What do building permits in New Jersey tell us about potential development trends?

Mike Deak, MyCentralJersey.com
·5 min read

In the first six months of 2023, East Brunswick was tops in New Jersey in the amount of square footage of new retail space approved for construction.

The township authorized permits for 310,696 square feet of new retail space. That was nearly a third of the entire state's total of 1.04 million square feet.

Neighboring Old Bridge was second in the state with 183,064 square feet.

In all, Middlesex County's 493,762 square feet of new retail space was 47.2% of the state’s total.

But, in Somerset and Hunterdon counties, no building permits were issued for retail space.

From January through June, Central Jersey, including Union County, issued building permits for a third of the state's new warehouse construction.

And the total amount of square footage approved in office space statewide was 137,075 square feet, smaller than many individual warehouses.

Those are some of the highlights of the state Department of Community Affairs' (DCA) report on building permits in New Jersey for the first half of 2023.

NJ housing trends

With interest rates set by the Federal Reserve to combat inflation rising to new highs for the 21st Century – though still below the rates of the final decades of the last century – the construction of new housing in Central Jersey has taken a retreat.

In 2022, permits for new residential construction dropped more than 40% from their 2021 level, which was the highest in the last four years.

And the trend has continued in the first six months of this year, according to the DCA statistics.

Kirby Village is a multifamily housing complex under construction in Somerville, a block off East Main Street.
Kirby Village is a multifamily housing complex under construction in Somerville, a block off East Main Street.

Though the number of permits approved for single-family homes has remained relatively stable since 2019, the number of multifamily permits continues to decrease.

  • Housing building permits in Central Jersey in 2021: 7,548

  • Housing building permits in Central Jersey in 2022: 4,247

  • Housing building permits in Central Jersey from January-June 2023: 1,495

The hottest areas for new residential construction in 2023 are Bernards, East Brunswick and Monroe. Bernards ranks 10th in New Jersey while East Brunswick is 13th.

More: East Brunswick council considering plan 'to better meet the housing needs of the township'

In 2021, the hottest communities were Old Bridge, Readington, Woodbridge and Raritan Township.

  • Multifamily housing building permits in Central Jersey in 2021: 6,197

  • Multifamily housing building permits in Central Jersey in 2022: 3,174

  • Multifamily housing building permits in Central Jersey from January-June2023: 784

NJ warehouse development

Though the number of permits for housing may be decreasing, the amount of square footage approved for warehouses is increasing.

For the first six months of 2023, new warehouse construction in Central Jersey accounted for a third of all warehouse construction in the state.

Approvals were given for 2,566,482 square feet of warehouse space in Central Jersey.

Middlesex County, crisscrossed by Interstate 287 and the New Jersey Turnpike and its proximity to Port Newark, led the state with 1,892,126 square feet.

More than a million square feet of warehousing is being built in the area of Route 9 and Jake Brown Road in Old Bridge.
More than a million square feet of warehousing is being built in the area of Route 9 and Jake Brown Road in Old Bridge.

The top three towns for new warehouse space in Middlesex County are Perth Amboy (1,043,600 square feet), Old Bridge (473,150 square feet) and East Brunswick (128,160 square feet).

More: Developer unveils massive distribution center off NJ Turnpike in Carteret

Somerset County was sixth in the state with 454,356 square feet. Franklin was first in the county with 244,445 square feet, followed by Branchburg with 157,836 square feet and Warren, 37,975 square feet.

  • New warehouse construction approved statewide in 2013: 9,549,179 square feet

  • New warehouse construction approved statewide in 2019: 22,144,195 square feet

  • New warehouse construction approved statewide in 2022: 31,269,619 square feet

NJ retail development

The boom in warehouse construction reflects trends in new retail space being developed.

During the pandemic, consumers switched from visiting stores to ordering online. Rare is the shopping center in Central Jersey that does not have a vacancy. And malls are struggling to find tenants outside the traditional boundaries of retail business.

According to JLL Research, "there is a shift in consumer spending towards experiences and the need for retailers to adapt to changing consumer behavior."

More: Construction on long-awaited Montgomery Promenade development finally happening

But even before the pandemic, the amount of new retail space was declining as shopping practices changed.

  • New retail construction approved statewide in 2000: 6,063,412 square feet

  • New retail construction approved statewide in 2010 (during the recession); 2,078,457 square feet

  • New retail construction approved statewide in 2020: 1,963,284 square feet

  • New retail construction approved statewide in 2022: 502,708 square feet

  • New retail construction approved in Central Jersey by county in first six months of 2023: Middlesex, 493,762 square feet; Union, 142,129 square feet; Somerset, 0; Hunterdon, 0.

NJ office space

Central Jersey, at the turn of the century, was paradise for the development of office parks.

As corporations moved out of urban areas, office developments sprung up along Central Jersey's highways, bringing "clean" property tax ratables and relatively well-paying jobs.

But the pandemic accelerated the telecommuting trend that started more than a decade ago. In Central Jersey that has resulted in proposals to demolish office complexes and construct alternate uses.

Bridgewater is hearing plans to demolish this Route 22 office building and replace it with a self-storage facility.
Bridgewater is hearing plans to demolish this Route 22 office building and replace it with a self-storage facility.

An office park was demolished on Route 22 in Readington and apartments were constructed. There are proposals in Franklin (Somerset), Bridgewater, Bernards and Warren to tear down office buildings, once the gold standard of suburban development, and build warehouses or other storage facilities.

More: Old office park helps Readington meet affordable housing quota

The former Sun National Bank headquarters on Route 22 in Branchburg is being transformed into a self-storage facility.

In Central Jersey, during the first six months of 2023, 56,888 square feet of office construction was approved. That is 41% of the state total.

There was no new office construction approved in Somerset and Hunterdon counties.

  • New office construction approved statewide in 2000: 15,531,039

  • New office construction approved by Central Jersey county in 2000: Middlesex, 1,453,241 square feet; Somerset, 1,431,689 square feet; Union, 1,006,693 square feet; Hunterdon, 322,707 square feet

  • New office construction approved statewide in 2020: 5,565,433 square feet.

  • New office construction approved by Central Jersey county in 2020: Union, 150,976 square feet; Middlesex, 1,475,746 square feet; Somerset, 91,603 square feet; Hunterdon, 20,555 square feet.

Email: mdeak@mycentraljersey.com

Mike Deak is a reporter for mycentraljersey.com. To get unlimited access to his articles on Somerset and Hunterdon counties, please subscribe or activate your digital account today.

This article originally appeared on MyCentralJersey.com: Development in NJ: What do building permits tell us about the future?