Elk Grove News

It’s official: Elk Grove Promenade to become outlet mall

The Elk Grove Promenade shopping mall was conceived during the boom a decade ago. It has sat empty for more than five years, a humbling reminder of economic collapse.

Now the unfinished retail complex is being reborn as an outlet mall, an apt symbol of a cautious, post-recessionary world in which the economy is recovering but shoppers demand discounts.

Howard Hughes Corp. will convert the former Promenade site into The Outlet Collection at Elk Grove. Almost a year after first raising the idea with Elk Grove officials, the Dallas developer filed formal development plans with the city Friday to resume construction at the site off Highway 99.

The company previously indicated to city officials the center could open in late 2015. But Mark Putney, vice president for development at Hughes, said the company isn’t ready to announce an opening date.

Putney said the mall will open with about half as much space as had been planned at the Promenade, but expansion could come later. The Outlet Collection will include several of the amenities contemplated at the Promenade, including a 14-screen movie theater, a cluster of restaurants and an open space for children to play and grownups to congregate.

He said the mall will appeal to today’s “price-savvy” consumers but will be done with style. It will be a pedestrian-friendly center, built on the framework of the largely completed Promenade, with trellises, partially covered walkways and other touches. The dining area will include an outdoor plaza anchored by a chimney. Four or five sit-down restaurants will open in addition to a fast-food court.

“People will come here to shop,” Putney said. “We want them to stay to have dinner, have lunch, go to a movie.”

The mall site, fenced off since construction stopped in late 2008, has been an open wound in Elk Grove, whose leaders once envisioned a conventional shopping mall with a Macy’s and other anchor tenants. Mayor Gary Davis said he was thrilled with Hughes’ plans.

“It’s going to have a really upscale look. … It’s going to be a regional destination,” Davis said. “Essentially, they’re finishing the job that they started.”

Hughes was spun off from the original developer, General Growth Properties of Chicago, after General Growth filed for bankruptcy protection in 2009. Hughes inherited several of General Growth’s projects, including the Elk Grove site, and spent the past few years formulating a strategy. Named for the legendary Las Vegas developer, Hughes is a $475 million-a-year company; Elk Grove will become just its second outlet mall.

Outlets are a small segment of the retail industry but have increased dramatically in popularity in the past few years. Since 2006 the country has seen just one new traditional regional center but 40 new outlet malls, said Linda Humphers, editor-in-chief of Value Retail News in Clearwater, Fla.

“The concept is certainly doing very well,” she said.

While low prices are certainly a draw, analysts said shoppers also flock to outlet malls for the blue-chip brands. Upscale retailers and clothing manufacturers have embraced the outlet environment, including Saks, Neiman Marcus, Brooks Brothers and Armani.

“Customers … like the high-end luxury brands at discount prices,” said Craig Johnson of Customer Growth Partners, a retail consulting firm based in Connecticut.

Davis said the outlet concept “will represent 21st-century shopping habits.”

Putney said Hughes has had encouraging talks with prospective tenants, but hasn’t yet signed any leases.

The Elk Grove site will become the third outlet mall in greater Sacramento, joining locations in Folsom and Vacaville. Abby Friedman, an analyst with Cassidy Turley commercial real estate in Sacramento, said she thinks the region is big enough to accommodate a third outlet center and that the Elk Grove complex will draw shoppers from as far away as Stockton and Modesto.

“It makes sense for that area,” she said.

The site consists of a dozen buildings, their exteriors mostly completed. Hughes will tear down four of them, put additions on some of the others and construct three buildings from the ground up. The complex will encompass 520,000 square feet of space, about half the size planned for the Promenade, although Putney said Hughes will likely add more buildings later.

He said Hughes doesn’t know yet how much it will spend finishing the mall.

Related stories from Sacramento Bee