Vacated shells of circa-1985 outlet shopping centers still dot the nation’s highways, but that’s not the format version that is finding a foothold among consumers and retailers.
A new value-oriented center, anchored by top-tier designer names, has opened the eyes and pocketbooks of American shoppers. Mainstream amenities have created the expectation that, while the goods may be discounted, the experience most definitely isn’t.
“Today’s evolved outlet centers are still focused on value, but have now morphed from centers built in rural areas on freeways to more part of the mainstream mix of retail assortments,” said Michael Lebovitz, executive VP development for Chattanooga, Tenn.-based CBL & Associates Properties.
In January 2012, CBL and Horizon Group Properties announced a 75/25 joint venture to develop The Outlet Shoppes at Atlanta, in Woodstock, Ga., which when complete in summer 2013 will feature 370,000 sq. ft. of outlet retailers. At construction launch, the project is more than 70% leased or committed, with names like Nike, J. Crew, Michael Kors, Puma and Under Armour.
When Simon Property Group, Indianapolis, acquired Premium Outlets in 2004, it began an outlet march that would see growth even in tough times and a design sizzle found only in higher-end projects. “The outlet segment of our business is recognized as an important piece of the whole pie — to enhance the mall channel, not compete with it,” said Michele Rothstein, senior VP marketing, Premium Outlets/Simon Property Group.
Woodbury (N.Y.) Common Premium Outlets is the company showcase, an iconic center that opened in 1985, then expanded in 1994 and 1998. Orlando (Fla.) Premium Outlets – Vineland Ave. is another highlight for the company, as it is currently undergoing its second major expansion.
“It has long been considered one of the most productive outlet centers in the world,” said Rothstein. “Sales exceed $1,300/sq. ft. Those are sexy numbers that say volumes about what a strong business this is.”
The fact that developers such as Premium/Simon are leading the outlet development charge, and that companies such as CBL are entering the arena with high-quality projects, bodes well for the format. According to Bill Stinneford, executive VP and head of the retail division for Fort Worth, Texas-based Buxton, the fact that there are a handful of highly competent developers controlling the industry “has resulted in projects that are better planned, better capitalized and better executed.”
Better-executed outlet centers means that more retailers will find them a suitable home. “The best outlet strategies extend the retailer/brand’s reach not just to a new customer, but to a whole new segment of consumer that may have found shopping the brand in its traditional locations at full price to be prohibitive,” Stinneford said.