The Baltimore-based owner of 29 outlet shopping centers is spending $100 million to improve appearance of its centers, lure new tenants and expand properties.

`Makeover' by Prime Retail

April 12, 2005|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Bob Brvenik was in Detroit for business a year ago when he approached a group of women and asked if they shopped at the nearby outlet mall.

"I haven't been there in a while," replied one woman, unaware that she was talking to the president of Prime Retail Inc., the owner of 29 outlet shopping centers, including the one in question. "It hasn't changed much in five years. When was the last time they painted it?"

The conversation confirmed what Brvenik and his team of executives knew - that years of financial problems under previous owners had taken their toll on many of Prime Retail's shopping centers.

But now the Baltimore-based company is promising shoppers a new and better operator. By the end of the year, Prime Retail will have spent $100 million sprucing up the exterior of its centers, luring new tenants and expanding some of its properties. An "extreme makeover," it calls the change.

"It's the new Prime Retail," Brvenik said. "It's a new company. It's a new attitude."

As part of the transformation, the company recently began an overhaul of its Queenstown outlet center, a popular stop for beach-goers, that will include a conversion of its 1980s stuccolike facade to a contemporary brick, stone and glass finish. The Eastern Shore center also is expected to expand by 80,000 square feet to 302,000 square feet.

The renovations are part of a broader plan to change the image of Prime Retail, which a couple of years ago was on the brink of financial disaster after expanding too quickly.

The New Jersey-based Lightstone Group LLC bailed out Prime Retail in 2003, acquiring the company in a $638 million deal, including assuming $523 million of the outlet center owner's debt. Under the agreement, the publicly traded Prime Retail became privately held. Most important, analysts said, the company got access to capital to help rehabilitate its malls and improve its financial footing.

Most of the centers were in good locations, which helped the company through its difficulties, said Stan Eichelbaum, president of Marketing Developments Inc., a research and consulting firm in Ohio. It also made it easier to attract new tenants, when it became more financially sound.

Since being acquired, Prime Retail has expanded several centers, including in Birch Run, Mich., Williamsburg, Va., and San Marcos, Texas. Sales at Birch Run were up 10 percent after improvements, Brvenik said. Every mall in the company's portfolio will get some kind of upgrade. Some, such as the Hagerstown outlet center along Interstate 70 in Western Maryland, are in good condition and don't need much work.

Prime Retail also has entered the traditional mall business, acquiring eight regional malls. In what some have described as potentially the biggest retail deal this year, Lightstone and Prime Retail are in negotiations to buy the 700,000-square-foot Belz Factory Outlet World and the 200,000-square-foot Belz Designer Outlet near Walt Disney World in Orlando, Fla.

The company has gotten rid of underperforming shopping centers, including an outlet center along Interstate 95 in Perryville in Cecil County, whose sign still bears its name, and another in Niagara Falls, N.Y., to focus on its more popular malls.

"In business, it's much easier to take a good property and make it better than to take an underperforming property and make it good," Brvenik said in a conference room of his Baltimore headquarters, surrounded by leasing plans of the company's shopping centers.

As a public company, Brvenik said, Prime Retail had become too stodgy and corporate. The offices were in the same building as financial powerhouse T. Rowe Price Group Inc. The office furniture was a dull, dark wood, he lamented.

The company's new office on Redwood Street has more contemporary cubicles. The new company logo is brighter. The advertising is more eye-catching, featuring young women in the latest fashions.

"We're trying to look like a cool, fashionable company because that's who our customers are," Brvenik said.

He also knows that appearance means nothing if you don't have the stores that people want to shop in. The biggest part of the company's turn-around plan has been improving the tenant mix in its shopping centers.

The $25 million expansion-and-renovation center at its San Marcos location brought in new, upscale stores such as Neiman Marcus Last Call, Salvatore Ferragamo Company Store and Hugo Boss. To The Max, a store that's part of the BCBG/Max Azria Group and caters to the young fashion-forward, also opened its first U.S. outlet store at the Texas center.

"When it's all said and done, the No. 1 reason people will come in is for your stores," Brvenik said. "You can have a beautiful center and stores nobody wants to shop. We want to spice it up. We want to add some flavor and zest to our merchants."

Retail experts said Prime Retail is taking the right steps as outlet centers face greater competition.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.