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Desert Hills Outlet to Get Upgrade

The expansion will enlarge the outlet shopping center to about 650,000 square feet and will house some 40 stores.

The upscaling of the outlet business continues.

When Desert Hills Premium Outlets in Cabazon, Calif., unveils its $100 million, 146,000-square-foot expansion on April 24, it will introduce the first Alexander McQueen outlet store in the U.S. to value-conscious shoppers. In total, the expansion will enlarge the outlet shopping center to about 650,000 square feet and will house some 40 stores, including Max Mara, CH Carolina Herrera, La Perla and Wolford, as well as other first-to-the-U.S. outlet stores for Helmut Lang and Belstaff.

“The luxury players are very selective about where they go. They have to be exclusive and maintain control over their brand. There are really only a handful of opportunities where they can go,” said Mark Silvestri, chief operating officer of Simon Property Group Inc.-owned Premium Outlets. “You can easily count the number of opportunities in North America that make sense for them, and we are fortunate to have some of the best centers.”

Desert Hills Premium Outlets opened in 1990 and currently has 130 outlet stores that generate $1,300 in annual sales per square foot on average. Among those stores are Gucci, Marni, Saint Laurent, Bottega Veneta and Prada, which is increasing its retail footprint at the shopping center from 5,500 square feet to 7,500 square feet.

Desert Hills Premium Outlets isn’t the only Premium Outlets center getting upgraded. About an hour outside of New York City, 850,000-square-foot Woodbury Common, where average annual sales per square foot exceed $1,550, is undergoing a $170 million renovation to bring it to 240 stores and more than 900,000 square feet. Additional expansion projects on Premium Outlets’ docket affect its outlet centers in Las Vegas, Chicago and Livermore, Calif.

The expansions, not to mention Premium Outlets center openings later this year in Charlotte, N.C., Montreal and Eagan, Minn., come as outlets are booming. During the third quarter of last year, Simon reported that rents at its U.S. malls and Premium Outlets properties rose 3.5 percent, sales per square foot grew 3 percent and comparable property net operating income jumped 5.2 percent. At Premium Outlets specifically, Silvestri said, “Our sales have been the highest they have ever been.”

As Premium Outlets embarks on pre-development projects in Tampa, Fla.; Tucson, Ariz.; Clarksburg, Md.; Norfolk, Va., and Gloucester Township, N.J., Silvestri doesn’t seem too worried that e-commerce would dim Premium Outlets’ future prospects. “The firsthand physical shopping experience is not something that can be replicated,” he said. “It’s all the amenities. It’s the food and beverage. It’s the thrill of the hunt and finding that dress at McQueen that is 50 or 75 percent off. That is not something that can be replicated clicking on a smartphone.”