New Jersey Liquor License Reform Fails to Fulfill Commercial Real Estate Advocates’ Expectations

Trenton, New Jersey – New Jersey’s liquor license laws, known for being restrictive and expensive, underwent significant changes this week. Governor Phil Murphy signed legislation that increases the number of available liquor licenses statewide and allows for new licenses in municipalities with large malls. This move injects nearly 1,500 licenses into the market, marking the first major reform since the Prohibition era. Despite this change, some groups, including the state’s largest commercial real estate trade organization, argue that the new legislation falls short of what is needed to spur development.

Craft breweries and distilleries have long criticized the state’s stringent rules, claiming that they hinder the growth of their industry and limit their ability to buy or lease real estate. The revised law attempts to address these concerns by easing some regulations. Governor Murphy emphasized the significance of this change, stating that it tackles an age-old problem that has hindered economic growth and small business owners’ dreams.

However, real estate development supporters argue that the compromise legislation fails to adequately stimulate development. According to New Jersey real estate officials, without more licenses available at lower costs, restaurants and bars face challenges in opening or surviving. This, in turn, hampers efforts to reinvigorate central business districts and mixed-use projects.

The debate surrounding New Jersey’s liquor laws has been ongoing for decades, with licenses in some towns costing over $1 million. While Murphy’s original plan faced opposition from the restaurant and hospitality association, the revised bill does address some concerns raised by the industry. It allows for approximately 1,400 inactive liquor licenses to reenter circulation, providing a boost to the commercial real estate industry.

The legislation also introduces a new class of liquor licenses for shopping malls, potentially creating over 100 new licenses throughout the state. This provision aims to support struggling malls in the wake of the pandemic and online shopping trends. However, critics argue that the legislation does not adequately support small businesses in downtown areas, prioritizing corporate interests instead.

In addition to the changes in liquor licenses, the new law also lifts several restrictions on craft breweries. Breweries can now offer snacks, collaborate with outside vendors, and host various on-site and off-site events. These eased regulations are expected to spur the expansion of breweries in the state, which currently lags behind neighboring states in terms of brewery numbers.

While the new legislation represents a step in the right direction, some stakeholders argue that more comprehensive reform is needed. The compromise legislation was welcomed by NAIOP NJ, the state’s commercial real estate industry trade group, but CEO Dan Kennedy emphasized the need for further reform to drive redevelopment.

The new liquor license laws are expected to have far-reaching implications for New Jersey’s economy and commercial property sector. They offer insights into how liquor regulation can impact business interests and provide lessons on navigating the complexities of reform. As New Jersey takes this significant step, the changes will continue to shape the landscape for restaurants, bars, breweries, and real estate developers across the state.