Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/863214
44 S C T / S E P T E M B E R 2 0 1 7 new, metro-oriented markets — remains appealing to the firm today, says Michael Barelli, a company vice president who is the Des Moines outlet project manager. Landlords are also redeveloping and expanding exist- ing projects to meet retailer demand. Simon was finishing redevelopments and expansions of outlets in Central Valley, N.Y., and suburban Dallas over the summer. And at press time Tanger was anticipating the August completion of renovations to its Myrtle Beach, S.C., property, as well as the opening of the 123,000-square-foot expansion of its Lancaster, Pa., project, early this month. The firm is also spending some $24.3 million to remerchan- dise six outlet centers. CEO Steven B. Tanger acknowledges the challeng- ing environment, but also notes that retailers still covet quality space. "We are taking advantage of this demand to retenant un- derperforming retailers with higher-volume, more-popular brands," said Tanger. The firm has invested some $300 million to upgrade, renovate and expand its centers over the past decade. "This redevelopment strategy should strengthen our future sales and cash flow." Few outlet centers have traded hands recently, but capitalization rates indicate healthy investment demand for higher-tier proper- ties — ranging from 4 percent for class-A-plus properties, to 7.1 per- cent for 'B' properties, according to Green Street Advisors, a real estate research firm that began covering the sector in October of 2016. This is roughly in line with cap rates for regional malls along the same quality spectrum, Green Street says. It also justifies the optimism among industry insiders. "It's obvious that a typical 350,000-to-400,000-square-foot racetrack outlet center is difficult to develop and lease in today's re- tail climate," said David Hinkle, an Outlet Resource Group principal. "But we also believe that when the dust settles, the outlet sector will be one of the leaders in brick-and- mortar retail." n have risen pretty significantly, which adds to the stress." Nevertheless, industry professionals remain bullish on the format's upside. Boston-based New England Develop- ment opened its first outlet center in 2014, in Palm Beach, Fla., after years of developing neighborhood retail, mixed- use, office, hotels and other properties. The Outlets of Des Moines will be the company's fifth outlet. And what New England Development found appealing in 2014 — namely, the opportunities to provide outlet retailers with space in outlets