Capture Analysis
To make a determination of likely absorption, a capture analysis is required. This analysis forecasts the amount of floor space that the target retail and other uses would occupy in Plainfield.
Using the estimate of retail sales per location and applying the national average sales per square foot for each category, an approximation of the sizes of the retail facilities can be achieved. While the national figures are a good starting point, discounting the results by a factor applied to a Plainfield location is warranted. Given that a downtown location for retail is often outperformed by a placement along highways or major shopping center location, a conservative factor of 33% has been applied to the results as shown in the table below:
From Task 1, the total available retail space within the 10 major housing developments totaled 20,080 sf. The sizes of vacant retail space varied from 1,700 sf to 4,200 sf. As shown in the table above most of the projected retail capture could be accommodated in the smaller retail footprints available in the housing projects except for Furniture/Home Décor. At 17,490 sf, the Furniture/Home Décor category is clearly a stand-alone facility requirement.
Using the estimate of fine dining sales per location and applying the national average sales per square foot for each category, an approximation of the sizes of the restaurant facilities can be achieved. As shown in Exhibit 37 (below), a fine dining establishment of 3,070 sf is capturable for the City of Plainfield.
In Task 5, the average size of a comedy club was 378 seats, and the median was 200 seats. Using a conservative 200 seats figure, the estimated range for a club-style venue is about 15 sf per person or an estimated 3,000 sf according to the industry standards.
In Task 5, the average size of a community theater was 524 seats, and the median was 200 seats. Using the conservative 270 seats figure, the estimated range for a theater-style venue is about 10 sf per person or an estimated 2,000 sf of total facility size.
In Task 5, the average hotel was 132 rooms, and the median was 389 rooms. Using the conservative 132 rooms figure, the estimated size of the hotel would be based on the industry average 300 sf per room plus a 20% common area factor (lobby, corridor, etc.) or a total of 47,500 sf.
In review of 41 retail brokerage listings in Union County, a total of 298,331 square feet of available space produces an average of $27.63 per sf. The typical size of retail establishments is 7,300 sf.
According to Chain Store Age, the retail vacancy rate in Northern New Jersey is forecasted to reach 3%, a record low. New Jersey’s combination of low vacancy, limited new supply, and strong rent growth makes it one of the most competitive retail markets in the country. Using the $27.63 psf annual rent figure, the 9 retail categories will produce monthly rents ranging from $1,370 to $44,300 as shown in the table (below):
Fine Dining
Fine dining restaurants would follow the same pattern of rental rates as retail locations. A 3,070 sf establishment would expect pay in the range of $6,400 to $7,800 per month.
Comedy Clubs and Community Theaters
Both comedy clubs and community theaters would be considered as retail uses, and similar rental rates could apply. Given that prime location is not as important a driver, a lower rent al figure might be considered, in about the $18 psf annually. For a 3,000 sf comedy club or a 2,000 sf community theater, monthly rents would be about $4,500 and $3,000, respectively.
An interesting use of community theaters is short-term event rentals. At the Burgdoff Theater in Maplewood, for example, this municipally-owned 100-seat facility can be rented at $150 per hour up to $6,300 per week. Events being held at local theaters include corporate retreats, children’s movie parties, retirement parties, or nonprofit fundraisers.
Hotels
A hotel brand (company) would expect to pay about $25,000 per room in annual lease costs. For a 132-room hotel, that would translate to a $3.3 million annual payment, or $69 per square foot.
Retail development in downtown Plainfield is not very active is clearly affected by the Rte. 22 retail corridor in close proximity. But with the gentrification of the downtown especially in the 10 study area properties, it must be assumed that some recovery in the retail space will be forthcoming.
In review of 41 retail properties available within Union County, the weighted average rental rate of $27.63 was generated for the composite 298,331 sf inventory. While this figure oud appear out of the range of the current downtown retail picture, it is DCG Corplan’s opinion a $25 to $30 retail price point is reasonable.
To maintain retail sustainability in a mixed-use project where traffic cannot be accurately predicted and often results in business failure and vacancies, five-year projections for retail rent should only be based on CPI adjustments, which could be about 2.6% per year going forward with inflation rising from current levels. Thus, if a 2024 date could be established as a starting point, the yr. 2029 projected rent would be in the range of $28.40 to $34.10 psf annually.
For the Entertainment/Leisure venues, the $18 price point in 2024 would rise to $20.50 by 2029 due to inflation. For the hotel, the $69 psf lease cost would increase to $78.50 by 2029 if the facility were in place today.