2014 Outlet Tenant Report

Transcription

1 Planned outlet chains Centers 2014 Outlet Tenant Report Five dozen new chains, higher sales psf and higher rents are just some of the highlights from VRN s latest research on outlet tenancy. By LINDA HUMPHERS Editor in Chief/Director Bloomingdale s Outlet Who s filling the space? 26 big-footed chains Retailer Name No. of stores Store Size [PSF] Average Saks Fifth Avenue Off 5 th 66 28,000 Last Call by Neiman Marcus 35 27,000 Bloomingdale s Outlet 10 25,000 Sierra Trading Post 4 25,000 VF Outlet 46 25,000 Beall s Outlet/Burke s Outlet 15 20,000 Pottery Barn/Pottery Barn Kids Outlets 7 20,000 Old Navy Outlet 84 16,000 Crate & Barrel 9 15,000 Nike Factory Store ,000 Polo Ralph Lauren/Ralph Lauren/ ,000 Ralph Lauren Home/Polo Ralph Lauren Children Factory Stores L.L. Bean Factory Store 13 13,000 Restoration Hardware 11 12,000 Gap Outlet ,000 Lands End Inlets 15 10,000 Talbots Outlet 53 10,000 Columbia Sportswear Company Factory Outlet 56 8,500 Tommy Hilfiger/Kids 155 8,500 Reebok/Rockport 112 8,000 Coach Factory Store/Coach Men s Factory Store 200 8,000 Banana Republic Factory Stores 128 8,000 Abercrombie & Fitch Outlet/ 14 7,900 Abercrombie Outlet/Kids Dressbarn/Dressbarn Woman 205 7,500 Coleman Factory Outlet 8 7,500 Calvin Klein 107 7,500 North Face Outlet 12 7,500 All the news and attention on the outlet industry during the past few years has focused on the number of centers that have opened. No one can deny the merit of that spotlight: 40 outlet centers have opened since 2006 while one regional mall opened during the same period. But lost in all the acclaim for outlet-center openings is the fact that a big bundle of new retailers are joining the outlettenant line-up. In the last year, VRN has added more than 60 new tenants operating nearly 300 stores to the outlet industry database. The database derives from information collected for the VRN s Value Retail Directory. These five dozen new tenants (some aren t new to the industry but they are new or returning to VRN s database) operate chains that average fewer than four stores. Some of the chains, such as Jimmy Choo, Anne Fontaine, Roberto Cavalli, and others, operate just one or two stores. And they might never open more than eight or 10. Outlet Chain Highlights U.S. Outlet Chains, As of Feb. 7, 2014 Total No. of outlet chains: 368 Total No. of outlet stores: 12,796 stores Average outlet chain size: 35 stores Average chain rent psf: $33.72 per 29 responding chains Average chain sales psf: $ per 46 responding chains Average store size: 4,220 sf per 239 responding chains Average discount: 38 percent per 143 responding chains U.S. Outlet Chain Expansion through 2015: n 158 chains operating 8,969 stores said they planned to expand n 59 of the chains said they would open a total 1,843 stores for an average of 6 new stores per chain n 36 chains said they would add up to 20 new stores n 107 of the chains with expansion plans didn t provide specifics U.S. Outlet Chain Parent companies n 299 parent companies operate the 368 outlet chains U.S. Multi-Chain Outlet Companies n 40 parent companies operate more than one outlet concept; they operate 116 outlet chains totaling 6,523 stores n 13 percent of the parent companies operate 32 percent of the chains and 51 percent of the stores. 10 VALUE RETAIL NEWS March 2014

2 Since the average outlet chain is 35 stores, we wondered if an influx of small chains would be good for the industry. It can t be a bad thing, said Arthur Weiner, chairman of AWE Talisman. His company and Macerich opened Fashion Outlets of Chicago with a purposely diverse, call it unique, outlet line-up in August More new tenants expand the offering, he said. More new tenants keep the center interesting, and that s always a good thing. We were looking to give the customer something different, so I think the brands found us as much as we found them. Weiner said outlets have become essential to brands global strategies. All successful retail brands have considerably more retail stores across the globe than they once did, and that s not just in America, he said. The brands need outlets for disposal, made-foroutlet, piece goods, no matter what, they need outlets. And