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As some shopping sites struggle, 3 new outlet malls planned for Metro Detroit market.
Three outlet malls on the drawing board for Metro Detroit are raising some eyebrows about the market for more regional shopping centers.

Developers are planning outlet malls in Canton, Chesterfield Township and Romulus, even as some longstanding shopping locations struggle with fewer retail tenants and a shrinking customer base.

“There are too many malls,” said Ken Dalto, a retail analyst at Kenneth Dalto & Associates, “but some of these retailers feel there are underserved markets.”

Two of the planned malls are in Wayne County, separated by 10 miles and targeting the same customers. The third is in Macomb County, near three large shopping malls.

Though all three developers are convinced their plans will work, some in the business community think there is only room for one new outlet mall.

The local market has four, although three are a considerable drive for most Metro Detroit residents: Birch Run Premium Outlets, Great Lakes Crossing Outlets in Auburn Hills, the Monroe Factory Shops in Monroe and Tanger Outlets in Howell.

The Monroe Factory Shops, formerly the Horizon Outlet Center, is a shadow of its former self, with a few retail names peppered throughout the 257,000-square foot facility purchased in 2007 by Madison Heights-based Howard Realty Group.

Retail analysts say it serves as a reminder of the importance of location and demographics to a mall’s long-term staying power.

A Howard representative did not respond to phone messages seeking comment.

“We’ve looked at the market for quite a bit of time,” said Nicholas King, a principal at Baltimore-based Paragon Outlet Partners, the developer for the Canton site between the Interstate 275 service drives and Lotz Road. “Despite the bad press the city of Detroit is getting, we’re bullish on the local market.”
Paragon and Massachusetts-based New England Development, which wants to open the mall in Romulus, are both targeting shoppers from Canton.

The charter township is one of the fastest growing communities in the state, according to U.S. Census data. And nearly half the population falls between the prime money-earning ages of 35 and 64.

New England Development, which is looking to expand its retail and outlet presence to more than 30 U.S. locations, believes the Canton-Plymouth-Novi area is the sweet spot for new mall infrastructure. The firm says that within a 30-minute radius of its site, there are about 1.79 million residents with average annual household incomes above $58,000.

Paragon, which researched other areas in the Detroit market before deciding on Canton, says its location on busy Ford Road had multiple selling points.

King believes the Canton site will draw shoppers from Ann Arbor to the west and Ontario to the east — many Canadian shoppers cross the border to shop at Canton’s Ikea — and the easy access point off I-275 couldn’t be beat.

Paragon, which plans to develop six other outlet malls across the U.S., will break ground on the 375,000-square foot site “as soon as the ground thaws” next spring, King said, and plans to open the facility in the summer of 2016.

New England Development, which would have similarly easy access — the I-94 exit at Vining Road — also is targeting a 2016 opening date.

Retail analysts and developers are skeptical that all three planned outlet centers will happen. “There’s no chance that all three go through,” King said.

But as traditional shopping malls continue to lose tenants, outlet centers are growing across the nation and have vacancy rates at or below 5 percent.

All shopping malls as a whole have vacancy levels of slightly more than 8 percent.

Since November 2012, 10 outlet malls have opened in the U.S., according to trade publication Value Retail News.

Eight are scheduled to open this year and 47 are slated for openings, conversions or redevelopments through the end of 2016.

The reason for the recent boom in outlet centers: the economy. Lower-priced offerings from well-known retail names have become an attractive option for consumers.

Discount prices have also helped outlet centers insulate themselves from the accelerating growth of online shopping.

From The Detroit News: Christian Louboutin Outlet