Woodbury Common agrees to drop New York trade restrictions

BY Al Urbanski

Simon Property Group has agreed to a settlement with the office of New York State Attorney General Eric T. Schneiderman that will have it loosening its stranglehold on the outlet business in Metropolitan New York.

Schneiderman maintained that Simon’s Woodbury Common outlet center in the Hudson River Valley owned a virtual monopoly in the region — including New York City — by virtue of a clause in tenant leases that forbid the opening other outlet stores within a 60-mile radius.

“No business should be allowed to stifle an entire industry at the expense of the consumer, but for years, that's exactly what Simon Property Group did to New Yorkers,” Schneiderman said. “Simon's anticompetitive conduct blocked competition and drove up prices for New York consumers.”

Simon will pay New York State $945,000, revise existing leases to remove the radius restrictions, and cease employing radius restrictions or other exclusionary tactics that might deter Woodbury tenants from opening additional outlet stores.

The settlement is welcome news for Staten Island developer Joseph Ferrara and his BFC partners, whose Empire Outlets NYC are under construction and set to bring luxury outlet stores to New York City in 2018. Brands signed to lease space at the 1.1 million-sq.-ft. development near the Staten Island Ferry terminal include Nordstrom Rack, Banana Republic, Francesca’s Collection, and Columbia Sporting Goods. But this week’s news should quickly add more names to the list, according to Casandra Properties’ James Prendanamo, who directs leasing for Empire Outlets.

Asked if the settlement expanded the prospective tenant pool, Prendamo replied, “We were looking at a tenant pool that was 10 Olympic-sized pools, then it shrunk to four, and now it’s back to 10 again.”

In a statement, Simon Premium Outlets argued that the radius restriction was lawful, having been in use since 1985, long before Simon acquired the center from Chelsea Property Group. The company decided to settle, however, since Schneiderman’s investigation had become “an unnecessary distraction.”

“Simon has never sought to limit competition. It regularly granted exceptions to radius provisions and understands the importance of competition and consumer choice in the market,” Simons stated. “While we do not agree with the suggested findings, the settlement has favorable terms for Woodbury Common and will permit Woodbury Common to focus on providing tenants and shoppers the type of premium experience they seek.”

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