Buoyed by shoppers looking for discounted goods and bustling demand for space, owners of outlet centers are posting strong results in an otherwise bleak retail environment, The Wall Street Journal reports.
“Outlets have performed well because of their discount nature,” says Hessam Nadji, CEO and president of real estate brokerage Marcus & Millichap. “It does have a flair to it that works well during tough times.”
Outlets used to be no-frills shops situated next to factories where retailers sold old, discontinued or defective goods. During the 1980s and 1990s, landlords packaged numerous retail outlets together in sprawling centers, and retailers responded by designing items specifically for sale at outlets.
There are roughly 200 U.S. outlet centers with assets worth a collective $50 billion, according to estimates from real estate research firm Green Street Advisors. And they enjoy high levels of occupancy and income growth, analysts say.
Tanger Factory Outlet Centers Inc., which has a center in Gonzales, is the only publicly traded real estate investment trust focused solely on outlets. It reported an occupancy rate of 97.7% at the end of 2016 and $273 million in same-center net operating income, up 3.3% from a year earlier.
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