Birth, Death of Planned 'Outlets of Michigan' Demonstrative of Challenges For Outlet Collection at Elk Grove

May 21, 2017 |   A recent story in the Detroit Free Press is demonstrative of some of the challenges facing the Howard Hughes Corp...



May 21, 2017 |  

A recent story in the Detroit Free Press is demonstrative of some of the challenges facing the Howard Hughes Corporation's (HHC) unfinished shopping center currently known as the Outlet Collection at Elk Grove,

In its most recent incarnation, the unfinished shopping center residing on the south side of Elk Grove for nine years this July is now named the Outlet Collection at Elk Grove. HHC's most recent marketing plan for the unfinished shopping center hatched in 2014 is to demolish about one-third of the structure's current footprint to make way for the proposed $400 million Wilton Rancheria and convert the remaining 689,000 square feet to a so-called lifestyle and outlet mall.

While that shopping center, now dubbed the ghost mall, has a long and tortured history with an uncertain future, as reported by the Detroit Free Press an outlet mall near Detroit Metropolitan Airport (DTW) saw a concept born, planned, and ultimately killed in about three years.

The shopping center, called Outlets of Michigan, was proposed by Tanger Outlets near I-94 and DTW, had a lot going for it compared to Elk Grove's outlet. According to  Tanger, traffic along I-94 near DTW, which is Delta Airlines' second largest American hub, has 115,000 vehicles pass it on a daily basis, and would draw shoppers from an estimated market of 5.7 million people from Michigan, northern Ohio, and Ontario, Canada. 

While Elk Grove's and DTW's proposed outlet centers' had obvious market strengths and weaknesses relative to one another, there is one glaring difference between HHC and Tanger. While HHC has been toying with what to do with its property, Tanger birthed their idea and killed it within three years. 

The key point, as reported in the Detroit Free Press story is this - "The developer, Tanger Outlets, recently told Romulus officials that it has canceled the proposed Outlets of Michigan, an 80-store development that was to be built on 35 acres at Wick and Vining roads near I-94. The problem was tenants were reluctant to commit to the project amid the fast-changing retail environment for brick-and-mortar stores, according to Timothy Keyes, economic development director for the City of Romulus."        

The key point for both outlets is this - tenants were reluctant to commit to the project amid the fast-changing retail environment for brick-and-mortar stores.

Even though Elk Grove is spending $50,000 with Alabama-based Retail Strategies to act as a juiced-up leasing agent, and City officials are reportedly in bi-weekly talks with HHC, there are certain national trends these actions cannot overcome. Much like the high-end retailers Tanger was trying to recruit to their outlet, do we expect HHC to buck these national trends at the Outlet Collection anytime in the next few years?

If HHC pulls it off and even someday opens the outlet, it would be like coming back to win the World Series from a 3-1 game deficit in the bottom of the ninth inning in game five. It can happen, but the odds are against it.   



  




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1 comment

D.J. Blutarsky said...

A town that lives and dies by the sales tax, along with the Prop 13 property tax limits, is left with few options to grow their economy in this new normal online consumer model. Ideally, prudent city leaders will recognize this and not extend their reliance upon future growth to pay off debt obligations. The aquatic center and SEPA infrastructure come to immediate mind.

The Ponzi scheme of future rooftops to pay current impacts characterizes Elk Grove's strategy and we will soon find out who gets left holding an empty bag. Remember this when they come knocking for your support for a sales tax increase.

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