Outlet center development surging

Developers are on track to open 11 outlet centers totaling more than 3.8 million square feet in North America in 2014, according to SCT’s sister publication Value Retail News (VRN). 

In October alone, Tanger Outlets and RioCan REIT will open the 350,999-square-foot Tanger Outlets Ottawa, in Canada; Simon and Calloway REIT will launch the 350,000-square-foot Premium Outlets Montréal, in Canada; and Shamrock Group will open its 132,000-square-foot Outlets at the Border, near San Diego. And it’s not all about new centers. Existing centers are expanding in response to tenant demand for space. 2014 will see 11 additions to existing centers. These expansions, which will average a healthy 76,473 square feet, represent a total of 841,000 square feet of new outlet space. Four of the expansions are 120,000 square feet or larger and four are under 30,000 square feet. Tanger Outlets is 2014’s biggest expander with four added phases totaling 268,000 square feet. For 2015 and beyond, VRN reports 14 expansions totaling 1.7 million square feet are due. 

The outlet concept is obviosuly as hot with developers and investors as it is with consumers, said ICSC president and CEO Michael P. Kercheval, at the VRN Fall Outlet Leasing & Marketing Convention, in Secaucus, N.J., in September. Sales at North American outlet centers continue to outperform traditional malls, he pointed out. “Sales today at U.S. malls are almost $480 per square foot,” he said. “But look at the outlet sector. The 205 outlet centers in North America are posting $532 per square foot. In fact, since 2009, outlet industry sales have more than doubled to $42 billion in 2013 from $19.9 billion in 2009.”