As the home to 14 shopping centers — from the Tanger Outlet Center of Westbrook to the Shoppes at Buckland Hills in Manchester — it would seem Connecticut has plenty of options for the state’s retail consumers.
But three new proposed multi-million dollar outlet center developments — in Cheshire, East Hartford and at Foxwoods Resort & Casino in Ledyard — will collectively add more than 1.1 million square feet of retail space in the Nutmeg State by 2016.
The new projects indicate developers are once again bullish on the state’s retail sector, following a lull in new activity following the Great Recession. The developments also reflect a national trend in the growing popularity of outlet centers. In fact, figures from the International Council of Shopping Centers (ICSC) show that nearly 40 of the U.S.’s 225 outlet centers have opened since 2006.
“Outlets are the name of the game,” said Gary Skoien, CEO of Horizon Group Properties, a Michigan-based company that plans to invest $84 million in a 350,000-square-foot retail development at Rentschler Field in East Hartford, the company’s first project in Connecticut.
Skoien said Greater Hartford’s demographics and the lack of an outlet center in the region made the East Hartford location optimal.
“We expect to have between 85-95 retailers when we open in the summer of 2016,” Skoien said. “And with [a projected] 3 to 4 million visitors each year, [the development] should generate more than $130 million in sales annually.”
This isn’t, of course, Rentschler Field’s first attempt at retail development. The home to UConn football and outdoor retailer Cabela’s has been searching for a retail operator for years, but saw its progress stall following the Great Recession. State and local officials were in talks early last year with an Arizona developer looking to build a retail center with a price tag of several hundred million dollars, but those efforts didn’t pan out.
Skoien said now is the right time for the project. “The recession is behind us, and outlet development is accelerating,” he said.
Horizon Group is aggressively recruiting tenants — well-known brands and designer outlets — and would need 60 percent of the retail space leased before the project could become a reality, Skoien said. They plan to draw people from nearly 60 miles away, plus tourists, he added.
Meanwhile, outlet centers are not simply growing in number, but in size as well. From 2000 to 2012, the average size of leasable space for outlet centers nationwide increased by 40 percent to more than 383,000 square feet, according to Standard & Poor’s. And they are not only attracting top brand-name retailers, but retaining them at a higher rate than traditional malls. Data from CoStar Group, a commercial real estate intelligence company, shows that while retail occupancy at regional malls (400,000 square feet or more) dropped to 94.8 percent from 2008 to 2013, outlets consistently maintained an average 98.2 percent retention rate.
Lou Masiello, vice president of development for Massachusetts-based WS Development knows firsthand what a successful outlet looks like. About 10 years ago, his company developed the 426,000-square-foot Shoppes at Farmington Valley in Canton, which features a variety of upscale retailers including Barnes & Noble, Ann Taylor and Joseph A. Bank.
Emboldened by consumer demand and a strengthening economy — in addition to an average 97 percent retail occupancy at its existing outlets — WS Development’s latest project is a 480,000-square-foot outlet center in Cheshire, which will be the company’s largest location in Connecticut. The multi-million dollar project is being built in partnership with Tanger Factory Outlet, the nation’s second largest outlet developer.
“With proximity to Interstates 691, 84, and 91 [Cheshire] is a superior location for development of this type,” Masiello said. “It can serve much of the central and western part of Connecticut.”
Masiello estimates more than 400 construction jobs will be created during the 12-18 month development, followed by nearly 1,100 full-or part-time retail jobs.
“The center will be populated with best-in-class retailers and designed with great architecture and landscape features,” Maseillo said.
In addition to strong occupancy, high-end outlet center space is also leasing at rates not seen since the Great Recession. According to real estate analytics firm Reis Inc., the average rate per square foot for outlet space ($40.15) is back to 2008 levels. And while costs may be increasing for leased space, outlets typically create greater sales efficiency and performance.
Meanwhile, in Ledyard Tanger Factory Outlets is betting their shopping experience will be popular with people looking to gamble or see a show or concert. The retail giant is investing $115 million in a 300,000-square-foot shopping outlet at Foxwoods Casino, which broke ground in September. Once completed, it will feature more than 80 brand name stores including Banana Republic, Coach, Nike, LOFT, and Tommy Hilfiger. The site is expected to generate more than $10.4 million a year in sales taxes alone. n
