Upscale retailer Saks Inc. plans to open outlet stores in five megamalls being developed by the Mills Corp. during the next three years, including Arundel Mills in Anne Arundel County.
The first of the planned Off 5th Saks Fifth Avenue Outlet stores is expected to open in November at Arundel Mills, a $250 million, entertainment-oriented mall under construction near Baltimore-Washington Airport, the retailer and the Arlington, Va.-based real estate investment trust said yesterday.
This brings one of the top retail tenants in the world to Arundel Mills, said Debra Feldman, a spokeswoman for the Mills Corp. Saks is a very strong tenant. Their name and brand identification is top of the line.
Four more Saks outlets are expected to open by 2003 in other Mills projects. The developer expects to open malls in Toronto and Atlanta next year and is planning a mall in New Jersey and an outdoor center in Atlanta.
Those are not necessarily the projects in which Saks will open, Feldman said.
At Arundel Mills, scheduled to open in November, the 28,000-square-foot Saks outlet will be one of about 16 anchors and will be one of 220 stores. The developer has announced the signing of six anchor tenants, among them a Jillians entertainment complex, Muvico Theaters, Sun & Ski Sports, Bed Bath & Beyond, FYE (For Your Entertainment) and Iguana Merimex. Negotiations continue with others, Feldman said.
Retail experts expect Old Navy, Books a Million and Blacklion furniture to sign on as well.
Saks will provide Arundel Mills with a needed, brand-name fashion tenant, which analysts say will help attract more high-quality tenants and draw upscale shoppers.
You want to see a Saks Off 5th, a Nieman Marcus Last Call, a Nordstrom Rack or some combination of those, said David M. Fick, an analyst with Legg Mason Wood Walker. You want to have the higher-end customer be attracted. People who shop at Nordstrom and Lord & Taylor in Columbia will come, and they wont perceive it as only discount. You need to have something to attract those people away from the fashion malls in the area.
The five-store deal, a first for both Mills and Saks, shows the strength and name recognition of the 10 existing Mills projects, all of which mix a heavy dose of entertainment with manufacturers outlets, department store and specialty outlets and off-price retailers, analysts said. Leases are typically signed on a site-by-site basis.
This is a somewhat atypical way of doing it, said Robert Levy, a senior analyst with Robertson Stephens. Its a positive for [Mills]. It shows the potential strength of the development pipeline that a high-quality tenant like Saks would commit so early.
Its a validation by Saks of their belief in the Mills products, and a validation of their belief of Mills as a developer.
Developers are generally better able to strike such multisite deals, as their projects become more national in scope, Fick said.
It becomes more efficient for both sides, Fick said. Its our expectation that companies would do more of this.
Saks, which operates 360 specialty and department stores, including 60 Saks Fifth Avenue stores, runs 44 Off 5th outlets, including 10 in all the Mills projects. Mills malls have occupancy rates in the 95 percent to 96 percent range, with average sales of $337 per square foot, higher than the average mall.
We anticipate Arundel will be a very solid performer for them, Levy said. Demographics in the area are extremely strong.