With opening of Bloomingdale's outlet, Potomac Mills ups its bet on high-end offerings
Next week's debut of Bloomingdale's first outlet store will place Potomac Mills in the enviable position of being the only discount megamall with all of the off-price luxury powerhouses -- Neiman Marcus Last Call, Saks Fifth Avenue Off 5th and Nordstrom Rack -- under one roof . . . for now.
The opening follows a string of moves made at the Woodbridge shopping center since 2008 to heighten its high-end offerings. Several upscale off-price stores, including J.Crew and Cole Hahn, have been added to the mall's directory during that time. And last Friday, Lacoste signed a lease for 4,700 square feet next to Neiman Marcus.
"This really has helped us to line up another cadre of tenants, a half dozen of which are in lease negotiations right now for stores that will open later this year or early next year," said Gregg Goodman, president of the Mills, which has 16 outlet malls across the country.
As the first megamall catering to bargain hunters in the United States, Potomac Mills -- now celebrating its 25th anniversary -- helped create a retail niche. But by the turn of the century, the mall lost much of its luster, as consumers could easily find its anchors, such as Marshall's and T.J. Maxx, closer to home. In 2005, the 1.6-million-square-foot outlet began a multimillion-dollar renovation that helped it regain prominence among a growing class of discount centers.
Potomac Mills "was a little tired," Goodman admitted. "We've been able to go back and institute new seating areas, new carpet . . . to give [the mall] an updated feel for our longtime loyal shoppers and to attract new customers."
Outlet malls have continually had the largest increases in shoppers, while most retail formats have registered steep declines over the past four years, according to research firm Kantar Retail. A number of brands, most notably Nordstrom and Neiman Marcus, hedged their bets during the downturn with the opening of more discount concepts than traditional stores.
Mills was not immune from the impact of the recession, but the group of outlets warded off the full sting, Goodman explained. "We speak very well to the consumer in this sort of climate," he said. "As the price conscious nature of the consumer seems to be not just a fad, but a trend and the direction that things are going, it has been a real opportunity for us."
The executive declined to disclose the mall's most recent earnings. And Simon Property Group, which snagged the Mills Corp. for $1.4 billion in 2007, did not separate out the performance of the Mills properties in its recent Securities and Exchange Commission filing. However, when the public company last did so, in its first-quarter filing, occupancy throughout the 16 Mills assets was at 93.3 percent, up from 89.7 percent for the same period a year prior, and tenant sales per square foot came in at $372, a few dollars less than before.
Goodman said he has received many calls from retailers wanting to stake out a spot near the Bloomingdale's outlet. The luxury retailer is rolling out its discount concept at four other locations this fall, including Mills' largest outlet mall, Sawgrass Mills in Sunrise, Fla. "Tenants may be doing less deals in the market, but they are still focused on going to the better properties," Goodman said.