Retail Outlet Malls are Outpacing Growth Projections

Retail commercial real estate, as a whole, is slowly recuperating, but outlet malls are sweeping the nation. These shopping centers are a destination for tourists and even residents of the community looking for value, style and convenience.

Consumers aren’t the only ones calling for new development. Retailers are also vying for more opportunities. Value Retail News has added 60 new tenants to their roster of outlet stores in just the last year.

According to National Real Estate Investor, “Retailers see outlet centers as a viable, profitable distribution channel. Those that already have outlet stores are looking to open more, and new retailers are committing to outlet center stores.”

What brought about the outlet mall fever?

During the recession, high-end retailers needed to find a way to broaden their diminishing customer base. Luxury names such as Saks Fifth Avenue and Neiman Marcus opened up outlet concepts. In fact, now 60% of all Saks stores are outlets.

“Development activity is stronger than it’s ever been,” says Gary J. Skoien, CEO of Horizon Group Properties, an outlet center developer and owner. “Retailers want to be in outlet centers because it’s an extremely profitable channel for them. Shoppers love a bargain.”

Since the recession, new outlet malls have popped up at a rate of seven to ten new developments a year*. Last year, we saw two new outlet malls open within miles of each other in St. Louis, and eight more across the nations, totaling 3.3 million sq. ft.

Because of this surge of development, outlet malls are differentiating themselves from regular malls with more upscale design and sophisticated amenities, even dog-friendly complexes. Consumers are going to enjoy shopping, as well as dining and leisure.

If you’re interested in talking further about trends in retail commercial real estate, reach out to our Retail Brokerage Team.

*According to Value Retail News 2014 Outlet Tenant Report