Shopping Centers Today

SEP 2017

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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42 S C T / S E P T E M B E R 2 0 1 7 CLOSER TO TOWN New England Development and Simon both targeted sizable metro areas for their outlet center projects this year, though in two distinctly different regions. New England Development is putting the final touches on its Outlets of Des Moines, a 300,000-square-foot center set to open in Altoona, Iowa, in October, and Simon opened its latest outlet property, Norfolk (Va.) Premium Outlets, in June. The Des Moines center had 24 tenants signed on as of early August, among them Asics, Levi's Outlet Store, Tommy Hilfiger and VF Outlet. Many of the retailers are new to Iowa, says Michael Barelli, a New England Development vice president and the Des Moines proj- ect's manager. The company plans to announce additional tenants and also to introduce some enter- tainment-oriented technology for the center visitors. A metro location and the fact that the nearest outlet center was 80 miles away were among the im- portant market dynamics, and the project is near a Bass Pro Shops Outdoor World, an amusement park and several other tourist enter- tainment venues. Close proximity to downtown Des Moines with its steady growth was enticing to the developer too. "It's definitely a metro area that, as we say, 'punch- es above its weight,'" Barelli said. "Incomes are above the national average, and the cost of living is below the national average. That's a great combination." Meanwhile, Simon's 332,000-square-foot Norfolk Pre- mium Outlets includes a Banana Republic Factory, a Calvin Klein, an Old Navy and a North Face, among others, and additional openings are expected there. Si- mon said in a published statement that the village-style center boasts such community amenities as a boardwalk, a walking trail around nearby Lake Wright and a water- front gazebo. — JG These five plus the three openings of 2016 represent a significant pullback in number from recent years. By the end of this year, the total number of outlet centers will be about 220, up from 174 in 2012. But demand drivers continue to be in evidence, despite the vigilant atmosphere. Unlike the past, when many outlets were built in far-flung locations, developers continue to gravitate toward larger population cen- ters. They are still targeting tourist destinations too. Observers anticipate that outlet centers, like other retail properties, will be exploring food-and-beverage and other entertainment-ori- ented options as traffic drivers. "There has been a lot of outlet development in the last eight years, and it has been a lot to absorb, given that it's such a small universe," said Lisa Wagner, a principal at The Outlet Resource Group, a Chicago-based consulting firm that also invests in these properties. "We're at a point of re- set and are taking stock of these cookie-cutter, racetrack-de- signed centers that have worked well for a long time but that are becoming more difficult to execute." Among the development adjustments to date are outlet centers that max out at about 325,000 square feet, ver- sus the more traditional 350,000 to 400,000 square feet, says Gary Skoien, chairman, president and CEO of Norton Shores, Mich.–based Horizon Group Properties. In anoth- er break from the past, notes Skoien, developers are more inclined to build two-story projects, particularly at locations inside or near metro areas. But the practice whereby devel- opers have customarily granted retail tenants favorable leases to make up for a poor location raises difficulties, he says. "We've been fighting that with retailers who got great deals in basically crummy properties and are expecting them else- where," Skoien said. "At the same time, construction costs outlets Simon's Norfolk (Va.) Premium Outlets opened in June

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