In January 2024, New Jersey introduced Senate Bill 1408 and Assembly Bill A2757 (collectively the “Bill”) in an effort to streamline the conversion of certain office parks and retail centers into mixed-use developments, thereby addressing housing shortages and revitalizing outdated and underutilized commercial properties. In recent months, the Bill has obtained further traction, and on March 17, 2025, the Senate Community and Urban Affairs Committee advanced an amended version of the Bill. Pursuant to the Bill, “Converting stranded office parks and retail centers into desirable mixed-use communities would promote the general welfare by revitalizing underused or underperforming properties, creating new opportunities for housing, businesses, and recreational facilities, and bolstering the economic and social vitality of New Jersey’s municipalities.”
While the Bill aims to overcome zoning restrictions that prevent such redevelopment, it has the potential to upend local zoning regulations put in place by a municipality. The Bill sets forth a legislative framework to allow certain eligible properties the ability to convert to a mixed-use development without the need for use variance relief. Thus, while it can be seen as a significant benefit to developers, permitted conversions would preempt local zoning and the ability of the municipality to dictate use of such lands.
Pursuant to the Bill, an “eligible property” is defined as an office park of at least 50,000 square feet, or a retail center of at least 15,000 square feet, with a vacancy rate of 25% or more for at least 18 months prior to the submission of an application for development. The property must also have suffered an economic downturn with measurable losses exceeding 30% in the preceding three years to qualify. Eligible properties are then able to seek zoning review from a local land use board for a mixed-use development as a permitted use, even if not permitted in the zone by ordinance. Interestingly, while the municipality must then consider the development a permitted use, the municipality maintains the authority to select which bulk standards to apply, typically selecting from another mixed-use zone in the municipality. The Bill encourages the re-use of existing buildings or redevelopment of property which would in turn, improve certain environmental impacts such as stormwater management and preservation of tree canopy. The mixed-use development must also include a minimum of 20% affordable units, thereby continuing to promote the purposes of zoning and supporting the general welfare of a municipality.
Notably, the main difference proposed in the amended Bill is that it eliminates a two-year sunset to allow applications to be made, thereby creating a permanent preemption in local zoning. By preempting restrictive zoning ordinances, the Bill seeks to encourage redevelopment that addresses New Jersey’s housing needs, enhances environmental sustainability, and promotes urban revitalization. However, with the increasing difficulty of obtaining use variance relief in New Jersey, there are fears that developers will utilize this Bill as an opportunity to bypass zoning regulations by purposefully impacting the vacancy and profitability of a property if it does not qualify as an “eligible property”. The Amended Bill now stands at second reading in the Senate and could be scheduled for a Senate floor vote as soon as the spring of 2025, however, it seems unlikely to pass without further controls and qualifiers to ensure that it cannot be utilized as a weapon against local zoning. While a work in process, the Bill provides the possibility of repurposing outdated and underutilized property into mixed-use developments which would further advance industry trends to live, work, eat and play all within walking distance.