outlet centers have flourished because of that. There is just a small handful of brands that still don t have outlets. Outlet tenancy has a habit of evolving quickly, which is a point in the industry s favor. Standing still lets the world fly by. Most industry veterans remember when department stores were a major dampening force on outlet development. But brands wanted to control their own destinies, so they figured out how to have both wholesale accounts and outlet chains. Department stores entrenched posture backfired to some degree and mall anchors found their business dwindling. Time heals all wounds, it s said, and today, four department store brands Bloomingdale s, Lord & Taylor, Neiman-Marcus and Saks operate more than 100 thriving outlet-concept stores in outlet centers. VRN s 2014 Outlet Tenant Report, based on information available as of Feb. 7, 2014, shows that the number of chains has risen to 368 from 322 at the end of The number of stores, though, has dropped to 12,796 from 14,793 at the end of We found that 16 chains operating 339 stores had closed since our last report and that 87 chains were operating 662 fewer stores than they had in Among the chains that reduced Kate Spade Outlet (Continued on page 12) Helzberg Diamonds Outlet 2014 Outlet Chain Merchandise Categories Merchandise Category No. of chains No. of stores Apparel and Shoes 244 9,451 Apparel - Children Apparel - Family 37 1,850 Apparel - Men Apparel - Men & Women 51 1,591 Apparel - Women 52 1,703 Athletic Apparel/Footwear/Sporting Goods Lingerie/Underwear/Hosiery Department Store Shoes 39 1,835 Accessories 50 1,576 Accessories Handbags/Luggage/Leather Goods Jewelry Home Housewares/Tableware/Kitchenware Home Décor/Furnishings/Linens Electronics/Appliances 3 95 Home Improvement/Hardware 2 40 Beauty and Health Beauty Products/Cosmetics Drug and Health Other Books/Music/Video 3 45 Food Paper Goods/Cards/Gifts 1 1 Toys 1 11 General Merchandise 3 55 Totals ,796 March 2014 VALUE RETAIL NEWS 11

3 outlet chains Tommy Hilfiger outlet (Continued from page 11) their store count, 10 account for nearly half of that contraction. We noted that 54 chains operating 934 stores had no net change in their chain size from Another stat that went down was average store size, which dropped to 4,220 sf from 4,321 sf. One stat that hasn t moved the needle since VRN began collecting data more than 20 years ago is average discount, which is lodged at 38 percent. Rents and sales are among the stats that have risen since Average sales psf has gone to $ from $357 in Sales psf is always an intriguing metric. VRN arrived at that number based on responses from 46 outlet chains that represented a range of high-performing and moderate chains. In all, 22 were apparel and accessories chains, seven were footwear retailers and five were housewares chains. The remainder fell into a smattering of categories, including beauty products, toys, food and electronics. Average rent psf has gone to $33.72 from $ It s interesting to note that both rents and sales increased by 9 percent. As for expansion, 158 chains said they plan to expand in 2014 and 2015, but 107 of the chains didn t provide specifics. Among those that did, 59 chains said they plan to add an average of six stores per year. With the influx of new brands, the number of companies operating more than one outlet concept rose to 40 from 33 in And the number of companies operating outlet chains increased to 299 from 265. v 24 largest multi-chain parent companies Parent Company No. of No. of STORES CONCEPTS Phillips-Van Heusen Corp Ascena Retail Group Sycamore Partners Gap, Inc Carter s, Inc Nike, Inc Brown Shoe Company, Inc VF Corporation Genesco Inc Coach Inc Ann Taylor Retail, Inc Adidas America Gymboree Corporation NACCO Industries Hanesbrands Inc Wolverine World Wide Inc Chico s FAS, Inc G-III Apparel Group Guess?, Inc Aeropostale, Inc Ralph Lauren Corp Levi Strauss & Co Limited Brands J. Crew largest outlet apparel chains chain No. of stores Dressbarn/Dressbarn Woman 205 Carter s Outlets 160 Gymboree 156 Tommy Hilfiger/Kids 155 Van Heusen 154 Gap Outlet 152 Wilsons Leather Outlet 150 OshKosh B Gosh Outlet 142 Polo Ralph Lauren 139 Banana Republic Factory Stores 128 Levi s Outlet 128 Aeropostale Outlet 126 Brooks Brothers Factory Store 125 Children s Place Outlet 124 Lane Bryant Outlet 118 Izod 117 Justice 115 PacSun 112 Bon Worth 110 rue21/rue21 etc! 110 Guess? Factory Store 110 Jockey Outlet 110 Calvin Klein 107 Ann Taylor Factory Stores 103 J. Crew/Crewcuts Outlet VALUE RETAIL NEWS March 2014

