Newspaper article St Louis Post-Dispatch (MO)

2 Outlet Malls on Collision Course?; Rivals Not Backing Down, but Skeptics Wonder If Area Can Support Both

Newspaper article St Louis Post-Dispatch (MO)

2 Outlet Malls on Collision Course?; Rivals Not Backing Down, but Skeptics Wonder If Area Can Support Both

Article excerpt

Two rival outlet mall developers are now betting that Chesterfield, already rich with retail, can indeed support both proposed malls, with about 200 stores between them, coexisting just a few miles apart.

That marks a change in the trajectory of the ongoing mall war between Taubman Centers and Simon Property Group, with the assumption up until recently being that only one would be built.

Yet analysts and industry observers have reacted to the prospect of these dueling outlet malls so close to one another with skepticism, noting that each mall would cut into the sales of the other.

"I'm kind of incredulous that they would both go forward," said Martin Sneider, an adjunct professor of retailing at Washington University. "I can't imagine how they justify it, although I imagine they are both reluctant to give it up. ... They are both like Thelma and Louise."

On Wednesday, William Taubman, chief operating officer of Michigan-based Taubman Centers, showed no signs of yielding. At a groundbreaking ceremony, he proclaimed that Taubman Prestige Outlets Chesterfield would open for business on Oct. 24, 2013.

To drive home the point, he rattled off a list of 40 retailers including Banana Republic, Gap, Furla, Ed Hardy, Billabong and Lucky Brand Jeans that have either signed leases or given commitments to be a part of a 450,000-square-foot outlet mall located near Boone's Crossing and Highway 40.

Also on Wednesday, Taubman Centers closed on a $15.2 million deal to buy the property on which its project is located from the Monarch- Chesterfield Levee District, according to David Human, the district's general counsel.

Yet, two weeks ago, executives from Indianapolis-based Simon Property were the ones who held the shovels for their own groundbreaking ceremony - St. Louis Premium Outlets, located a few miles to the west near the Daniel Boone Bridge. That 350,000-square- foot project has named tenants such as Saks Fifth Avenue Off Fifth, Elie Tahari, Ann Taylor and Tommy Hilfiger. Officials have said the center is more than 60 percent committed.

Nathan Isbee, an analyst with Stifel Nicolaus, said it's hard to believe that two outlet malls will be built so close to each other. But he said it's looking more and more like both will go forward, given that both have broken ground, announced tenants and given out opening dates.

Still, he added, "Until steel appears on both sites you can't be sure."

Isbee noted that there are some other markets where outlet malls are located close to each other, such as in Myrtle Beach, S.C., Orlando, Fla., and Lancaster, Pa.

"So it's not unprecedented," he said. "But those tend to be more tourist-driven markets, unlike St. Louis."

Steve Sakwa, an analyst with ISI Group, said he doesn't see either side budging at this point.

On the one hand, two outlet malls in close proximity could work by making Chesterfield a hub of outlet mall shopping for the region if there are enough unique retailers in each center, he said. …

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