Outlet execs celebrate robust growth

SOURCE: SCT NEWSWIRE - ICSC.ORG

There is plenty to celebrate, executives attending the Value Retail News Fall Outlet Leasing and Marketing Convention were reminded Monday. While most sectors have contended with modest growth since the recession, the outlet center sector is on fire.

Since 2009, sales generated at the 205 outlet centers in North America have increased by $7.7 billion to $27.6 billion, representing a 28 percent increase in just four years, noted Michael P. Kercheval, president and CEO of ICSC.

“No other retail sector can say that the recession of 2009 was a good thing,” he told the gathering in East Rutherford, New Jersey. “But it opened the eyes of the American consumer at a time when outlets were strategically and analytically ready for expansion.”

Outlet shopping centers were first opened in the 1970s, and today some 15 million shoppers visit them every week. “We are all optimistic about outlet retailing; who couldn’t be?,” Kercheval said. “Since 2006, 39 outlet centers have opened in North America. In contrast, there has only been one traditional mall that has opened in that same period.”

This year alone the outlet industry added 5.4 million square feet of gross leasable area in North America, bringing the industry total to 77.3 million square feet. That new GLA came from nine phase 1 outlet centers and four traditional centers completing their conversion to outlet tenancy, as well as expansions to nine existing centers. Planned for 2014 are 11 phase 1 outlet centers. Eight will open in the U.S. and three in Canada.

“Outlets are a growth vehicle even in unprecedentedly difficult macroeconomic times,” Kercheval said. “And outlet center occupancy stands at better than 95 percent.” Little wonder, then, that conventional mall developers are getting into the outlet center business. Those that have done so include CBL, Taubman, Macerich, New England Development, Federal Realty, Ben Carter, PREIT and Rockefeller Group.

On the retail front, more than 150 outlet retailers told VRN they would expand their chains next year, adding more than 1,200 new outlet units.

The new joint venture between Simon Property Group and McArthurGlen Group will mean that even more brands will be criss-crossing the Atlantic to open outlet stores in Europe and North America.

The convention concludes Tuesday.