4 Outlet Centers 2014 Outlet Centers Report Outlet Center Highlights 2014 North American Outlet Industry (U.S./Puerto Rico; Canada and Mexico) Number of outlet centers: 201 Total outlet-center GLA: 78,991,692 sf Average outlet-center GLA: 392,993 sf Average outlet-center age: 18 years Total outlet center industry sales: $42 billion (based on estimated $532 psf) 2014 U.S. Outlet Center Stats Number of U.S. outlet centers: 193 (including two in Puerto Rico) Total U.S. Outlet Center GLA: 77,527,874 sf Average U.S. Outlet Center GLA: 401,699 sf U.S. Outlet Center Occupancy: 95 percent or higher 2014 Canadian Outlet Center Stats Number of Canadian outlet centers: 7 Total Canadian Outlet Center GLA: 1,196,818 sf Average Canadian Outlet Center GLA: 170,974 sf One 360,000-sf Canadian outlet center opened in Mexican Outlet Center Stats: One center, Premium Outlets Punta Norte, 267,000 sf 2014 North American Outlet Center Ownership 58 development entities own North America s 201 outlet centers 47 development entities own just 1 outlet project 11 developers own 2 or more U.S. outlet centers for a total of 154 centers 8 joint ventures between developers own 12 outlet centers 5 developers operate non-anchored outlet-center portfolios of more than 1 million sf 2013 Outlet Center Openings North America: 11 centers, including 2 conversion/redevelopments Total GLA: 3,657,000 sf (9 phase 1 projects totaling 3,190,000 sf and two conversion to outlet projects totaling 467,000 sf) Average center size: 467,000 sf United States: 10 centers (including two conversion/redevelopments) Total U.S. GLA: 3,297,000 sf Average center size: 329,700 sf Canada: One center totaling 360,000 sf 2014 Planned Outlet Center Openings 2014 planned U.S. openings: 8 phase 1 projects totaling 3,173,200 sf 2014 planned Canadian openings: 3 centers totaling 1,120,999 sf Planned Outlet Center Projects 4 North American projects: 55 centers totaling 20,621,912 sf, averaging 374,944 sf 4 U.S. projects: 47 centers totaling 17,054,544 sf, averaging 362,863 sf 4 Canadian projects: 8 centers totaling 3,567,368 sf Expansions to Existing Centers l 18 expansions totaling 1,933,498 sf, averaging 110,750 sf With 11 outlet center openings in 2013 and 11 more planned for this year, North America s outlet industry is showing growth that s both robust and controlled. By LINDA HUMPHERS Editor in Chief/Director In the 18 months since VRN compiled and published the last State of the Outlet Industry report, the North American sector has grown to 201 outlet centers, added more than 8 million sf of GLA and expanded to 368 outlet chains. Eleven outlet centers have opened since the last SOI, published in September 2012, and 11 more outlet centers are certain to open this year in the U.S. and Canada. Those new centers in 2013 created more than 16,000 retail and property jobs, and that s not counting approximately 25,000 construction workers hired to build the projects. The industry has grown, and it s still growing. The North American pipeline through 2016 includes 55 projects totaling nearly 21 million sf, plus 18 expansions to existing projects totaling almost 2 million sf. Developers with strong backgrounds in the traditional development side are teaming up with outlet developers, combining the strength of both sectors. Macerich, CBL, RioCan, Calloway and New England Development have opened 4 million sf of outlet GLA with partners that include Simon Property Group, Tanger Factory Outlet Centers, Horizon Group Properties and AWE Talisman. Simon and Tanger still rule North American outlet development together the two companies operate 116 outlet centers totaling more than 41 million sf. For the first time since 2009, Simon revealed that sales psf for its Premium Outlets division was steady at $606. Tanger reported 2013 sales at $384 psf. Sales psf is a difficult metric, one that isn t the only measure