Fargo developer explores massive outlet mall
FARGO — In preparation for North Dakota's first sizeable outlet center, earthmovers here have spent months reshaping land near the Timber Creek Addition on the city's south side.
It's one of the few visible signs that a regional retail center that's second in size only to West Acres is emerging northeast of the intersection of 52nd Avenue South and Interstate 29.
Kevin Christianson, president of Fargo-based Property Resources Group, confirmed this week he is "exploring" a 300,000-square-foot outlet center with enough space for 60 stores and nearly 1,500 parking spots. He wouldn't name tenants that PRG is working with but said he hopes to have news on that next month.
By comparison, West Acres offers 120 stores in 950,000 square feet of space.
If the outlet mall is developed, Christianson said, he hopes to add a hotel and water park as well as an entertainment complex to the east.
"Our project will bring a lot of amenities the larger communities are enjoying today," he said.
If built, Fargo Outlets at Timber Creek would be the first outlet center in North Dakota and the only one between Albertville, Minn., and Boise, Idaho, a trade area that includes some 2.6 million potential shoppers, according to PRG's analysis.
Christianson said an outlet center is also under development in the Winnipeg area, but it's a different concept than his.
If everything goes according to plan, he said he hopes to break ground in 2017 and have the outlet center open the following year. The hotel and entertainment complex could be in place by 2020, he said.
How an outlet is built
With some exceptions, such as West Acres Mall in Fargo, malls are a dying breed around the nation and being replaced by outlets, Christianson said. He cited industry studies showing how outlets have successfully positioned themselves as places where fashionable brands can be found at bargain prices at a time when consumers increasingly demand those things.
In Fargo-Moorhead, West Acres' ability to attract shoppers from far and wide will actually help Fargo Outlets because it shows retailers how much of a market there is here, said Travis Voegele, who works on commercial sales and leasing for PRG. At the same time, he said he expects the outlet to attract more visitors to the area, benefitting existing retailers.
PRG has experience developing local retail centers, such as the Shoppes at Osgood, but this will be its first outlet center. The firm has hired EB Development, outlet specialists who represent both developers and tenants. In their portfolio are Outlets at the Pike in Long Beach, Calif., and the Outlets at Assembly Row in Somerville, Mass., which feature brands such as Banana Republic, H&M, J. Crew and Nike. They're also opening Empire Outlets in Staten Island, N.Y., and The Outlets at Corpus Christi Bay in Texas.
At least two companies, Brooks Brothers and Destination XL, the company behind Casual Male XL, have shown enough interest in being tenants at Fargo Outlets that they've provided PRG with comments for public release.
But the key to the outlet center's success will be five anchor tenants that Christianson said he's working to sign up.
In the outlet industry, many smaller retailers that offer the same or complementary merchandise as an anchor will follow that anchor to different retail centers, said Kyle Freier, PRG's chief operating officer. They assume that if the anchor has done the research and found a location beneficial, they will benefit also.
Christianson said he's had to convince anchors accustomed to major metro areas that Fargo-Moorhead is big enough for them. Many want at least 800,000 consumers within their daily trade area, which usually means within a 30-mile radius of their outlet stores, he said.
It takes a 50-mile radius around Fargo to approach those numbers, but what makes it work here is lack of traffic congestion and consumers willing to drive long distances to do their shopping, Christianson said.
Water park, cinema
If Fargo Outlets works out, it'll trigger the two other Timber Creek-area projects, Christianson said.
The hotel and water park would likely be built by PRG, which has a development arm with experience in developing hotels carrying the flag of brands such as Fairfield Inn & Suites.
The 85,000-square-foot entertainment center would offer a variety of entertainment under one roof. Christianson described possibilities such as a gussied-up bowling alley like those offered by Lucky Strike, an arcade, restaurants and movie theater. He said if a theater is built it would be designed with a segregated area for serving alcohol.
The city does not allow alcohol in theaters now, though at one time there had been discussions with West Acres Cinema. Those talks have not been revived since the city insisted on segregated areas for drinkers, which existing theaters like West Acres would find costly because of the renovation involved.
Though earthmovers have been at work for months, the outlet center is still not a done deal.
Christianson said they've raised the site elevation to get out of the flood plain and are creating buffers to shield nearby homes and apartments from retail activities. He said that will be needed for any commercial development in the area.
Besides waiting for word from retailers, he said he also plans to ask for tax incentives from the city.
"We need some help with the city to make it work financially," he said.
City leaders have traditionally frowned on offering incentives for retail developments. When the city uses a point system to decide if a development qualifies, manufacturers and tech firms gain points while retail and lodging outside of downtown loses points.
PRG argues that Fargo Outlets would bolster the area's tourism industry by bringing in more visitors and generating more sales taxes.
Using industry averages that he called conservative, Christianson said he believes his outlet center would increase the city's annual sales tax revenue by 7 percent.
That's based on $150 million in annual sales. The development would also create more than 1,000 jobs, he said.