Horizon plans new outlet shops
Lisa R. Schoolcraft / Atlanta Business Chronicle
An Illinois development company is planning its first outlet center project in metro Atlanta.
Horizon Group Properties Inc. (OTC: HGPI.PK) of Rosemont, Ill., plans to open The Outlet Shoppes at Atlanta, a 435,000-square-foot shopping center for 80 to 100 factory outlet stores in Woodstock.
“We’re hoping to develop a high-end factory outlet center,” said Gary Skoien, Horizon’s president and CEO. “We have a lot of tenants that are interested. We’re already in serious negotiations on leases.”
The Outlet Shoppes at Atlanta would be located at 728 Woodstock Parkway, at the new exchange being built near Ridge Walk Parkway and Interstate 575.
Skoien hopes to begin construction on the first 360,000 square feet in early 2012 so it would open in spring 2013.
Skoien said he could not disclose which retailers he is in talks with, but Horizon Group Properties is currently building a similar project in Oklahoma City, Okla., and the tenants will be similar, he said.
The Outlet Shoppes at Oklahoma City will have tenants including Saks Fifth Avenue Off 5th, J. Crew, Brooks Brothers and Coach.
The Atlanta project will have “slightly better [shops] than [the Oklahoma City project] because this market can handle a bit better than that,” he said.
There are other outlet shopping centers north of metro Atlanta.
Greensboro, N.C.-based Tanger Factory Outlet Centers Inc. (NYSE: SKT) has Tanger Outlets in Commerce, which has more than 85 retail outlets and expanded in 2009.
North Georgia Premium Outlets in Dawsonville, owned by Simon Property Group Inc. (NYSE: SPG), has about 140 stores.
Tanger also has an outlet center in Locust Grove, south of metro Atlanta.
Skoien said he is not concerned by the competition.
“Atlanta is a big market and there is definitely more room for outlet shopping in the market,” he said.
Besides, Woodstock is closer to the city and to Buckhead than the others.
“Cherokee County is growing, and we will be an easier center to get to than Dawsonville,” he added.
The project still has some permitting hurdles ahead.
The site is currently zoned light industrial with an overlay, and no formal plans for the project have been submitted yet to the city of Woodstock, said Richard McLeod, Woodstock’s director of community development.
McLeod has had informal discussions with Horizon, however, “but we’re not sure what variances they may need with zoning.”
The project is currently being reviewed by the state Department of Community Affairs as a development of regional impact.
Until the project gets approval from the state, nothing will be filed with the city, he added.
There are no cost estimates for the project, both Skoien and McLeod said.
“They were just now getting an architectural firm, so we should know costs in a couple of months,” McLeod said.
Traditional retail was hit hard during the economic downtown, said Jeff Green, president and CEO of Jeff Green Partners in Phoenix. “Outlet retail is now the darling of the retail real estate industry.”
Coming out of the Great Recession, value retailers have remained strong “but the question I have is for how long,” he said.
In the 1990s, outlet stores were in favor, but then leveled off in the late 1990s and early 2000s, Green said. “But they are heading up again.”
The northern suburbs of metro Atlanta are affluent, so a higher-end outlet center makes sense, he said.
Green expects outlet retailers such as Anne Klein, Burberry and Coach to likely land there, as well as some of the luxury brands that have outlet stores, such as Neiman’s Last Call and Nordstrom Rack.
But even traditional retailers are now getting in the outlet game, Green said.
“For many retailers, they can’t afford not to be in the outlet business,” he said. “There is so much locked up potential there.”
Some traditional retailers “have maxed out their store counts at traditional locations, so they need to come up with an outlet concept,” Green said.
Lucy, a women’s active wear retailer, is trying it, as is New York & Co., he said.
Luxury retailers with an outlet component often attract “the aspirational shopper,” said Nikoleta Panteva, retail industry analyst for IBISWorld Inc., a consumer research firm. “They aren’t quite ready to spend the full amount on a Coach bag, but they are ready to find the outlet, or last season’s bag, at a lower price.”
Luxury retailers also turn to outlet center stores to help build brand loyalty, she said.
“They are expanding their reach through these outlet malls,” Panteva said.