of a center s success, but it s a popular number to cite. Historically, sales psf given to VRN by retailers is lower than sales psf presented by developers. The reason is that retailers are reporting only on the stores in their chains, but developers are reporting on all the stores in their centers. This year 46 of 368 outlet chains reported sales, which averaged of $ psf. The responding chains represent Largest Unanchored Outlet Center Portfolios Developer Number of Outlet portfolio CENTERS gla sf Simon Property Group 69 27,951,729 Tanger Factory Outlet Centers 47 13,473,687 Craig Realty Group 11 3,276,919 Horizon Group Properties 7 2,160,040 AWE Talisman 2 1,077,000 Totals ,939,375 sf Largest Outlet Megamall Portfolios Developer Number of Outlet s Outlet Megamall MegAMALL gla Mills 9 12,176,000 Taubman 3 3,025,000 Glimcher 2 2,238,746 Totals 14 17,439, VALUE RETAIL NEWS March 2014

5 a wide range of performers and didn t include some that are known to be among the most productive. Given the disparities, VRN estimates that total industry sales range from $31 billion (per retailer) to $42 billion (per Simon and Tanger.) The higher figure is using an approximate weighted average of Simon and Tanger at $532 psf. SPG chairman and CEO David Simon told analysts in December that the success of the company s Premium Outlets division was completely tied to its upper-end regional mall business and to those executives understanding and management of those properties. When we bought the outlet business [in 2004], the [net operating income] was roughly $400 million, he said. Today, it s $1.3 billion. So that would not have happened had it not been for the executive team In the history of real estate transactions, there have been few that have been as successful as what we ve done in the outlet business and it s not by osmosis. It s by day-to-day focused effort and dedication. Without doubt, there is reason for optimism and excitement regarding the outlet industry. Rents, occupancy and sales continually increase and stay at high, stable levels. Outlet retailing has proven to be resilient to many types of economic conditions. Areas of recent concern has (Continued on page 16) 18 Largest Unanchored Outlet Centers 2014 Outlet Center Openings Horizon Group Properties Outlets at Oklahoma City Center City State GLA DevELOPER year opened Woodbury Common Premium Outlets Central Valley NY 844,000 Simon Property Group 1985 Orlando Premium Outlets - International Drive Orlando FL 775,297 Simon Property Group 1981 Tanger Outlets Deer Park Deer Park NY 741,981 Tanger Outlets 2008 San Marcos Premium Outlets San Marcos TX 737,000 Simon Property Group 1990 VF Outlet Center Reading PA 734,000 VF Outlet 1970 Tanger Outlets Riverhead Riverhead NY 729,734 Tanger Outlets 1996 Birch Run Premium Outlets Birch Run MI 682,000 Simon Property Group 1986 Camarillo Premium Outlets Camarillo CA 679,000 Simon Property Group 1995 Orlando Premium Outlets Vineland Orlando FL 660,000 Simon Property Group 2000 Desert Hills Premium Outlets Cabazon CA 650,000 Simon Property Group 1990 Wrentham Village Premium Outlets Wrentham MA 616,000 Simon Property Group 1997 Miromar Outlets, Southwest Florida Estero FL 605,537 Miromar Development 1998 Rio Grande Valley Premium Outlets Mercedes TX 600,000 Simon Property Group 2006 Gilroy Premium Outlets Gilroy CA 575,000 Simon Property Group 1990 Rockvale Outlets Lancaster PA 565,000 PA Outlet Management 1986 Tanger Outlets Rehoboth Rehoboth Beach DE 564,593 Tanger Outlets 1990 Tanger Outlets Foley Foley AL 557,014 Tanger Outlets 1988 Philadelphia Premium Outlets Limerick PA 553,000 Simon Property Group 2007 Center Location DevELOPER gla Opening Palm Beach Outlets West Palm Beach, Fla. New England Development/Eastern Real Estate 500,000 February 14 Outlet Collection at Niagara Niagara-on-the-Lake, Ont. Ivanhoe Cambridge 420,000 May 15 The Outlet Collection at Riverwalk New Orleans, La. Howard Hughes Corporation 250,000 May 22 Outlet Shoppes of the Bluegrass Louisville, Ky. Horizon Group Properties 374,000 July 31 Charlotte Premium Outlets Charlotte, N.C. Simon Property Group/Tanger Outlets 400,000 July 31 Outlets at Tejon Ranch Bakersfield, Calif. Tejon Ranch Co./Rockefeller Group 328,000 August 7 Twin Cities Premium Outlets Eagan, Minn. Paragon Outlet Partners/Simon Property Group 409,000 August Premium Outlets Montreal Mirabel, Ore. Simon Property Group/Calloway REIT/SmartCentres 350,000 August Tanger Outlets Ottawa Kanata, Ont. Tanger Outlets/RioCan 350,999 Fall Gloucester Premium Outlets Gloucester, N.J. Simon Property Group/PREIT 375,000 November Outlets at Border San Diego, Calif. Shamrock Group 133,200 October Assembly Row Somerville, Mass. Federal Realty 313,000 summer 12 centers 4,203,199 March 2014 VALUE RETAIL NEWS 15

