The announcement that there would be two outlet malls built in Chesterfield has left a lot of people scratching their heads, including some public officials, about whether there will be enough demand.
It's also a question on the mind of investor's in the two competing companies, Taubman Centers (Taubman Prestige Outlets) and Simon Property Group (St. Louis Premium Outlets). Investment website Seeking Alpha recently published a story covering anaylst and investor conference calls held by the two companies.
"If both projects get built, I suppose consumers in Chesterfield will have plenty of options for finding a bargain. I'm just not sure how investors will benefit from owning real estate in a market that appears to be soon over-supplied with an abundance of outlet space."
The article quotes Taubman's CEO Bobby Taubman as acknowledging that the having two similar projects so close together could "fragment the market."
"It will reduce sales productivity, which would modestly impact the returns. But the returns would still be attractive," Taubman said during the call.
Taubman also noted that the company has acclerated its starting date to Aug. 2 and already has the walls going up. He also emphasized the benefit's of the mall's location at Boone's Crossing off of Highway 40 because "it's sitting there for over half a mile on the freeway."
Simon's CEO David Simon is also quoted in the article as responding even more aggressively to questions about possible overcrowding in the outlet market during the company's third quarter conference call.
"We will not make any outlet mistakes, okay?" he said. "The reason we won't is because we're the leader in the business. We have 70 Premium Outlets in the world. We have the best francishe in the business."
Turns out, St. Louis isn't the only area where Simon Properties is facing outlet mall compeititon. According to the article, they are in a similar situation in Charlotte, N.C., with Simon and another experienced developer both planning outlet centers in the city.
"At the end of the day, it will be a competition of who gets the retailers," Simon said during the call. "And the experience will ultimately dictate that somebody will get the project, and somebody won't, and there will be one built."
For his part, Thomas recommended investing in Taubman Centers over Simon Property Group, noting that it's the "best site that usually wins."
To see all of our past coverage on this ongoing story, check out our outlet malls topic page.