A new $100 million outlet mall with nearly 100 stores was approved last week by the Eagan City Council and could open by November 2014, becoming the first major outlet mall to be within the metro area rather than on the periphery.
Eagan officials said the city had hired an outside marketing consultant to make sure the outlet mall, proposed by Baltimore-based Paragon Outlet Partners, had a sustainable business plan. The study found that the outlet mall would be feasible based on a projected Twin Cities population increase that is expected to push retail spending in the metro area from $2.9 billion in 2014 to $3.7 billion in 2020.
"Our study showed that an outlet shopping mall draws traffic in a different way than other retail, and that it can be complementary to an unusual retail destination such as the Mall of America," Jon Hohenstein, Eagan's community development director, said in an interview Monday. The mall's location on a 29-acre tract south of the Minnesota River near Cedar Avenue and Hwy. 13 is less than 5 miles south of the Mall of America. Between now and January, Paragon must show the City Council that the plan is progressing in accordance with what was approved.
It's possible that some Mall of America stores also might be present at the outlet mall, selling different merchandise at a different price, said Tom Hedges, Eagan's city administrator.
Paragon, which did not return phone calls Monday, has not disclosed which retailers would open stores in the new outlet mall. But Eagan officials point to malls that Paragon recently opened in Texas and California, which include retailers such as Burberry, Calvin Klein, Jos. A. Bank, Wilson's Leather, Fossil and Brooks Brothers.
Retail experts interviewed Monday said a new outlet mall probably would draw no more than a few percent of customers away from the Mall of America, Southdale, Eden Prairie Center and Burnsville Center. That is not enough to cause the mall operators and their shop owners much discomfort, they said.
The proposed 441,000-square-foot Paragon development "does not represent a significant increase in retail space in the south metro area," said Jim McComb, president of Minneapolis-based McComb Group, a retail and real estate consulting firm. "So I don't see it as an important threat to any regional malls or retailers across the south metro."
Herb Tousley, director of real estate studies at the University of St. Thomas in Minneapolis, agreed.
"The outlet stores will not compete directly with the Mall of America," Tousley said. "Outlet stores draw a different kind of shopper. They will compete mainly for customers that currently go to other outlet stores" such as those in Albertville, North Branch and Medford, located beyond the metro area.
Retail experts said history suggests the outlet mall will draw more bargain-oriented shoppers than the Mall of America or Southdale. It is possible, however, that the outlet mall could have a modest impact on traditional retailers.
For example, out-of-town shoppers who have come for the weekend might want to take in as many attractions as possible and spend at least part of their time at the outlet mall, McComb said. Malls such as Burnsville Center, Eden Prairie Center and Southdale might lose from 2 to 5 percent of their business to the new outlet mall, "but those are not significant percentages," he said.
The creation of an outlet mall in Eagan suggests that investment in retail property is on the rise, Tousley said.
"There won't be dramatic improvement [in retail investment] in the short term,'' Tousley said. "But assuming there's not major economic disruption, we'll see steady growth over time. I think this [Eagan mall] has a good chance of being a successful development."
Steve Alexander 612-673-4553