This article originally appeared in Shopping Center Business, March 2014. © 2014 France Media, Inc. www.shoppingcenterbusiness.com The Reimagined Outlet Center As the demand for discount retail continues to grow, the outlet industry is expanding and evolving to offer consumers a more entertaining and accessible experience. Susan Fishman hen the first outlets were launched, developers had Wa simple plan: build a basic box, provide the discounts, and shoppers would be attracted, no matter where the centers were. And the consumers came, often driving long distances in search of the ultimate savings. Today, value-con- scious shoppers continue to flock to the outlet space, but they are discovering a new, improved experience as developers and owners recognize the need to com- pete in a growing market. “Outlet malls are making a comeback,” according to Michael Garner, president of Athena Property Management. “They are the fastest growing part of retail right now,” he says. Ivanhoé Cambridge is planning The Outlet Collection at Niagara in Ontario. The According to a report on outlet cen- project will be 488,000 square feet in eight separate buildings. It is the first open-air ter and mall completion by Standard & outlet center in Canada. Poor’s Rating Services, while only a cou- ly clear excess goods. Now that outlets creation of brand loyalty. ple of outlet centers opened per year from have grown into a full-fledged distribu- “Access from majority arterial roads 2009 through 2011, the number of new tion channel, the location strategies have and public transportation has always been outlet centers jumped to eight in 2012 and changed. an important factor, and it remains vital,” then even higher to 11 in 2013. Rob Schoeneck, general manager of Wagner says. “Research shows that it is Outlet properties are in high demand Destiny USA, a 2.4 million-square-foot the number one reason consumers say and they are popping up in new markets. destination shopping complex in Syracuse, they would shop outlets more frequently.” No longer must the shopper travel to the N.Y., agrees, noting that outlet centers are Visibility to the major access points is outskirts for a good deal; the outlets of moving into urban and suburban areas to also important, she notes. today are in suburbia and, in some cases, strengthen their immediate market. “In fact, there are many examples of right downtown, reimagined with all the “We see this as the future of outlet centers that are visible but not terribly easy lifestyle and entertainment amenities of development. Our goal is to remain in- to access that prove that visibility actually today’s traditional retail. Developers and novative on the development side while trumps access. The rule of thumb is that operators are responding to the outlet de- continuing to provide an all-in-one experi- if consumers can see it, they will find a mand with an exciting, yet comfortable, ence to guests,” he says. way to get to it.” experience that makes the shopper want Wagner explains that developers have The Outlets at Assembly Row in to linger, and shop more. always sought access to high concentra- Somerville, Mass., developed by Federal tions of upscale population densities, but Realty Investment Trust, is one example GREATER ACCESS are now seeking locations that are closer of an urban center located proximate to What characterized a property with to those population centers. The presence both dense and upscale population nodes, strong outlet potential 25 years ago is not of wholesale or full-priced retail locations but also relatively close to existing strong the same as what is ideal today, accord- is still important, but the brands now rec- traditional retail. ing to Lisa Wagner, partner with EWB ognize that the sum of the total of outlet “The brands that have elected to pop- Development, LLC and 25-year veteran retail, in addition to their full-price repre- ulate the first phase understand that the in the outlet industry. In the early days, sentation, will typically be higher overall, proximity will be a great advantage,” says Wagner says, the goal was to not disrupt and outlets can positively contribute to the Wagner. the retail and full-price channel and mere- 50 • SHOPPING CENTER BUSINESS • MARCH 2014 town Long Beach, Calif., a dense and diverse population center with a strong demographic profile. The development is nestled within the area attractions, such as the Long Beach Convention Center, the Aquarium of the Pacific, the historic Queen Mary, the Carnival Cruise line, the ferries to Catalina Island, and all that makes Long Beach a vibrant attraction for more than five million tourists a year. “Converting an existing lifestyle center to an outlet is a daunting task, but our initial store opening of Restoration Hard- Rockvale Outlets, in Lancaster, Pa., is one of the largets outlet