A new report by the New Jersey State Policy Lab, “Vacant Commercial Property in New Jersey: Causes and Solutions,” explores existing and prospective tax and subsidy policies that both New Jersey state and local governments could use to encourage property owners to reuse and/or activate currently vacant commercial properties in the state.
The report was authored by written by Michael Hayes and Pengju Zhang.
The economic recession caused by the COVID-19 pandemic has resulted in an increase in vacant and under-occupied commercial property across New Jersey. This increase is expected to put downward pressure on economic growth and government revenues in both the short and long run.
After reviewing prior studies, the authors found that several factors can impact the likelihood of vacant or under-occupied commercial properties including urban population decline, suburbanization, the rise of e-commerce, and speculative investing. This study also examined whether commercial property owners strategically under-utilize their property to reduce their property tax liabilities, finding that this is not a viable business strategy nor an important explanation for vacant and under-occupied properties in New Jersey. Rather, they suggest the causes for vacant and under-occupied commercial property vary across New Jersey cities.