition of our physical plant retail and they say, ‘I can’t believe the rents that you guys get,” ’ Villa joked. “And the reality is: It’s the population base and the demographics that are supporting these properties.
“In spite of the fact of how we look, oftentimes, the value is there and business is being done regardless. That’s one of the anomalies of New Jersey.”