Firms back single site for outlets

Simon, Tanger joining in Steele Creek mall; Stallings plan dropped

news@lakewyliepilot.comDecember 3, 2012 

  • Simon and Tanger area holdings • Simon owns and operates Concord Mills (1.3 million square feet), SouthPark mall (1.6 million square feet) and Gaffney Premium Outlets (359,658 square feet). • Tanger owns and operates outlet centers in Mebane (318,910 square feet) and Blowing Rock (104,154 square feet).

There will be no outlet mall war in Charlotte. In a twist Wednesday evening, rivals Tanger Factory Outlet Centers and Simon Property Group announced they will team up to build one project in the Steele Creek area.

The move means Indianapolis-based Simon won’t build its announced 400,000-square-foot project in Stallings. Local officials there had said the project, at Interstate 485 and Idlewild Road, would have been the biggest retail development to date in the Union County town, and would have provided $175,000 to $200,000 in property and sales taxes.

Instead, the surviving mall project will be the one originally called Tanger Outlets Charlotte, at the I-485 interchange with Steele Creek Road. The mall will now be named Charlotte Premium Outlets, and will be 350,000 square feet with the option to expand to 400,000.

The outlet center is expected to have more than 90 retailers when it opens in the spring of 2014. Tanger has said it estimates the cost of the Steele Creek project at $80 million, and that it will employ more than 900 full- and part-time workers when it opens, in addition to 300 construction jobs.

A hearing on the proposed rezoning for the 82-acre parcel is set for Jan. 22.

Linda Humphers, editor in chief of the outlet trade magazine Value Retail News, said joint ventures between developers have become more common, but they’re typically between a traditional mall and an outlet mall company. “It’s very unusual to see two heavy competitors team up,” she said.

By joining forces, she said, Simon and Tanger ensure that there won’t be a damaging contest between them in the Charlotte area, while also sparing retailers the difficult decision of where to locate their stores. Since the outlet mall projects were so close – only about 22 miles apart – many retailers would have had to choose one or the other mall.

“The retailers have always felt like it’s very difficult for them to make the right site selection,” Humphers said. In addition to choosing the better site, they would have also had to factor in their relationships with Simon and Tanger and which mall company would be more upset if they chose the other.

“It’s ‘Whose birthday party do I go to?’ ” Humphers said. “It eliminates all that jockeying.”

The parcel being developed for the mall is bordered by Steele Creek Road, Shopton Road, Dixie River Road and I-485. The land is owned by Steele Creek Limited Partnership, an entity created by Sarah Belk Gambrell. She is a member of the Belk family and a major shareholder of the privately held department store company, Belk Inc.

Disappointment in Stallings

Simon had planned to build its Stallings mall as a joint venture with Baltimore-based Paragon Outlets, a relatively small company with a portfolio of three malls. Paragon executives couldn’t be reached Wednesday evening.

Stallings advocates were not happy to hear of the joint venture between Simon and Greensboro-based Tanger.

“I’m pretty disappointed,” said Sharon Rosche, president of the Union County Chamber of Commerce. “It really would have been a good opportunity to enhance our tax base.”

She said the outlet mall would have enhanced shopping options for Union County residents as well, since the relatively small Monroe Mall is the only major shopping center in the county.

Simon is the world’s largest commercial landlord, while Tanger is the nation’s largest outlet-only retail mall company. It’s not the first time the two companies have worked together to develop an outlet mall as a partnership. They recently opened a mall outside of Houston as a joint venture, after teaming up against a third rival mall company, Taubman.

Simon and Tanger also announced Wednesday that they’ll join forces to build a 350,000-square-foot outlet center in Columbus, Ohio, to be called Tanger Outlets.

“Our plans to enter into a joint venture with Simon in Charlotte and Columbus are strategic in delivering world class outlet centers,” CEO Steven Tanger said in a statement.

John Klein, president of Simon’s Premium Outlets, said in a statement, “Both of these projects provide the most compelling locations for our merchants and our customers and will best serve the Charlotte and Columbus communities.”

Firms to share duties

The companies said they will split their duties in Charlotte. Tanger will develop the site and supervise construction, while Simon will manage the mall and provide marketing services. The companies will split leasing.

From the beginning, when the Steele Creek and Stallings projects were announced within two days last month, executives and analysts speculated that only one would be built.

Analysts and industry-watchers generally agreed that Charlotte could support only one outlet center.

They also said Simon risked cannibalizing sales from Concord Mills with its project.

The heads of both companies admitted only one project might be completed in the end. Simon CEO David Simon told analysts so point-blank during a conference call.

“Yes, at the end of the day, my guess is only one will get built there,” Simon said.

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