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Survival of the Fittest: Poor Economy Has Wounded Some Weak Outlet Malls but Strengthened Others
Sunday, September 07, 2008 10:55 AM


(Source: The Columbus Dispatch, Ohio)trackingBy Marla Matzer Rose, The Columbus Dispatch, Ohio

Sep. 7--Just off I-71, 40 miles south of Columbus, two developments illustrate the changing trends in outlet malls.

Prime Outlets Jeffersonville is performing steadily, its owners say, even in the economic downturn. More than 90 percent of its space is occupied, and upscale shops including Kate Spade and Puma opened there recently. On a recent weekday afternoon, the crowds weren't huge, but the shoppers who were there appeared to be buying.

Meanwhile, the former Jeffersonville II mall 4 miles north, which also was owned for a time by Prime, is a virtual ghost town. Reebok is the only outlet store still there. Its fellow tenants consist of a collection of flea-market stores, most open only on weekends, and a 21-and-over video-game parlor.

The strong have gotten stronger in recent years, while the weak have faltered or adapted as the outlet industry has matured. According to the trade publication Value Retail News, the number of outlet malls in the U.S. has declined every year since 1996, and new construction has slowed to a trickle.

"There's typically a boom when someone discovers a new retail format," said Linda Humphers, editor-in-chief of the Florida-based publication.

The first true outlet mall opened near Memphis in 1979. After that, Humphers said, many developers rushed to build more.

In a number of instances, "site wars" broke out, she said, resulting in two outlet centers being built close by each other, as in Jeffersonville. In nearly every case, Humphers said, one mall emerged as dominant within a few years, while the other was left to struggle or reinvent itself.

The slowed pace of outlet-mall construction simply reflects retail trends in general, Humphers said. "It's typical of pretty much all retail. Not many regional malls are being built, either."

Baltimore-based Prime Retail, owner of the Jeffersonville location, has fewer centers today than it did five or 10 years ago. Its 22 locations make Prime the third-largest owner of outlet malls, behind Chelsea Property Group (48) and Tanger Factory Outlet Centers (33).

Prime Retail has sold off some of its poorer performers in recent years. They include the former Jeffersonville II and the center in Lodi, about two-thirds of the way to Cleveland from Columbus along I-71.

"There's definitely been a trend to refine the portfolio while developing critical mass in terms of size at our existing centers," said Karen Fluharty, senior vice president of marketing for Prime Retail.




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