The Evolving Landscape of U.S. Outlet Center Real Estate

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Exploring the current state and development of U.S. outlet centers with insights into key players, growth patterns, and the shift from lifestyle centers. The journey from pre-recession dynamics to post-recession investment strategies showcases the rise of outlet centers as significant retail hubs. Discover the reasons behind the surge in outlet center construction and the notable centers across different regions.

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THE STATE OF U.S. OUTLET CENTER REAL ESTATE

WHERE ARE WE TODAY 241 U.S. Outlet Centers (give or take) Roughly 80 different owners Large owners are Simon, Tanger, Horizon, Craig Realty, The Was Group, EWB Development, AWE Talisman, CBL, Macerich, Taubman, Glimcher 30 New Centers over past 4 Years (15% growth) 10 New Centers in 2014; 66 Centers in Development Dynamic and Changing 2

HOW DID WE GET HERE Pre-Recession 2000 s Simon bought Chelsea in 2004 Still, Lifestyle Centers were really the only thing that mattered in the mall development world 1 to 3 new outlet centers were being built a year Primarily focused on tourist markets or on periphery of major metros Centers were built in places like Atlantic City, Las Vegas, Charleston, Seattle, El Paso, McAllen, Wisconsin Dells, Chicago, Philadelphia etc. 3

HOW DID WE GET HERE Heart of Recession (2008-2009) Outlet Centers Hold Up (what Lifestyle Center?) 2008 Simon Mall Portfolio (-4.3%); 2008 Premium Outlet Portfolio +1.8% 2009 Simon Mall Portfolio (-1.8%) 2009 Premium Outlet Portfolio +5.8% Post-Recession (2010+) Every Developer: We Better Get In This Outlet Game! 4

HOW DID WE GET HERE 2006 to 2009: Proposed Lifestyle Centers (2009 Began Tracking Outlet Centers) 350 Proposed Lifestyle Centers 300 RECESSION 250 200 150 100 50 0 5

HOW DID WE GET HERE 2010 to 2014: Proposed Lifestyle Centers and Outlet Centers 80 Proposed Lifestyle Centers Proposed Outlet Centers 70 60 50 40 30 20 10 0 6

HOW DID WE GET HERE 28 New Outlet Centers in Past 3 Years Newly Built Outlet Centers By Year 11 10 9 8 7 6 5 4 3 2 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 7

HOW DID WE GET HERE Why Build? Just Put Outlet In The Name Great Lakes Crossing Block at Orange The Legends Village West Legends at Sparks Marina Jersey Gardens SuperMall of the Great NW Louisiana Boardwalk The Pike at Long Beach St. Louis Mills Great Lakes Crossing Outlets The Outlets at Orange Legends Outlets Kansas City Outlets at Sparks Outlet Collection Jersey Gardens Outlet Collection Seattle Outlets at Louisiana Boardwalk Outlets at The Pike St Louis Outlet Mall 8

WHAT IS DRIVING OUTLET MALLS TO CERTAIN MARKETS? 1. Which Markets Don t Have an Outlet Yet? 2. Which Markets Are Still Operating on the Old Model? 3. Which Markets Are Big Enough to Support Multiple Outlet Centers? WHAT S LEFT? 9

WHAT IS DRIVING OUTLET MALL LOCATIONS 1. Which Markets Don t Have an Outlet Yet? St. Louis Oklahoma City Louisville Birmingham Jackson, MS Syracuse, NY Recent Examples: Coming Soon? Are We Getting Too Small? Tucson Tulsa Little Rock Anchorage Grand Rapids Savannah Corpus Christi Des Moines Memphis Richmond Asheville Springfield, IL Coeur d Alene Augusta, GA Tyler, TX Examples: 10

WHAT IS DRIVING OUTLET MALL LOCATIONS 1. Which Markets have an Outlet but not close to town (Old Model)? Houston Charlotte Cincinnati Pittsburgh Philadelphia Twin Cities Atlanta Rosemont National Harbor (DC) Recent Examples: Coming Soon? What is too far away? Hartford Columbus Indianapolis Detroit Sacramento New York San Francisco Houston Miami Examples: 11

WHAT IS DRIVING OUTLET MALL LOCATIONS 1. Which Markets Can Support Multiple Outlet Centers? Houston (2nd center) DC (2nd center) Dallas (2nd center) Phoenix (2nd & 3rd center) Boston (2nd & 3rd center) Atlanta (2nd center) Recent Examples: Coming Soon? How Close Can They Locate? Examples: Houston (3rd center) DC (3rd center) Dallas (3rd center) Denver (2nd center) Tampa (2nd center) Seattle (2nd center) San Francisco, NY, LA, etc. 12

WHERE DO WE GO FROM HERE 6 to 10 Outlet Centers built in the U.S. in each of next 3 to 4 Years Smaller Markets and Closer Spacing Sensitivity is dead Outlet centers can go anywhere Driven by retailer demand The principlesof good real estate still apply (can t just go anywhere) 13

TWO GAME CHANGING CENTERS Fashion Outlets of Chicago at Rosemont Regional Mall Location In-board of existing outlet centers 10 miles in-board of Woodfield Mall; 8 miles from Old Orchard Mall Indoor Outlet Center Interior design/seating/finishes similar to Regional Mall standards 14

TWO GAME CHANGING CENTERS The Outlets at Assembly Row Mixed-Use Project (includes office and apartments above retail). 2 miles from downtown Boston - located on the T Line Includes entertainment AMC Theater, Lego Discovery Center Includes Restaurants Earl s Kitchen, Legal Seafood, etc. Outlet Lifestyle Center 15

TWO POTENTIAL GAME CHANGERS On-Line Outlet Product Growing number of retailers selling their outlet product on-line through their own websites In addition to selling through Amazon and flash-sale sites TJ Maxx on-line is seeing strong sales growth 16

TWO POTENTIAL GAME CHANGERS Outlet Retailers are Locating Outside of Outlet Centers Street Retail Value Oriented Strip- Centers 155 Nordstrom Rack Locations 1,100 TJ Maxx and 900 Marshalls Locations 1,100 Ross Stores NIKE Factory Store in Strip Center in Louisville, KY B Malls J Crew Factory Store at Plymouth Meeting Mall 17

TWO POTENTIAL GAME CHANGERS Outlet Retailers with Street and Strip Center sites GAP Factory Store Locations in NYC (No Traditional Outlet Malls) 18