Taubman's Outlet Mall Planned for Chesterfield Valley

Taubman group's fancy 59-acre outlet mall dresses up flood plain

Friday, September 2, 2011

Rick Desloge
Reporter - St. Louis Business Journal

Two of the country's leading retail development firms have formed a joint venture to build a high-end outlet mall in Chesterfield Valley.

Taubman Centers Inc. .Taubman Centers Inc. Latest from The Business Journals Shops at Willow Bend has new business formulaMcKenna Long & Aldridge stays downtownNew S&P index to reflect Syniverse deal Follow this company ., a Bloomfield Hills, Mich.-based real estate company and retail center operator, and OutletPartners LLC, a real estate development firm in Warren, N.J., that specializes in high-end outlet shopping centers, want to rezone nearly 60 acres on the north side of U.S. 40/Interstate 64 in Chesterfield Valley.

Their company, T-O Ventures LLC, has the undeveloped 59.1-acre site under contract just west of the Hardee's Iceplex and east of Boone's Crossing. Undeveloped highway frontage property in the area commands about $350,000 an acre, real estate executives said. At that price, the site would be worth approximately $20.65 million.

The site is currently owned by the Monarch-Chesterfield Levee District and has no assessed value listed with the St. Louis County Assessor's office. David Human, attorney for the levee district, said he could not comment on the proposed deal.

A vice president and founding member of OutletPartners, Pete Winstead, confirmed T-O Ventures is considering a high-end outlet mall, but declined to elaborate on plans. He referred questions to Taubman, as did T-O Ventures' local attorney, Mike Doster of DosterUllom LLC in Chesterfield. Karen Mac Donald, Taubman Co.'s director of communications, did not respond to emails and telephone messages seeking comment.

It would be the first development in the St. Louis area for either Taubman or OutletPartners. Their joint venture has been scouring the country for high-end outlet mall sites for the last year, according to Taubman's 2010 annual report. While outlet malls have been around for decades, it is one of the few retail areas that has shown growth in recent years, according to Value Retail News, a trade publication that tracks the outlet industry. High-end outlet malls feature stores such as Calvin Klein, Coach, Polo Ralph Lauren, Brooks Brothers and Bloomingdale's.

Chesterfield has scheduled a Sept. 12 public hearing on a rezoning for the property. T-O Ventures is requesting to rezone the site from its current "non-urban" to "planned commercial," which would allow development similar to the Chesterfield Commons on the south side of U.S. 40/I-64. Part of the site up for rezoning is in a flood plain.

"At this stage it's a rezoning request," and hard to tell the scope of what T-O is proposing, said Aimee Nassif, Chesterfield's planning and development services director. However, Chesterfield has seen a surge of proposed new developments this year, and currently has some 30 projects under review. They include proposals for retailers who will be making their Missouri debuts, including Tahoe Joe's in Chesterfield Commons and American Girl, in Chesterfield Mall, about 4 miles from Chesterfield Valley.

Tim Lowe, vice president of leasing for THF Realty .THF Realty Latest from The Business Journals St. Louis restaurants rewrite menu to get financingHelen Antoine: J.W. TerrillTime: Kroenke among richest U.S. sports team owners Follow this company ., which operates Chesterfield Commons, said that if T-O brings in high-end outlets to Chesterfield Valley, it would be a positive for the region. "It's a complimentary development that's proposed to bring tenants new to the St. Louis market," Lowe said.

T-O Ventures has not requested any financial support from Chesterfield for the project, though such a request could come later in the development process.

Taubman has a portfolio of 26 high-end malls, including the Beverly Center in Los Angeles, the Dolphin Center in Miami and the Fair Oaks in Fairfax, Va. The company reported its mall tenant sales hits $600 per square foot in the second quarter, with Taubman posting gains in its average rent per square foot and occupancy. For the first half of the year, Taubman reported a profit of $19 million on $44.7 million in revenue.

For the last three years the company has seen some of its strongest sales improvements at its value and outlet centers and last year formed a joint venture with OutletPartners where Taubman has a 90 percent ownership interest, according to Taubman's 2010 annual report.

"Recognizing the opportunities ahead for this popular retail format, we've teamed up with a company headed by Bruce Zalaznick, former executive vice president of Prime Outlets and Chelsea. He's scouring the U.S. for potential sites, targeting markets that can support higher productivity outlet centers capable of achieving tenant sales of at least $400 per square foot. Our goal is to build five to ten outlet centers over the next ten years," Robert Taubman, chairman and chief executive of the company, wrote in the 2010 annual report.

In an Aug. 19 investor presentation, Taubman said it expects outlet developments to outnumber traditional retail development in the coming years.

At $400-a-square-foot in sales, T-O Ventures' sales would be among the highest in the outlet industry, according to a March report on the outlet industry by Value Retail News. That report said the average sales per square foot for 61 outlet chains was $331.

"Clearly outlets are one of the productive retail sectors," said Linda Humphers, editor in chief of Value Retail News, who also said outlet malls are a growth area. "There are 181 outlet malls nationally, compared to 1,400 malls across the country."

She said if T-O Ventures faces any opposition it likely would come from CBL & Associates Properties Inc. .CBL & Associates Properties Inc. Latest from The Business Journals Top of the list - Retail property management firmsRegency Mall holding up despite downturnTop of the list: St. Louis' biggest retail property managers; moving and storage companies Follow this company ., which owns the nearby Chesterfield Mall. But CBL is expanding into outlet malls too, and earlier this year opened The Outlet Shoppes at Oklahoma City. A spokesperson for CBL could not be reached for comment.