6 Outlet Centers (Continued from page 15) been the impact of everything from the weather to Obamacare on traffic and sales in all sectors. Chairman and CEO Steven B. Tanger explained to analysts in October why outlet retailers are able to continue prospering in a variety of conditions. Short-term sales results for sophisticated retailers, brand names and designers don t impact their long-term strategy, he said. There s lots of noise around existing sales, secular shifts from durable to nondurable, government shutdowns, weather, this, that and the other But the retailers we deal with are sophisticated. They do have long-term strategies. The outlet distribution channel still continues to be either the most profitable or amongst the most profitable business units they have. So they re continuing to allocate capital to that. And we ve seen these slowdowns before. But it still increases. There are no decreases in sales, so we remain optimistic. v Tanger Factory Outlet Centers - Myrtle Beach 501, SC Outlets Centers Owned by Developer JVs CENTER CITy STATE gla sf Developer partners Fashion Outlets of Chicago Rosemont IL 550,000 AWE Talisman/Macerich Outlet Shoppes at Oklahoma City Oklahoma City OK 348,100 Horizon Group Properties/CBL Assocs. Outlet Shoppes at Gettysburg Gettysburg PA 360,000 Horizon Group Properties/CBL Assocs. The Outlet Shoppes at Atlanta Woodstock GA 350,000 Horizon Group Properties/CBL & Assocs. Toronto Premium Outlets Halton Hills _Ontario 360,000 Simon Property Group/Calloway REIT Silver Sands Premium Outlets Destin FL 466,000 Simon Property Group/Howard Group St. Louis Premium Outlets Chesterfield MO 350,000 Simon Property Group/Woodmont Outlets Tanger Outlet Center National Harbor National Harbor MD 350,000 Tanger Factory Outlet Centers/Peterson Cos. Tanger Outlets Cookstown Cookstown Ontario 196,000 Tanger Factory Outlet Centers/RioCan Tanger Outlets Bromont Outlet Mall Bromont Quebec 162,000 Tanger Factory Outlet Centers/RioCan Tanger Outlets Les Factoreries St.-Sauveur-des-Monts Quebec 100,000 Tanger Factory Outlet Centers/RioCan Saint-Sauveur Tanger Outlet Center Texas City Texas City TX 352,720 Tanger Factory Outlet Centers/Simon Property Group 12 centers 3,944,820 sf 8 JV partnerships Expansions to Existing Outlet Centers Center City State DevELOPER Expansion GLA opening Tanger Outlets Cookstown Cookstown ONT Tanger Factory Outlets 153,000 Fall 2014 Cabazon Outlets Cabazon CA Craig Realty Group 75, Desert Hills Premium Outlets Cabazon CA Simon Property Group 146,000 May 2014 Livermore Premium Outlets Livermore CA Simon Property Group 190,000 Summer 2015 Miromar Outlets, Southwest Florida Estero FL Miromar Development Corporation 62,498 N/A Waikele Premium Outlets Waipahu HI Simon Property Group 5, Chicago Premium Outlets Aurora IL Simon Property Group 294,000 Spring 2015 Premium Outlets at White Oak Mall Springfield IL Simon Property Group 80,000 N/A St. Louis Premium Outlets Chesterfield MO Simon Property Group 79,000 N/A Merrimack Premium Outlets Merrimack NH Premium Outlets / 149, Las Vegas Premium Outlets North Las Vegas NV Simon Property Group 140,000 Spring 2015 Woodbury Common Premium Outlets Central Valley NY Simon Property Group 60, Outlet Shoppes of Lake George Lake George NY Adirondack Outlet Mall 120,000 Fall 2014 Outlets at Lake George Lake George NY Sobert Realty Corp. 50,000 Fall 2014 Fashion Outlets of Niagara Falls USA Niagara Falls NY Macerich 175,000 Fall 2014 Allen Premium Outlets Allen TX Simon Property Group 125, Manchester Designer Outlets Manchester VT Vanderbilt Equities 30,000 N/A 17 expansions, averaging 113,735 sf 1,933, VALUE RETAIL NEWS March 2014