Outlet Mall Sector is Heating Up

Amid the gloom-and-doom stories about failed malls and what to do about them, comes a surprising discovery. Namely that outlet malls are posting some pretty strong results. According to experts, such as Hessam Nadji of Marcus & Millichap Inc., outlet malls are doing well because they offer discounted goods.

Tanger Factory Outlet Centers Inc., the only public REIT focused solely on outlets, reported an occupancy rate of 97.7% and 3.3% year-over-year growth in same-center net operating income at the end of 2016. Simon Property Growth reported occupancy of 96.8% for both its Class A malls and outlet centers.

One reason for the growth is a lack of department stores that cater to an individual brand. And another is the outlets’ measured growth. “We’re a sector that has always been underbuilt,” Steven Tanger, chief executive of Tanger Factory Outlet Centers told the Wall Street Journal.

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