Are outlet centers ready to resume growth?
Tanger Outlets and Simon Property Group have both recently renewed investments in building outlet centers as inflation has consumers on the hunt for savings.
Tanger in March broke ground on a new development, a 290,000-square-foot center that will represent Nashville’s first open-air outlet shopping center. It is the first such development for the company in six years.
“Tanger Outlets Nashville will serve as an experience hub, immersing guests in all that Tanger represents — from best-in-class brands to partnerships with local causes, to celebrating community and culture in an inviting environment,” said Stephen Yalof, Tanger’s CEO, in a statement. “The center will also be steeped in Nashville flavor, with special attention to iconic entertainment and local dining favorites.”
Simon, in June, announced it was beginning construction on a Nashville outlet in 2023, resuming outlet projects in Los Angeles and Tulsa and expanding its New York State flagship, Woodbury Commons.
Traffic to outlet malls has reportedly recovered after being affected by a significant drop-off in tourist dollars during the earlier stages of the pandemic. Travel restrictions for most foreign tourists were only lifted in November 2021.
Outlet centers still face pre-pandemic challenges, including an over-reliance on apparel tenants. Adding more digitally-native and international retailers is supporting diversification efforts. Like shopping malls, developers are adding more experiential and dining concepts to drive foot traffic.
Although still offering a place to periodically clear older inventory, outlet malls are increasingly being relied on to drive customer acquisition and increase brand awareness.
In announcing plans last week to open Athleta’s first two outlet stores, Mary Beth Laughton, Athleta’s CEO, said in a statement, “Athleta is investing in new access points to reach new customers, deliver new value to customers who already know and love our brand, and expand our community of empowered women and girls.”
Escalating gas prices could create headwinds in the near term. Speaking to Wealth Management Real Estate, however, Tanger’s Mr. Yalof said he believes discount shoppers are more impacted by inflation. He said outlet center shoppers are “discerning, aspirational and looking to get the brands they love at a great everyday value.”
- Tanger Outlets Nashville Breaks Ground – Tanger Factory Outlet Centers
- Simon Announces Multiple New Developments – Simon Property Group
- Simon Celebrates First-Ever National Outlet Shopping Day – Simon Property Group/PRNewswire
- Athleta Unveils First Look at New Outlet Stores – Gap Inc.
- Outlet Center Development Wakes Up After a Long Break – Wealth Management Real Estate
- Are outlet centers immune to the ills of regional malls? – RetailWire
DISCUSSION QUESTIONS: What’s your outlook for outlet centers? What changes may be necessary to make outlet properties more appealing for brand tenants?