DESERT EXPANSION: Desert Hills Premium Outlets unveiled the largest expansion in its history on April 24. It has been in business since 1990. Photos courtesy of Simon Property Group.

DESERT EXPANSION: Desert Hills Premium Outlets unveiled the largest expansion in its history on April 24. It has been in business since 1990. Photos courtesy of Simon Property Group.

BRINGING MORE BLING TO DESERT

Desert Hills Premium Outlets

Desert Hills Premium Outlets, known as a Rodeo Drive for discount designer clothes, unveiled the biggest expansion in its more than two decades in business.

Simon Property Group, the owner and operator of Desert Hills, located in Cabazon, Calif., a 20-minute drive from Palm Springs, Calif., spent $100 million on the 146,000-square-foot expansion, which debuted on April 24. The retail center will host 50 new shops, including the first Alexander McQueen and Helmut Lang outlet shops in the United States. Other designer brands opening outlet shops at Desert Hills include Belstaff, Max Mara, Wolford, La Perla, CH Carolina Herrera, Fendi, John Varvatos and Valentino, which will open on Aug. 1. A Marc by Marc Jacobs shop is scheduled to open in May.

Prada will introduce an expanded 7,500-square-foot outlet store at Desert Hills this year. Other existing designer discount stores include high-marquee brands Michael Kors, Salvatore Ferragamo, St John, Polo Ralph Lauren, Versace, and Armani, all selling fashions typically a season to one year old, at 25 percent to 65 percent off.

The expansion will make Desert Hills one of the flagships of Simon’s more than 65 Premium Outlets chain of discount brand boutique centers located across the United States and in Puerto Rico, said Coleen Conklin, Premium Outlet’s senior vice president of marketing.

“It offers a list of stores not available at outlet centers in the U.S.,” Conklin said.

Desert Hills has been a popular retail attraction since it opened in 1990, and it attracts more than 10 million visitors annually. Last year, more than 3,000 chartered tour buses brought international tourists from China, Japan and Brazil to Desert Hills. Conklin said the average sales per square foot is $1,300 annually.

The coveted tourist business is joined by shoppers from all over the West—primarily California, Nevada and Arizona—seeking designer and discounted merchandise from popular brands and retailers. Teen retailers Pacific Sunwear and Zumiez operate Desert Hills outlets. Levi’s, Lacoste, Joe’s Jeans, Juicy Couture, James Perse, Quiksilver and Volcom also operate stores there. Hurley and U.K.–based Ted Baker London opened outlet stores on April 24.

Ted Baker operates 18 outlet stores across the globe, said Craig Smith, the company’s communications director. Outlet stores bring in benefits that are not entirely financial, he said. “They introduce our brand to a broader scope of clients in high-tourist areas and allows us to further protect our brand image,” he said.

The outlet-center business is one of the growth areas of the shopping-center business. Since 2006, 40 outlet centers have been built but only one traditional regional shopping center, said Linda Humphers, editor-in-chief/director of Value Retail News, a publication owned by the International Council of Shopping Centers,a shopping-center trade group.

About 11 outlet retail centers are scheduled to open in 2014, including two in California. The Outlets at Tejon Ranch is being developed 40 miles south of Bakersfield, Calif., by the Tejon Ranch Co./Rockefeller Group. Shamrock Group LLC is developing The Outlets at the Border, which is scheduled to open in fall 2014 in the San Diego area.

About 17 outlet centers are scheduled for major expansion this year, according to Value Retail News. In December, Simon placed its portfolio of strip malls and smaller retail centers into a new company, SpinCo, so it could focus more on its Premium Outlets properties, Mills properties and larger malls such as Del Amo Fashion Center in Torrance, Calif. However, Humphers noted, the outlet business is just a small part of the retail landscape.

“There are more than 200 outlet centers in North America. There are 1,200 regional malls in the U.S.,” Humphers said. “It’s a tenth of the size of the regional mall industry.”

Perhaps one reason why the business is still small is that many manufacturers will not open an outlet store near a wholesale account. “Retail sensitivity does still exist,” Humphers said. “The old rule of thumb was that an outlet center had to be 30 miles from a regional mall. We are seeing some centers open closer than that, but there still are retailers who will not open in those centers.”

Architects Orange of Orange, Calif., designed the expansion of Desert Hills, which features wider walkways, a new roofed parking area that is the length of three football fields, and new desert-friendly landscaping (including 125 palm trees). “It feels like a premium outlet that belongs in the area,” Conklin said.