Where Are Outlet Malls Located in California?

Recently, the current owner of the Elk Grove Promenade Mall posted on their website that the unfinished structure would be converted...

Recently, the current owner of the Elk Grove Promenade Mall posted on their website that the unfinished structure would be converted into an outlet mall. 

Although the conversion of the site that has become something of an eyesore and source of embarrassment for Elk Grove would be a somewhat welcome development, how realistic are the plans of the Howard Hughes Company?

In our bar stool analysis HHC's conversion plans are not very realistic.

The biggest stumbling block for converting the Promenade to an outlet mall relates to the oldest axiom in real estate - location, location, location.

First lets consider Highway 99. Unlike the two closest outlet malls, Folsom and Vacaville, both of which are are located along either a high-traffic interstate corridor or between tourist area, or both, the Promenade is not located on an interstate or is enroute to a major tourist area.  A third nearby outlet mall in Tracy, a city not dissimilar to Elk Grove, is the home to what seems to be a moribund 12-retailer outlet.  

Conversely, Highway 99 acts primarily as an intrastate route primarily serving the residents of the California's Central Valley. While many local residents may echo Mayor Gary Davis' oft-repeated proclamation that they love Elk Grove, the truth of the matter is many of the city's dotting Highway 99 up and down the valley are home to low-wage earners, amongst the lowest in the country according to a 2009 report by the the Great Valley Center.

Will people or workers traveling from Yuba City to Bakersfield along Highway 99 be outlet mall shoppers? With bigger and more established malls located in nearby Folsom, will shoppers outside of Elk Grove and South Sacramento switch? Likewise, are there enough shoppers in Elk Grove, South Sacramento, Galt and Lodi to support the mall? Furthermore, are there that many people from outside the region who will be traveling the route?

A review of a map complied Mallseeker.com shows that a majority of California's 24 outlet malls are located either in the Los Angeles area, Bay Area, or along a major interstate route. Likewise, the maps reveals the outlet mall in Tulare is the only one along Highway 99.  

While some may argue the fact that there is only one outlet mall in the Valley is an opportunity, we believe that if the market could have supported more outlet malls, some savvy developer would have already build in more places along Highway 99. Given local governments crack-like addition to sales taxes revenue, if an outlet mall was proposed they would be salivating like Pavlov's dog at the prospect too. 

Obviously this is a thumbnail analysis, but we nonetheless view HHC's as nothing more than a trial balloon to assess any demand for an outlet mall. Although an outlet mall would be an improvement over the eyesore we now have, we wouldn't bet our first born on HHC's proposition coming to fruition.                 

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Phoenix Rising said...

Nice article. The market is smarter than any public sector elected or staff person. Pressuring a Fortune 500 company to build something that the market will not support might make for good sound bites, but totally ignores the fact that the electeds are powerless in the face of the market forces.

We can assume that our electeds are probably dangling tax incentives at HHC as we read this, but tax credits can only swing a deal if the market feasibility gap is narrow to begin with. As your article suggests, the feasibility gap may be as wide as the Grand Canyon!

The political rhetoric will likely continue, and I would prepare for a lot of blame gaming if the premise of your article is correct. But I would suggest that the underlying interest of our electeds is to be sure to have a scapegoat to blame if the outlet does not go through. HHC will see its name dragged through the mud in the name political self-preservation and political cover. Does this mean our electeds don't care about economic development? No, it means their political future and ability to get reelected comes first. Everything else is secondary.

Jill said...

As the link to the Great Valley Center data points out, the Central Valley has one of the lowest incomes per capita in the country and that study was issued in 2009 just as the first affects of the Great Recession and foreclosure crisis were being felt. Our recovery has been anemic at best and the Central Valley will lag far behind the rest of the national recovery, such as it is.

For my money, don't expect anyone to take Hughes up on their offer - the demographics, income and competitors like the Arden just won't support an outlet mall much less a regional mall. To bad Wal Mart didn't buy it - but I guess they knew better.

Anonymous said...

The Sac Metro Chamber did a presentation at the last council meeting regarding Elk Grove’s “amenities.” Elk Grove City Council members were very critical of the report, saying in part that the Chamber didn’t do its homework. I wonder how their curt responses resonated with the Sac Metro Chamber Board?

Additionally, they didn’t offer much of a counter. Steve Detirck offered up his gated home as an amenity. Who is Detrick kidding? An amenity is open to the public during set business hours; not a place where you locked out.

The Elk Grove City Council needs to take a good long hard look on what our city’s amenities are that would attract tourism to the point of a CVB; which they also want to explore forming.

Did they offer to send the Sac Metro Chamber a counter report? No, they did not. And not one of the council members mentioned the future outlet mall as an amenity.

Lynn said...

The council didn't mention outlet stores because would we really want that to be what makes Elk Grove a destination city? I agree when speaking with the SacMetro the information could be presented in a manner that was not so defensive. After building homes for 155,000 people, Elk Grove doesn't have an identity other than "the fastest growing city"....We will have Dignity hospital with its six stories as the major focal point near our future civic center....I hear the helicopters landing.

Anonymous said...

As much as I want some local shopping choices and would like our city to receive some sale tax dollars, I do not see an outlet mall working for us. My sense is we cannot sustain a mall with 100+ shops and a smaller mall (45-70 shops) won't create any interest or desire for the citizens. We are in a Catch 22 here....what we want we cannot sustain..and what we can sustain, we do not want. Perhaps an indian casino at that spot would be the best use of that land. If done correctly, the city could bring in hotels and a restaurant row to support the casino industry. When will this council wise up to the fact we are a small subburb of Sacramento. We are not a destination city. No matter how many times Davis says it, we are just not THAT kind of city.

Anonymous said...

Destination city you say Mayor Davis and council members? So when people say "elk grove, never heard of it, what's it known for?"..... Yeah I couldn't think of anything either.

Anonymous said...

I don't think of Elk Grove as a destination city...I have lived her a long while and while I love it here, there is nothing here that makes this a special place (except for the rural influence/slower pace of life) that USED to be associated with Elk Grove. Our council should laser focus on the crime that is lopping over from South Sacramento. Our police force should address these troublemakers from Sacramento/Natomas/Rancho. How about the council working towards a crime free city? I rather have a "safe and secure" home then be known as a "destination city". We are NOT LA. We are NOT San Diego. We are NOT SF. Maybe some of us are OK with being JUST Elk Grove. Ever thought of that, Mr. Mayor? Stop spending our money on stupid ideas like major league soccer. Many of us do not want the traffic, the extra cost to maintain such a plan; the noise, congestion, the extra people in town. If we all wanted to live in SF or LA, we would have moved there. We moved to EG for the quiet, slow paced, family friendly atmosphere. We did not move here for major league soccer. Please just STOP with these gradious ideas. They make you all look pretty stupid for not being able to "read" your audience.

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