centers in ware in May 2013 has been very success- the U.S. The center falls in a highly traveled zone, with more ful, indicating that there is a strong and than 60,000 vehicles passing each day. upscale value customer in the market,” Wagner says. The layout is unusual by outlet stan- “There seems to be a natural tie be- Plans continue for the conversion and dards in that it is streetscape with apart- tween outlet shopping and leisure time,” reface of the center, coupled with a strong ments on top, providing a unique built-in she says. “I believe that there remain a marketing program to promote the new customer base. The access and visibility number of tourism locations in the U.S. positioning. The grand re-opening is ex- are unparalleled, consistent with industry still to be untapped, and the surface has pected to occur mid next year with some norms, and the development is in close only been scratched internationally where tenants opening in the interim. proximity to public transportation with there are thousands of tourism locations the T stop integral to the project. Wagner still in need of an outlet center. The next NEW FRILLS AND THRILLS notes that “it will be very interesting to see wave in international development will The Outlets at Assembly Row rep- how that contributes to the traffic flow.” certainly include a strong tourism loca- resents a new wave in outlet retail, says Proximity to tourist areas and attractions tion component.” Wagner, combining the best elements of is important as well, notes Wagner, and The Outlets at the Pike at Long Beach outlet retail with an in-town experience there are numerous examples of very suc- is an example of a new tourism center. replete with dining and entertainment and cessful centers trading in areas associated The Pike is an existing lifestyle center customers delivered to the door via vari- with tourism and vacation destinations. located at the Rainbow Harbor in down- http://vimeo.com/TsawwassenMills 52 • SHOPPING CENTER BUSINESS • MARCH 2014 NED-23935 PBO Shoping March Ad_CO-2.qxp_Layout 1 2/14/14 11:35 AM Page 1 A rendering of the renovations for Lake Elsinore Outlets in California. Courtesy Athena Property Management and HTH Architects. ous means of transit. The Grand Open- ing will even be unusual, with a series of events commencing in May and continu- ing throughout the summer months to po- sition the new center as part of the fabric of the extended Boston community, as well as attracting tourists. The project also features a high level of So many shoppers entertainment in the form of not only a cinema, but also a Lego Discovery center, looking for an outlet. expected to attract families from through- out the region. Additional components in- clude fine dining that is also expected to Now Palm Beach has its own. draw from throughout the metropolitan area. Over 100 outlet stores including: THE HYBRID CONCEPT Saks Fifth Avenue OFF 5TH Many other non-traditional develop- Calvin Klein ments are combining outlets, traditional retail, and entertainment and dining for a Ann Taylor Factory Store unique outlet experience. Destiny USA in Nine West Outlet Syracuse is a hybrid property that appeals Nautica Factory Store to all members of the family with activi- Come Home to ties ranging from value shopping to the J.Crew | crewcuts Factory world’s largest indoor suspended ropes Banana Republic Factory Store course at WonderWorks. Kenneth Cole Harlingen, TX “The most unique aspect is that the development is all-indoors, something Nike Factory Store no other developer is doing, paired with DKNY 1 of only 3 South the entertainment and full-service dining GAP Factory Store Over 350,000 SF components,” says Schoeneck. Texas cities to top Destiny USA underwent a radical Cole Haan of retail space $1 billion in change in 2012 when it fully rebranded Tommy Hilfiger Company Store built in 2013 Annual Retail from Carousel Center to Destiny USA. Under Armour Sales last year The transition included the opening of a 1.3 million-square-foot expansion with an and more! offering of new venues ranging from great Led all South dining options, including Texas de Bra- Texas cities in zil, The Melting Pot, P.F. Chang’s, The For leasing information commercial Cheesecake Factory, Cantina Laredo and Gordon Biersch, to luxury outlets, includ- New England Development construction in ing Brooks Brothers, Michael Kors, Ar- 2013 mani, Ferragamo and Tod’s. These new 617.965.8700 | nedevelopment.com stores joined an already dynamic mix FFO Real Estate Advisors Looking for investment, expansion or relocation opportunities? of traditional stores like Coach, Apple, Sephora, H&M, Macy’s, Lord & Taylor Call Raudel Garza, CEO at 956.216.5081 410.779.1283 | fforealty.com and more. It took nearly 10 years of development and five years of construction to bring Destiny USA to fruition.