From the APP:
The Whiting Town Center is a sprawling complex on Lacey Road in Manchester whose tenants include restaurants, doctor’s offices and a Super Foodtown that serves as an anchor. There are a few empty stores, but nothing that would signal distress.
Until you talk to one of the tenants.
“The middle class, they’re just dead in the water,” said Cathy Lada, owner of the flooring store, A Lada Flooring. “We’re basically (living) paycheck to paycheck right now. There’s no security.”
With tenants hurting and unemployment rising, banks are bracing for another round of shaky loans, this one to borrowers who own property such as shopping centers and office buildings.
“Definitely we’re seeing more stress on our commercial real estate loans and our borrowers,” said Bruce Dansbury, chief operating officer of Sun Bancorp, the Vineland-based parent company of Sun National Bank. “It’s there. It’s real. You can see it as you ride around. You see vacancies in shopping centers and office buildings. It seems like everywhere you go there is a “For Lease’ sign.”
The result: About 4.6 percent of commercial mortgages in the region that includes Monmouth and Ocean counties were at least 30 days past due during the third quarter of 2009, up from 2.1 percent during the fourth quarter of 2008 and mirroring the national rate, according to Foresight Analytics, an Oakland, Calif., research firm.
From the Star Ledger:
The deserted office building off Prospect Plains Road in Cranbury looks as if it could still be occupied, with 42 acres of manicured landscaping and traffic signs advising employees where to park.
But it’s been more than two years since Aetna Insurance moved out of the space at 1 Continental Drive, leaving the 500,000-square-foot building empty as the day it was built.
The agency trying to lease the five-story building has dropped the price to $4.95 a square foot, or about $10 less than the 2006 price. The agency tells potential tenants that a square foot of premium office space off exit 8A of the New Jersey Turnpike — where the building is located — is now as affordable as a “golf ball” or “hamburger.”
At the end of last year, about 34.7 million square feet of office space was on the market in central and northern New Jersey — up from 31.5 million available square feet at the end of 2008, according Grubb & Ellis, a commercial real estate firm.
But that doesn’t include the “shadow market” of space that landlords are simply not bothering to try to lease, said Matt Dolly, managing director of research in the New Jersey office of FirstService Williams.
Dolly said with that space could amount to hundreds of thousands of extra square feet.
The jobless rate in New Jersey has now hit 10.1 percent, with more than half of those out of work “knowledge-based workers,” or those that would likely work in offices, according to an estimate from the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.
And the glut of commercial office space on the market has dropped asking prices to similar lows. The average asking rate for Class A space — the highest quality — has dropped to its lowest level in more than five years — $28.80 a square foot in the northern and central parts of the state, according to Grubb & Ellis.
From the Press of Atlantic City:
The row of blacked-out stores at Heather Croft Square gives the impression of a retail ghost town. For more than 20 years, the big draw at the shopping center on Tilton Road in Egg Harbor Township was a Superfresh, until it closed in 2007.
The impending recession gutted the center. A dollar store went bust, a lending company left and a dinette and bar stool supplier shut down. Larry Delany watched helplessly as his neighbors’ stores suffered.
The alarms were ringing for retail mall and strip center operators a year ago, when major chains such as Circuit City and KB Toys prepared to go out of business after a weak holiday shopping season.
In April, Chicago-based General Growth Properties Inc., which operates four malls in northern New Jersey, filed for one of the largest commercial real estate bankruptcies ever after struggling with a $27.3 billion debt load. Its malls remain open as it works to restructure its debt.
In September, Taubman Centers Inc., of Bloomfield Hills, Mich., reported a negative cash flow with its luxury shopping mall in Atlantic City, The Pier Shops at Caesars, and said it did not think it could pay off its $135 million mortgage. A company spokeswoman said last week that a plan to turn over the property to lenders is still in negotiations.
The Shore Mall in Egg Harbor Township was reportedly in jeopardy of closing after its anchor, Boscov’s, filed for bankruptcy protection in 2008 and threatened to go out of business. It has since come out of bankruptcy and is adding staff.
The department store’s survival was especially critical after Value City closed that same year. Shore Mall, which opened in 1968, is made up primarily of smaller, independent retailers as opposed to the national chains with greater access to capital.
Streb said the region remains “overmalled,” and weaker properties that don’t upgrade face difficulties. He ranks malls with a letter grade, and said modern, fresher properties such as the Cherry Hill Mall can be considered an A. He gave the Hamilton Mall in Mays Landing a B, and the Shore Mall a C.
“The A malls are going to survive,” he said. “It’s the B malls that should upgrade, and the C malls, if they don’t do anything, can potentially close.”