Simon Premium Outlets & Marana Show Pima County ‘How It’s Done’

Op-Ed by Karen Schutte, Publisher Real Estate Daily News

As Simon Premium Outlets® announced Monday, the list of retailers that have signed on to the outlet mall in Marana. The Tucson local media reported disappointment that the Tucson Premium Outlets in Marana was short on retailers, with 17 retailers signed up for the 366,000-square-feet of space, instead of with excitement that there were already 17 retailers signed up!

The competition for the first major Northwest outlet center started between Marana and Pima County back in December 2013 when County Supervisors approved a “100-plus store outlet center” two miles north of the Tucson Premium Outlet, at Avra Valley Road and I-10. The owner of the property, I-10 Avra Valley Mining and Development, LLC was hoping to sell the property to a private company, AWE Talisman, a shopping center developer based in Florida that owns Fashion Outlet centers in Las Vegas, Santa Fe, Chicago and Canada.

Almost simultaneously Vintage Partners was closing on a 161 acres at I-10 and Twin Peaks interchange, that was to become the Tucson Premium Outlets.

Pima County in its approval of the AWE’s Development Concept Permit and amendment for this future outlet center two miles north, required the developer to pay the County 2% of “certain revenues” generated by its development over 30 years for costs associated with improving a wildlife corridor. The County would share in the “enhancement revenue, projection totals of $123 million with AWE, to compensate AWE for the public improvements it agreed to build and in exchange for 3.5 acres it was to convey to the County as part of the agreement,” according to a prepared statement by the County. Pima County anticipated $89 million in revenue from the project for its wildlife corridor that didn’t happen.

The public improvements for the County were to include 30 acres of wildlife habitat, two miles of river park from Avra Valley Road to Twin Peaks Road, and road, water and wastewater improvements were expected to cost AWE $33.1 million, including borrowing costs over 20 years.

The County claimed at the time that this was one of the last remaining locations for wildlife to move between the two mountain ranges. The County had been acquiring land in the area to protect the corridor and working with a number of other agencies and organizations to develop a plan for how to improve the corridor over the long term.

Well, as expected and stated in our report at the time, that didn’t work out so well and the property never sold. The Tucson Premium Outlets on the other hand, has been built with record speed and ease between the Town and developer.

Tucson Premium Outlets, Rich McKewon, General Manager, has gone on record saying he’s not concerned about the short list at this time. “Each day we progress with some new leases,” said McKewon. “So when the project’s complete, we’ll have 90 retailers here plus some food venues.”

The project is reportedly 85 percent complete and will be ready to open on October 1, 2015.

Missing also in the media coverage this week was the small fact that, Simon Premium Outlets® has more than earned their place as a world leader as an upscale outlet center developer. Its already impressive portfolio of properties with a worldwide development pipeline of 6.4-million-square-feet started 2015 with a total investment of $2.5 billion.

Domestic sales within the Simon portfolio have productivity levels are higher than industry standards, and include six existing outlet centers performing at greater than $1,000 per square foot.

The Vancouver Designer Outlet, a 242,000-square-foot center, opened in May. Construction continues on three new outlet centers that will open in 2015. Gloucester Premium Outlets, serving the greater Philadelphia area, a 375,000-square-foot center will be ready for shoppers in August. Tucson Premium Outlets (366,000-square-feet) and Tampa Premium Outlets (441,000-square-feet) are both scheduled to open in October.

Also in 2015, Simon is slated to begin construction on five new domestic Premium Outlets, including Columbus, OH (355,000-square-feet), Norfolk, VA (351,000-square-feet), Clarksburg, MD (392,000-square-feet), Tulsa, OK (318,000-square-feet), and Denver, CO (350,000-square-feet).

International growth continues to be a focus as well, with performance at existing centers exceeding retailer expectations. Recently completed expansions include Toki Premium Outlets (Japan), and Paju Premium Outlets (Korea) with expansions underway at Premium Outlets Punta Norte (Mexico), Yeoju Premium Outlets (Korea) and Shisui Premium Outlets (Japan). Construction on new international Premium Outlets is slated to begin in Siheung (Korea) and Genting Highlands (Malaysia).

Simon continues to reinvest in its existing outlet assets to meet the strong demand from retailers and shoppers.  In April, Simon reintroduced an expanded and renovated Desert Hills Premium Outlets, including new stores for top brands such as Alexander McQueen, Rag and Bone, Bottega Veneta, Belstaff, Marc Jacobs, Ted Baker, and others, generating average sales of more than $2,000 per square foot. Redevelopment projects continue at the world renowned Woodbury Common Premium Outlets, Las Vegas Premium Outlets – North, Chicago Premium Outlets, Waikele Premium Outlets, and Livermore Premium Outlets outside San Francisco.

New development within Simon’s Premium Outlets portfolio continued to accelerate in 2014 with three very successful outlet projects opening in North America (Charlotte, Twin Cities, and Montreal). The properties opened well leased with the best brands in retail. Since 2012, Simon has also completed expansions at Seattle Premium Outlets, Orlando Premium Outlets – Vineland Ave, and Las Vegas Premium Outlets – South.

“Our Premium Outlets portfolio is firing on all cylinders and is the unquestioned standard bearer in the industry,” said David Simon, Chairman and CEO of Simon. “The pace of our new developments both here and abroad and the significant expansion of our landmark properties are unprecedented and a testament to the strength and quality of both our brand and organization.”

In case you’re still wondering, the 17 retailers that have already signed up for Tucson Premium Outlet in Marana include: Aldo, Asics, Banana Republic, Calvin Klein, Carter’s, Converse, Express Outlet, Gap Outlet, Godiva, Helzberg Diamonds, Nike, Old Navy, Skechers, Starbucks, Tilly’s, Tommy Hilfiger and Vans Outlet.