4/17/2012 | By Carisa Chappell
Simon Property Group Inc. (NYSE: SPG) is expanding its global footprint and bringing the concept of outlet centers to countries outside of the United States. Simon announced in April that it will be developing an outlet center in Brazil and is beginning construction on Canada's first upscale outlet center.
"Outside the U.S., the outlet sector is still in the earlier stages of development and growth," John Klein, president of Simon's Premium Outlets division, told REIT.com. "Shoppers in both countries love our centers here in the U.S. and don't have anything like it at home."
He said Simon is keeping an eye on opportunities to bring the company's outlet brand to new countries, especially those where residents have frequented Simon's centers while visiting in the U.S.
"There is good demand from a consumer standpoint, and there's also a desire within the merchant community to expand," he said.
Simon's strategy for international expansion revolves around joint ventures with companies that are experts in the target markets, because "both partners bring areas of expertise that complement one another," according to Klein.
The first project in Brazil will be a 50-50 joint venture with BR Malls Particpacoes S.A., the largest retail real estate company in Latin America. The center is expected to open in Sao Paulo in 2013.
In Canada, Simon joined forces with Calloway Real Estate Investment Trust on a 50-50 venture. The partnership announced that construction of the Toronto outlet center will begin on April 25. Toronto Premium Outlets is expected to open the first phase of its 500,000-square-foot center in 2013. The outlet center will have more than 100 stores, and Klein said it is expected to be the Canadian entry point for selected upscale U.S. retailers and designer brands.
Simon previously announced an agreement in March with the Baililan Group, the largest retail corporation in China, to jointly develop Simon's first outlet center in China. The project is expected to be adjacent to the Shanghai Disney Resort.
"We are exploring many opportunities worldwide," Klein said. "We opened in Malaysia last year and we are very pleased with its performance to date."
Simon currently has 70 Premium Outlet Centers, including 57 in the U.S., one in Puerto Rico, eight in Japan, two in Korea and one in Mexico.