The latest victim in the retail apocalypse? Outlet malls

Et tu, outlet malls?

After years of being seemingly insulated from the ills affecting department stores, the country’s 200-plus outlet malls are starting to show signs of strain.

Tanger Factory Outlet Centers, which owns 43 centers in 22 states and is the largest publicly traded pure-play outlet operator in the US, is throwing off some warning signs, experts tell The Post.

The Greensboro, NC, company, seen as a bellwether for the sector, is not planning any outlet openings for 2018, one industry watcher said — noting it was the first time in recent memory that no new opening has occurred.

Plus, Tanger isn’t attracting the shoppers that it was used to, according to RS Metrics, a satellite data company.

Tanger used to lead all outlet centers in drawing consumers but now, like all centers, is seeing only a modest increase in shoppers, according to RS Metrics, which uses satellite to monitor cars in scores of shopping centers.

“They are no longer an outperforming the sector,” said Mike Gantcher, managing director of RS Metrics.

At investment bank Boenning & Scattergood, analyst Floris van Dijkum predicts that base rentals will rise 3.5 percent next year, down from a 6.6 percent bump in 2016.

Tanger shares are down 31 percent over the past 12 months, and the company earlier this year said profits for 2017 would be lower than expected.

Bank of America analyst Craig Schmidt recently downgraded Tanger to underperform from neutral.

Many of the same shoppers who filled parking lots at these far-from-urban center outlets now see just as strong a value at off-pricers like T.J.Maxx or Nordstrom Rack, some said.

Investors have also expressed concerns about the company’s reliance on apparel stores — among the worst hit by the so-called retail apocalypse — which make up 58 percent of the company’s rent roll, according to van Dijkum.

Other outlet center operators, like Simon Properties — owner of the largest outlet center in the country, Woodbury Common Premium Outlets — and Macerich Properties and GGP have also come under pressure.

The warning signs in the outlet industry “are going to show up in Tanger first,” said real estate lawyer Jeff Green, of Jeff Green Partners.

There could be a new threat to outlet centers coming down the pike: new centers opening up smack dab within the borders of big cities like New York, San Francisco, Los Angeles, Chicago and Philadelphia.

Macerich is developing several urban outlet centers, including a…

Read the full article from the Source…

Leave a Reply

Your email address will not be published. Required fields are marked *