The acquisition of the Belz Factory Outlet mall by Chelsea Property Group will allow it to control the outlet shopping market in the Las Vegas area, but shoppers will see few, if any, changes, local analysts said.
Hours after Roseland, N.J.-based Chelsea Property Group and its partner, Simon Property Group, opened their 435,000-square-foot Las Vegas Premium Outlets in downtown Las Vegas Friday, Chelsea bought its largest local competitor.
Chelsea bought the 10-year-old, 477,000-square-foot Belz Factory Outlet World from Estein & Associates USA Ltd., for $104 million. Belz, which will be renamed the Las Vegas Outlet, is widely considered one of the top outlet properties in the country, with 2002 sales averaging $390 per square foot.
That compares with Chelsea's 34 outlets nationwide, which average about $329 per square foot. The nation's other outlet centers average between $241 and $294 per square foot, according to the International Council of Shopping Centers, an industry trade group.
"My reaction is I'm not surprised," said Michael Kammerling, senior vice president of the retail division at Grubb & Ellis, Las Vegas. "From the perspective that Chelsea is growing rapidly and is one of the best REITs in the country, there are a lot of people behind them, and with interest rates as good as they are, it's as good a time as ever to lock in on these centers."
As part of the Las Vegas Belz Factory Outlet sale, Chelsea also bought a second Belz property in Lakeland, Tenn., for $3 million. Chelsea officials said that center will be resold.
Belz still owns a 51,874-square-foot annex at the Las Vegas mall as well as 12 acres of land fronting Las Vegas Boulevard and the mall. Officials with Belz could not be reached for comment.
Chelsea, in partnership with Simon, has plans to open a Chicago-area Premium Outlet next summer. Chelsea also owns, and continues to open additional properties, in Japan.
Michele Rothstein, spokeswoman for Chelsea, said there will be no immediate changes to the tenants at the two Las Vegas properties.
When the $90 million Las Vegas Premium Outlets opened Friday, it opened with some of the same tenants that are housed on the south side of the Strip at Belz.
"Those that are in both centers are such popular brands and that appeal to such a wide target, we feel at this point they will both do well," Rothstein said.
Las Vegas Premium Outlets has stores such as Armani Exchange, Kenneth Cole, Coach and Chico's. Las Vegas Outlets has stores such as Burlington Brands, Catherine's, Harris & Frank and Urban Leather.
The two outlets have many of the same stores, such as Casual Corner, Big Dog Sportswear, Nike Factory Store and Dress Barn.
Rothstein said, though owned by the same company, the centers will each have their own identity.
"The positioning will be different," she said. "My analogy is casinos. There are owners who own several casinos and hotels on the Strip. Their ad campaigning, logo, look and feel gives customers assurance in the ownership and to their quality."
Rothstein said the thread between Chelsea's two outlet centers will be on quality and customer service.
The Las Vegas Premium Outlets has been marketed as a place for high-end goods and retail, while Belz has traditionally been focused on the midpriced market, said George Connor, senior vice president of Colliers International's Las Vegas retail division.
Rothstein said the two centers would be marketed together to tour groups.
"It will be a great opportunity when marketing to tour and travel trade groups, to offer them both, because both offer great opportunities," she said. "It is important in the visitor market where the imagery is important and will be distinct and will compliment one another."
Rothstein said bottom line, buying the other center had to do, well, with the bottom line.
"We'd rather own our competitor than compete with them," she said.
Chelsea's only outlet competitor is now the Fashion Outlet of Las Vegas in Primm, about 45 minutes south of Las Vegas. Officials with that mall said they don't expect Chelsea's presence in the market to hurt sales or traffic figures.