Shopping Center Business

MAY 2016

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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OUTLETS 196 • SHOPPING CENTER BUSINESS • May 2016 geographically distant outlet mall is being challenged as more outlet developments are being built closer to conventional re- tail centers. Tanger Outlets at National Harbor near Washington, D.C., and Hori- zon Group Properties' Outlet Shoppes of Atlanta are clear examples of this trend. Recent history tells us that a strategy like this can raise concerns about the potential cannibalization of nearby full-price stores, but we will not know the true impact — positive or negative — until the outlet stores and centers have stabilized. There are other notable changes with- in the outlets themselves. Outlet retailers recognize that consumers are looking for an experience, and many outlets have re- sponded by adapting to that experiential preference. The evolution of increasingly more sophisticated build-outs within the outlet sector is one part of that adapta- tion. Today's outlets look more like tra- ditional retail destinations, and consum- ers' shopping experiences are similar to what they would get in traditional retail stores. Owners and landlords continue to make capital investments in older, more traditionally located outlet centers, too. These centers are like your favorite pair of jeans; shoppers utilize them because they are comfortable with them and crave their favorite brands consistently. This re- lationship is fostered by familiarity with the location and shopping experience. Other outlets have taken the experien- tial factor to a new level, presenting out- let retail as part of a strong mix of uses. Assembly Row in Boston is an example. Located just outside of downtown, the 45-acre mixed-use project presents a diverse array of outlet retail options in concert with appealing dining and en- tertainment components, including an AMC theater anchor and more than a dozen restaurants. A significant residen- tial component, an urban setting, and a nearby MBTA Orange line transit station make this Federal Realty Investment Trust project a potential game-changer for both the region and outlets as a whole. Outlet retailers are also moving success- fully into secondary and tertiary markets like Gainesville, Flor- ida, and Bridgeport, Connecticut, where noteworthy mixed- use projects Cele- bration Pointe and Steelpointe Harbor, respectively, are both under construction. CONVERSATIONS SPELL CREATIVITY For the outlet sec- tor, the name of the game today is creativ- ity. More and more, outlet retail contin- ues to find its way into conventional retail environments and existing projects. For centers that are not evolving or are tough to tenant with traditional retail, the addition of an outlet retail component — perhaps in concert with another demand driver such as din- ing or entertainment — is an increasingly attractive proposition. Repositioning and redeveloping enclosed malls with outlet retail can also be an effective strategy — although product-overlap challenges between a manufacturers outlet concept and a large department store anchor need to be addressed. It is remarkable how active the outlet market has been. At Avison Young, we spend a significant amount of time con- ducting feasibility studies for property owners and investors trying to integrate outlet retail as a way to repurpose, revital- ize or re-tenant their assets. Conventional retail owners and investors are increasing- ly willing to explore outlet options or mix outlet with entertainment, hospitality and even office and residential to add extra horsepower to the shopping experience and, ultimately, revenue generation. On the outlet side, retailers are similarly en- thusiastic and open to capitalizing on new opportunities to expand their concepts. What is particularly exciting about these conversations is the willingness of retailers and real estate professionals to be creative. All parties are genuinely interested in finding innovative ways to make outlets work. It is clear that the outlet playbook has changed. In today's evolving retail marketplace, it pays to be bold, to think outside the "big" box and to look at things from different angles to find a solution. The bottom line is that there are very real opportunities out there for outlet retailers and commercial real es- tate professionals to be creative with new markets, new locations and new project types. SCB Tonya Creekmore is a principal with Avison Young where she is a member of the firm's national retail services group with an emphasis in outlet retail. Based in Atlanta, she has more than 20 years of experience in the retail real estate industry.

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