Outlet shopping center visits are up as two Maryland projects move forward

If there's one thing American consumers can't resist, it's a bargain, so as shopping malls struggle to stay relevant in the internet age of convenience and choice, outlet centers offering popular sports and fashion apparel name brands are gaining ground.

Visits to outlet centers, which continue to outpace mall traffic, hit a three-year high this summer, led by millennial shoppers, according to a recent survey released by Cowen and Co.

"The channel is still relevant in general to the consumer," said John Kernan, a senior research analyst at Cowen. "Outlets probably represent more value to the consumer."

The findings come as two new outlet centers are poised to sprout in Maryland, closer to the state's major metropolitan centers of Baltimore and the Washington suburbs than other outlet centers.

Simon Property Group will open the 90-store Clarksburg Premium Outlets this fall off Interstate 270 in Clarksburg, and Paragon Outlet Partners is ready to move forward with a controversial 100-store center in White Marsh.

"We think our industry provides a congregation of main brand product and value pricing," said R. Kelvin Antill, development partner with Baltimore-based Paragon. "That seems to always be in favor."

Despite opposition to its project, Paragon has preleased a "substantial" portion of its proposed open-air center, Antill said.

Since unveiling its outlet plans, the firm has faced fierce resistance from community members and owners of nearby White Marsh Mall, which organized a successful petition drive to put a zoning law allowing the center before voters as a referendum question.

Yet in the recently completed Baltimore County rezoning cycle, the County Council placed the property in a zone that permits outlet centers, paving the way for the controversial project to move forward regardless of the vote. Still Paragon is gearing up for a campaign to urge approval of the referendum question and has not set a construction start date, Antill said.

Outlet centers have become more popular partly because more of them exist, said Tom McGee, president and CEO of the International Council of Shopping Centers. Once built primarily in less-populated areas to prevent competition with brands' full-price stores, outlets are now being built closer to more densely populated areas.

About 60 new outlet centers totaling 23.5 million square feet have opened in the past 12 years, McGee said, bringing the current total to 202. This year, 24 outlet centers are set to open in 14 states and about 19 more are planned through 2018, according to the shopping center group.

Mall development, meanwhile, has withered as consumers turned to internet sites such as Amazon and new so-called "lifestyle" retail centers like The Avenue at White Marsh. While upscale malls such as Towson Town Center and The Mall in Columbia continue to thrive, other malls are struggling to retain shoppers, sales and stores. Some have closed.

Malls largely reflect the health of their anchors, and many large retailers such as Macy's, Sears, JCPenney and Kmart have lost sales and have closed or plan to shutter stores.

"Those anchors are the ones responsible for the majority of traffic to the centers," said Mark Millman, president and CEO of Millman Search Group, a retail consulting and executive search firm. "When they don't exist, you don't have a need to go to the mall.

The decline has been driven largely by the growth of online shopping, which makes it easy to shop at home and have your purchase delivered the next day, Millman said.

Yet sales continue to rise at outlets, which saw sales per square foot reach $546 last year, up from $532 two years earlier, according to the shopping centers council.

"These centers bring a unique tenant mix of retailers, and typically offer iterations of retail stores that cannot be found elsewhere," McGee said.

Sports brands Nike, Under Armour and Adidas have emerged as the biggest drivers of overall outlet traffic, especially among men, Cowen's August report found.

The Clarksburg Premium Outlets is expected to open close to fully occupied, said Stephen J. Yalof, CEO of Simon's Premium Outlets division, with retailers such as Coach, Hugo Boss, Saks Fifth Avenue Off 5th, Tory Burch, Under Armour, Nike Factory Store, A/X Armani Exchange and Michael Kors.

Indianapolis-based Simon, the nation's largest factory outlet center owner, has opened Premium Outlet malls in Tampa, Fla.; Tucson, Ariz.; Columbus, Ohio; and Blackwood, N.J., since last year.

"The outlet models cater to the value-conscious consumer, and all consumers are value-conscious," Yalof said.

Around Baltimore, Arundel Mills mall offers the closest thing to outlet-style shopping with its mix of mainline and outlet stores. There also are outlet centers in Hagerstown, National Harbor, Ocean City, Perryville and Queenstown, as well as in Hershey and Lancaster in Pennsylvania.

Whitney Pacheco, 28, a flight attendant from New York, found her way to Arundel Mills last week during a layover at Baltimore-Washington International Thurgood Marshall Airport, drawn by the promise of discounts off department store prices. But the shopping center outing, where she and fellow flight attendant Jennylee Sosa bought shoes at Steve Madden, was not typical. Both said they mostly shop online.

"I don't have time to go to a store," Pacheco said.

Factory outlet stores can be a "profitable" contributor to retailers' "direct-to-consumer" channel, which typically includes online sales as well as branded and outlet stores, Cowen's Aug. 22 report said.

For retailers, the centers can help boost brand exposure they may lose when wholesale customers, such as department stores, close locations.

The right location can make all the difference in an outlet center's success, Millman said. For example, the proposed Paragon White Marsh mall likely will benefit from a spot along the heavily traveled Interstate 95 corridor and from a lack of major outlet centers nearby, he said.

Paragon's developer says the center is tapping into a trend in which consumers want to spend more time outdoors — including shopping at open-air outlets.

"We clearly are a retail operation, but we're also an entertainment operation," Antill said. "That's always been one of the reasons for outlets' success, main brands and value pricing. … It's that attraction of finding that deep discount."

For its part, the developer of the Clarksburg outlet center is touting a "luxury collection" of retailers and amenities such as eateries and indoor and outdoor gathering spots.

"We really tend to manage our shopping centers to have more of a fashion component, and with those fashion retailers come fashion consumers," Yalof said. "They know the brand lineup is going to be elevated."

The new outlets are looking for shoppers like Cornelius Griggs, a pharmaceutical manager who lives in Ellicott City and occasionally travels to outlets in Queenstown, Hagerstown and Leesburg, Va., drawn by brands such as Saks Fifth Avenue, Nordstrom and Brooks Brothers.

"You get high-end products at reasonable prices," said Griggs, 55, who shopped at Arundel Mills twice last week, once for clothes for his granddaughter and a second time for sneakers and shorts for himself at Nike. "I like the variety of stores under one roof."

This story has been updated to reflect the accurate number of outlet centers scheduled to open through 2018, according to the ICSC.

lorraine.mirabella@baltsun.com

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