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An Outlet for Growth
Outlet Centers Beef Up Revenues for Texas Towns
When the Rio Grande Valley Premium Outlets opened in Mercedes in November 2006, it was the culmination of 10 years of discussions and plans between city economic development officials and retail developers.
So you want an outlet mall?
The world of outlet center retail is competitive. Michele Rothstein is senior vice president of marketing for Chelsea Property Group, a division of Simon Property Group, which owns Premium Outlet Centers in three Texas cities and has a fourth under construction. She says the company looks at the following general criteria when scouting potential sites for its centers:
- a market with a strong permanent population as well as a visitor component;
- ease of access via major highways and visibility from the highway; and
- demographics that best suit its up-scale outlet center concept.
The Comptroller’s Local Government Assistance and Economic Development Division can provide general technical assistance on incentives that cities and counties may use to promote retail development, as well as lists of cities that have attracted large retail developments using Chapter 380 Agreements, Section 4A and 4B sales taxes, tax abatements and other information. Contact the division at (800) 531-5441, ext. 3-4679, or visit the Economic Development Sales Tax information page.
Local Government Tools that Made the Difference
for Mercedes
When it comes to landing an outlet center, it’s all about services, says Albert Gonzalez, executive director of the Mercedes Economic Development Corp. (EDC). The city tripled the personnel in its planning, zoning and police departments since the outlets opened in 2006.
Mercedes leaders offered the following incentives as part of their package to land the Rio Grande Valley Premium Outlets:
- $1.5 million in infrastructure, including running water and sewer to the site and building a lift station; and
- a 50 percent sales tax rebate to developers for 10 years
For more information, contact the Mercedes EDC at (956) 565-2230. The Comptroller’s office provides information on the Section 4A and Section 4B economic development sales tax, which can provide funds for infrastructure improvements. For more information, contact the Comptroller’s Local Government Assistance and Economic Development Division at (800) 531-5441, ext. 3-4679.
Who's shopping?
Outlet centers nationwide have grown bigger and more upscale in recent years, but their customers haven’t changed much; they are predominantly female. A 2005 demographic study by North Carolina-based Tanger Factory Outlet Centers found the average Tanger shopper is a married, 41-year-old woman with a median household income of $56,283.
Tanger has outlet centers in San Marcos and Terrell.
Shoppers stroll the Rio Grande Valley Premium Outlets in Mercedes, Texas.
Ultimately, New Jersey–based Chelsea Property Group, a division of Simon Property Group and owner of the Premium Outlet Centers, built a $60 million, 400,000–square–foot property along U.S. Highway 83. “This has been a much awaited project for our community, the Rio Grande Valley and northern Mexico,” Mercedes Mayor Joel Quintanilla told dignitaries and shoppers at the ribbon cutting.
Three months after the opening, Mercedes saw sales tax receipts of $350,000 from the center, says Albert Gonzalez, executive director of the Mercedes Economic Development Corp.
The outlets, which boast stores such as Calvin Klein and Tommy Hilfiger, in part sparked a tourism boost that will bring an estimated 7 million tourists to the town of 13,000 this year, Gonzalez says.
The shops have had a ripple effect on other parts of town.
“All of our existing facilities that we had in the downtown area have filled up much faster,” Gonzalez says. “We’ve seen more business activity down there. Obviously it’s a complement to what’s going on in the expressway, where the outlets are located.”
Mercedes Drives Sales
Mercedes officials recognized that outlet centers can mean more than new jobs and shopping — they can put a city on the map, says Michele Rothstein, senior vice president of marketing for Chelsea Property Group.
“Most convention and visitors bureaus today recognize the importance of shopping as being a bona fide destination and an enhancement to their offerings,” she says. “Visitors from all over the world love to shop.”
Up I–35, Hillsboro draws tourists to its Outlets at Hillsboro. “Everyone associates Hillsboro with the outlet mall,” says Robert Watts, director of the Hillsboro Chamber of Commerce. The shops have spurred growth along I–35, Watts says. Several restaurants and a Hampton Inn have opened.
With 230 outlet stores that bring in an estimated 7 million visitors a year, San Marcos knows the power of outlets. “The outlets have definitely put us on the map tourism–wise,” says Rebecca Ramirez, director of the San Marcos Convention and Visitor Bureau.
The city’s Tanger and Prime outlet centers are one of the state’s most–visited tourist destinations, according to the Governor’s Office. The outlets generate between 35 and 40 percent of San Marcos’ sales tax revenue, Ramirez says.
Upscale Shopping
Ten miles from the Mexican border, Mercedes’ Rio Grande Valley Premium Outlets offer an upscale shopping destination for Mexican nationals, area visitors and local residents.
“It’s bringing really nice tax dollars into Texas,” says Linda Humphers, editor in chief of Value Retail News. “Everybody in the outlet world is excited about Texas. You’ve got the right weather for shopping year–round, and it’s got great demographics for people who like outlet shopping.”
For in–depth information on retail sales in Texas, visit the Texas Comptroller of Public Accounts’ Economic Indicators.