Retail Evolution: Are Coffee Shops the Key Indicator for New Jersey’s Future CRE Success?
by Josh Anderson
JERSEY CITY, NJ — CapRE’s Second Annual New Jersey Gold Coast North & Bergen County CRE Summit, moderated by Brian Klebash, Founder and CEO of CapRE, featured a panel titled Multifamily Outlook: Analysis of Leasing Trends and Absorption in the Region’s Luxury, Mixed-Use and Affordable Units. A large part of that panel was comprised of insight from Shergoh Alkilani, Principal at Alkova Companies, who provided a wealth of insight into how retail affects the New Jersey multi-family arena.
“How does the evolving retail sector relate to Jersey City and Hoboken?” asked Klebash. “We seem to be getting a coffee shop on every corner. Or two coffee shops on every corner. Does that help you in multi-family?”
“It hurts us on the retail side, that tenants have really changed their business models a lot,” Alkilani replied. “We have a relationship with a partner that is focused on real quality retail, and they’re just admitting that a lot of their tenants are leaving their very high-quality centers and going to more urban areas. And that again promotes urbanism, it promotes being able to go out of your apartment and go have a meal in five minutes, rather than driving twenty-five minutes through traffic to go have the same meal somewhere else.”
“So there is the evolution of more service-oriented, more hospitality-oriented tenants. And I really support the coffee shops,” he explained. “Thank god for Starbucks. I personally had 11 leases with Starbucks in the mid-2000s and we were all geeked up about it. Now you get geeked up about the Mom and Pop bringing something in rom a Colombian region, and it really draws a lot of attention. You’d never think that some silly 800 square foot tenant [would do that].”
“Another example like that, which is unfortunately still in a shopping center, and not in Jersey City retail, is in Edgewater,” he shared. “We had a shopping center that was dead for twenty years. There’s now a coffee shop there that’s probably 4000 square foot. The owner told me their monthly gross revenues, and I was shocked. That was a center where you couldn’t lease that space for twenty bucks a foot. But they got a great rent and they’ve got a great volume, because people aren’t going to that Starbucks anymore.”
To conclude, Alikilani shared how he thinks that these firms have more retail experience in Jersey City. “But from an ICSC retail side, we’ve been studying this for like ten years now and a lot of the projections that were made by the real serious players in retail have pretty much all been accurate,” he shared. “We never thought that Wal-Mart would be closing stores as aggressively as they had been in 2007 and all of those people that made those projections have been right.”
For more from Alkilani, check out previous CapRE Insider Reports:
- Shergoh Alkilani, Alvoka Companies, Talks Q1 & Interest Rates at Gold Coast North CRE Summit
- Alkova Properties’ Shergoh Alkilani Says Transit Will Be Biggest Hurdle for Long-Term NJ Multi-Family Growth
- Q&A with Shergoh Alkilani: New Jersey Falling Behind Due to Fear of Progress, Must Innovate to Stay Competitive
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