Simon (SPG) Formally Begins Tulsa Premium Outlets' Construction

Simon Property Group, Inc. (NYSE:SPG) recently hosted a construction kick-off event for Tulsa Premium Outlets in Jenks, OK. The move comes as part of its strategy of enhancing the company’s portfolio of premium outlets in thriving regions.

Scheduled to open in spring 2021, this 340,000-square-foot open air center is positioned on the southern side of the Creek Turnpike and west of the Arkansas River, and will feature high-quality designer and name-brand retailers. Particularly, it will offer a mix of options including fashion, accessories, footwear, athletic and fitness apparel, home décor, electronics as well as quick service dining.

The property will likely draw a high footfall as the Tulsa community is witnessing solid economic and population growth. The project will generate substantial construction and permanent jobs in the area, creating as many as 400 construction jobs, and 800 full and part-time jobs.

Notably, Simon Property is making efforts to make its property stand out from the rest. Tulsa Premium Outlets is, in fact, Simon Property’s 91st Premium Outlets center. For the past years, the retail REIT has been investing billions to transform its portfolio focused on creating value and boost footfall. The transformational plans include addition of hotels, restaurants, residences and luxury stores.

At the end of fourth-quarter 2019, Simon Property had redevelopment and expansion projects, including the redevelopment of former department store spaces, ongoing at more than 30 properties in the United States, Asia and Europe. The company’s share of costs of all new development and redevelopment projects under construction was $1.8 billion at the end of the fourth quarter.

With a strong balance sheet and such a huge pipeline, the company is well poised to effectively leverage the improving spending habits of customers backed by job-market strength and high consumer confidence.

Nevertheless, a shift in consumers’ preferences toward online channels for purchases, bankruptcies and store closures have emerged as pressing concerns for retail REITs and Simon Property is not immune to such choppy environment. In fact, this turbulent environment has wreaked havoc for retail REITs like Simon Property, The Macerich Company (NYSE:MAC) , Taubman Centers (NYSE:TCO) and Kimco Realty Corp. (NYSE:KIM) , among others.

In addition, though the company has been striving to counter this pressure through various initiatives, implementation of such measures requires a decent upfront cost. Therefore, this is likely to limit any robust growth in profit margins in the near term.

Due to the gloomy retail real estate market environment, Simon Property has underperformed its industry in the past six months. Shares of this Zacks Rank #4 (Sell) stock have depreciated 17.7% compared with the industry’s decline of 8.3%.



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