State legislation that would override municipal zoning law to encourage redevelopment of "stranded" office parks and shopping malls was unanimously advanced Monday by the state Senate Community and Urban Affairs Committee.

The legislation, sponsored by Sen. Troy Singleton (D, Burlington County), would deem as permitted uses the eligible mixed-use developments replacing an office park or mall. Municipalities would be required to approve use variances for the projects.

"By repurposing these outdated, unused spaces into mixed-use developments, we will be able to address the housing shortage and create economic growth opportunities in these areas," Singleton, whose district includes Mount Laurel and Moorestown, said a statement on Monday. One goal of the bill is to add to the state's inventory of affordable housing.

"This bill would establish a limited preemption from local zoning regulations for applications to convert certain office parks and retail centers into mixed-use developments," according to the bill, S-1408. A similar bill was proposed in 2022.

The bill, however, was panned by New Jersey League of Municipalities (NJLM) as unnecessary.

"We see it as a permanent preemption of local duly elected and appointed officials," NJLM Executive Director Michael F. Cerra told committee members at the meeting.

Calling it a "myth" that local zoning hinders converting stranded assets, Cerra said: "We believe it undermines the local planning process, which is designed to facilitate grass roots engagement with the community."

Al-Tariq Witcher, managing director of external affairs for the Fair Share Housing Center, told committee members that the bill would be a boon to affordable housing growth.

"New Jersey has a shortage of more than 200,000 affordable housing units throughout the state and this would help remedy a lot of that problem," he said. "Utilizing existing structures from abandoned or underused commercial sites and strip malls would allow for the creation of these units, it would also cut costs construction wise."

Eligible properties would be office parks with at least 50,000 square feet of space or retail centers with at least 15,000 square feet. Properties also would have to have a vacancy rate of at least 40 percent. The redevelopment would need at least two uses and not expand beyond the square footage of the old uses.

One example of repurposing a dying shopping center was the Moorestown Mall, an initiative that began in 2021 with a redevelopment plan approved by Township Council. Cooper University Health Care opened its largest ambulatory center in a former Sears store. 

"As economic conditions and consumer preferences change in conjunction with remote work, office space vacancies are at a 30-year high, according to Moody's," said Singleton's announcement. "At the same time, a housing shortage drives up rents and home prices across the country," it stated.

"This legislation seeks to address these dual issues by enabling the conversion of vacant office space into mixed-use developments, allowing for new affordable housing and the creation of vibrant communities that appeal to the workers and employers of today."

The bill cites New Jersey economic reports that noted large, regional shopping malls and suburban office parks once prospered, but "these old single-use forms of development are now in such significant decline throughout the state and the country that academics and planners have termed them 'stranded assets'." 

If the multi-use project includes residential housing, at least 20% of the units would need to be designated for low- or moderate-income households, the bill notes.

Original Article