Analyst: Not Enough Demand for Two Outlet Malls in Chesterfield

With the battle for outlet mall supremacy in Chesterfield heating up, some financial analysts are doubting assertions that there is enough consumer demand to support success for both projects.

Writing in investment website Seeking Alpha, Brad Thomas called it “a gamble” by both Taubman Centers (Taubman Prestige Outlets) and Simon Property Group (St. Louis Premium Outlets) that is being waged “with no clear victorious outcome.”

While acknowledging that the market may be underserved, Thomas said there simply isn’t enough demand to support the combined 800,000 square feet of retail space that will open in August.

Thomas comments were in light of a recent earnings conference call held by Taubman, in which executives with the companies defended their moves in Chesterfield Valley.

Robert Taubman, CEO of Taubman Centers, has acknowledged that having both the Taubman Prestige Outlets and St. Louis Premium Outlets built within a few miles of each other will “modestly impact returns” since the consumer market will be split between the two.

He re-iterated an often made talking point by both developers that the St. Louis area is a “terrific market” that will still be capable of delivering attractive returns, despite the competition. However, the company has adjusted their forecast downward in light of the competition from the Simon project.

Thomas noted that of the two, Simon is the much larger company, with a market cap of around $49 billion compared to Taubman’s $4.9 billion. With the outlet mall market expected to grow in the coming years, Thomas said it’s likely that competition for prime slices of consumers, such as in St. Louis, will only become more intense.

With construction well underway, the two developers are now engaged in a fierce battle for tenants. The St. Louis Business Journal recently reported that two prize retailers -- Polo and Nike -- will be split between the two with Polo signing for Taubman and Nike secured by Simon. 

A spokesperson for Simon also told the Business Journal that the St. Louis Premium Outlets are now 90 percent leased and talks have begun concerning a second phase of development. 

About the Outlets:

St. Louis Premium Outlets is set to open Aug. 22. The $100 million, 350,000-square-foot complex will include 85 stores located on the south side of Highway 40 just east of the Daniel Boone Bridge. It is being developed by Indianapolis-based Simon Property Group and Forth Worth, Texas-based Woodmont Outlets.

Taubman Prestige Outlets is set to open Aug. 2. The $150 million, 450,000-square-foot project will include more than 100 stores on North Outer 40 east of Boone’s Crossing. It is being developed by Bloomfield Hills, Mich.-based Taubman Centers and Warren, N.J.-based OutletPartners LLC.