Outlet mall may attract more than shoppers to Steele Creek

After Charlotte Premium Outlets is built on this land in Steele Creek and open for business, developers believe residential communities will pop up nearby. Photo by Payton Guion

CHARLOTTE – The words “outlet mall” bring to mind the towns of Mebane and Gaffney, S.C., where the sprawling shopping complexes hunker on busy interstates, enticing travelers to stop in and drop some coin.

The Charlotte Premium Outlets, which are currently under construction in the Queen City’s Steele Creek neighborhood, will look much the same. At more than 400,000 square feet, it will be sprawling, and just off Interstate 485 at Steele Creek Road, it will be at a major roadway attracting potential customers.

And, like the other outlets, shoppers will need places to eat and sleep after they tire of reveling in retail, so expect restaurant and hotel development to accompany Charlotte Premium Outlets.

But, unlike its older siblings across the state, many in the city’s commercial real estate industry are saying the Charlotte outlets will likely lead to development not typically associated with outlet malls: residential development.

Chris Thomas, partner at Charlotte-based Childress Klein Properties, which is developing the land for the outlet mall, said building an outlet mall in a bigger city – outlets have traditionally flocked to smaller towns – is going to encourage more than just commercial development.

“There are a lot of folks who haven’t visited that part of the city that go to visit the outlets and may not be familiar with what that area has to offer,” Thomas said. “It’s a nice area for families, there are good schools, it’s become a nice place to live.

“I think the outlets will attract homebuyers to the area.” And wherever there’s demand for homes, the homebuilders will follow.

Outlet malls aren’t often associated with residential development because their small-town locations are intentional, meant to draw in shoppers from around a region. Shoppers come, spend money at the stores, eat at the restaurants and possibly sleep at the hotels before returning home.

People aren’t likely to move to Mebane, population 11,393, and Gaffney, population 12,414, solely because of an outlet mall. But in Charlotte, population 796,921, having an outlet mall in a neighborhood will likely add to the amenities homebuyers are seeking, Thomas said.

The outlet won’t be the only commercial development, either. Thomas that Childress Klein is developing the land around Charlotte Premium Outlets, looking to add gas stations, full-service restaurants, fast food restaurants and a hotel.

Thomas said no tenants have been locked in, but said Childress Klein has “a lot of negotiations going on” with potential tenants.

While Childress Klein is the developer on the outlet land – and is developing the projects around the outlet – it isn’t in charge of the outlet buildings. That’s Greensboro-based Tanger Factory Outlet Centers, which is partnering with Indianapolis-based Simon Property Group on the nearly 82-acre, 400,000-square-foot outlet mall.

Charlotte Premium Outlets will have about 90 retailers and Saks Fifth Avenue Off 5^th will be an anchor tenant, according to a news release from the companies, neither of which returned calls for this story.

Thomas said site work began in July on the outlet site and construction started on the mall itself in September, according to Simon and Tanger. The outlets are tentatively scheduled to open next summer.

John Culbertson, a partner of Charlotte-based Cardinal Real Estate Partners, said he wouldn’t be surprised to see a grocery store pop up near all the outlet-related development. Grocery stores typically don’t build near outlets, instead favoring more residential areas. But Culbertson said grocery will be needed in the Steele Creek area based on the residential growth he expects to come with the outlets.

“Even though the mall will be a regional destination, (people in Charlotte) are going to go,” he said. “(They’ll) go the first year it’s open. (They’ll) go down and see that there’s a Harris Teeter and say, ‘Look at this interchange, I had no idea it was like this.’

“And because of the outlet, people in Charlotte are looking at this as a place to live.”

Culbertson and Thomas aren’t the only ones who think, once the outlets are complete, that homebuyers and builders will be attracted to Steele Creek.

Darrell Palasciano, a retail broker in the Charlotte office of Atlanta-based The Shopping Center Group, said Charlotte Premium Outlets is in a unique position to drive residential growth in southwest Charlotte.

“When you bring amenities and services to that community, it will drive traffic to that area and will spur residential growth,” Palasciano said. “The traditional growth model is residential first and retail second, but sometimes the retail comes first and draws residential.

“Concord Mills is a good example of another time that happened. There was nothing there, besides the speedway, and now there’s residential all the way out Derita (Road).”