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Online Shopping Aside, Malls Bullish on New Year

Despite a surge in online shopping, San Diego mall and outlet center operators are forecasting strong returns in 2006 from shoppers who prefer to peruse the racks and store shelves in person.

According to Virginia-based research firm comScore Networks, online retail sales between Nov. 1 and Dec. 13 were up 23 percent from the same period in 2004, and by the holiday season’s end, that percentage was expected to rise by at least a full point. But those added profits made on the Internet apparently didn’t hurt local retail center revenues.

“There really is no online equivalent to what we do,” said Michele Rothstein, a spokeswoman for Carlsbad Premium Outlets. “People who shop with us want the experience of shopping. They want to be able to try on clothes and enjoy the fountains we have and the atmosphere they help create.”

Without disclosing specific figures, Rothstein also said that revenues at North County’s 90-store Carlsbad Premium Outlets are increasing. She suspects many of the center’s shoppers are visiting San Diego and view the outdoor center as a tourist attraction.

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Located in Carlsbad, Carlsbad Premium Outlets is owned by New Jersey-based Chelsea Property Group, Inc. The 289,000-square-foot center was known as the Carlsbad Company Stores before being purchased by the Chelsea Property Group in September 2004 for $102.4 million.

Chelsea is part of Indiana-based real estate company Simon Property Group, Inc., which also owns Fashion Valley Mall in Mission Valley.

Masa Liles, director of mall marketing for Fashion Valley, also expects strong returns in 2006.

“Fashion Valley will end 2005 with a significant sales increase so we, of course, expect that trend to continue in 2006,” Liles said.

Going For The Gold

Liles attributes increased sales figures to the 1,697,162-square-foot mall’s increased push to attract more high-end retailers. New tenants slated to open at Fashion Valley in 2006 include Bloomingdale’s department store, Gucci and Kiehl’s, a skin and hair product brand popular with celebrities.

The newest outlet center in the county, Las Shops at Las Americas in south San Diego, plans to continue expanding in 2006, said spokeswoman Nancy Walters. Las Shops at Las Americas is owned by Philadelphia-based Stoltz Management Co. and opened in 2001. Following a recent expansion, the center measures 560,000 square feet and houses 125 retail tenants, including Neiman Marcus Last Call, Nike Factory Outlet and Polo Ralph Lauren Factory Store.

Walters said that Las Shops at Las Americas, which is about 20 minutes from Downtown San Diego, will be completely leased out by the end of 2006 , hopefully with more “fashion forward-type” retailers.

High-end, fashion-forward-type retailers seem to be a consistent theme among the county’s mall and outlet centers. Rothstein, from Carlsbad Premium Outlets, said that although the center’s 90 tenant spaces are 100 percent leased as of the new year, some leases will expire, paving the way for more affluent designer shops.

“Our goal is to keep doing what we’re doing and as we get the opportunity to re-lease spaces, we will do that,” Rothstein said, noting that she expects at least three new tenants in 2006.

While Rothstein declined to give the names of those three new tenants, projected opening dates and the names of the stores they will replace, she did say that they are all high-end designer brand stores.

Fashion Valley’s Liles said she expects the wave of new high-end stores at her mall to continue into 2007, when a “significant percentage” of tenant turnover will occur as several 10-year leases signed in 1997 expire.

With most of the county’s mall and outlet centers vying for the same high-end retail consumer’s attention, attracting shoppers to a particular center will be key in 2006.

Walters, from Las Shops at Las Americas, said that convincing shoppers from North County that the drive to the center is not excessively long will be important this year.

“The awareness is definitely there in South County and in Baja, but North County residents don’t always know about us and even if they do, they might think we’re further away than we really are,” Walters said, noting that it’s a common misconception that Las Shops at Las Americas is in the San Diego suburb of San Ysidro when it is in fact within San Diego city limits.

A new sit-down restaurant opening soon at the center, described as a “destination” place, may also help attract North County shoppers, Walters said.

At Fashion Valley, Liles said she hopes her mall will beef up its 2006 marketing strategies that target Hispanic shoppers, who represent 22 percent of the mall’s visitors annually.

Liles said all advertising and marketing campaign strategies for the property are initiated at the corporate level, but she plans to share her interest with Simon Properties in the hopes of encouraging them to more aggressively court Hispanic shoppers.

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