San Marcos Mercury | Local News from San Marcos and Hays County, Texas

GRAPHIC by BRAD ROLLINS/SAN MARCOS MERCURY
SOURCE: TANGER FACTORY OUTLET CENTERS INC.

by BRAD ROLLINS

Looking to thwart aggressive new competition in Corpus Christi and Laredo, Tanger Factory Outlet Centers Inc. plans to invest an estimated $5 million to renovate and update its sprawling San Marcos outlet mall.

The two South Texas projects — Dolphin Ventures’ The Outlets at Corpus Christi Bay and Horizon Group Property’s The Outlet Shoppes at Laredo — are being built on a scale to rival Tanger’s 441,000-square-foot footprint in San Marcos. Scheduled to launch in September, Dolphin Ventures’ outlet center in Robstown is 330,000-square-feet and its developers say they anticipate 70 stores on opening day. The first phase of Horizon Property’s Laredo outlet center will weigh-in at 350,800 square feet with a possible second phase of 100,000 more square feet.

Both projects are well positioned geographically to siphon off affluent Mexicans who generate as much as half of Tanger’s business here. Located at the foot of the Gateway to the Americas international bridges, the Laredo project in particular is taking dead aim at San Marcos’ cash cows.

In announcing The Outlet Shoppes at Laredo in June 2013, Horizon Group CEO Gary Skoien said, “There is not a better site that has this kind of accessibility and visibility on the border. It is perfectly positioned to tap into Monterrey, Mexico, the highest income area of the country and the brand-conscious Mexican consumers.”

Those, of course, are fighting words to Greensboro, N.C.-based Tanger and Morristown, N.J.-based Premium Outlets.

“San Marcos must remain competitive and a first choice shopping destination for local, regional, tourist and international shoppers. With two new outlet centers underway to our south and knowing that 40 percent to 50 percent of our trade comes from that area inclusive of the Mexican national shopper, we must stay ahead of the game. … Aging centers are challenged to modernize facilities to meet the demands of top retailers,” states a company memo prepared for the San Marcos City Council which is scheduled to hear a request tonight for an economic development incentive to offset part of the cost of Tanger’s renovations.

The company is asking the city council to extend a grant equal to 75 percent of sales and property taxes it collects above 2014 levels for each of the next ten years. The grant would be capped at a total of $2.5 million. Tanger’s request is on the agenda as a discussion item during tonight’s city council meeting.

Tanger’s plans call for added amenities that include landscaped, meandering walkways across it’s vast parking lots; shaded outdoor rest areas; a VIP lounge reserved for international shoppers; a baby nursery; remodeled restrooms; charging stations for electric vehicles; digital store directory kiosks; and new furnishings for its shopper services lounge.

The company says it will also invest heavily in build-out allowances for tenants, “a substantial expense in attracting top retailers to set up shop in our center,” the memo states. The total cost of the amenities and the tenant build-out allowances is estimated at $5 million although the memo does not itemize how much will be spent on each component of the program.

With more than a million square feet between them, Tanger Outlets San Marcos and next-door San Marcos Premium Outlets have been major shopping destinations for more than two decades. Because shoppers censuses are most routinely conducted on behalf of the malls themselves — and because Tanger and Premium executives often treat their headcounts and methodology as propriety — annual attendance estimates vary widely.

A 2014 regional competitive assessment commissioned by the Greater San Marcos Partnership estimates about 14 million visits to one or both of the outlets each year. Tanger estimates it receives 10 million annual visits, according to the company memo.

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Memo on Tanger Outlets San Marcos renovation plans [pdf]

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6 thoughts on “Eyes on the border, Tanger plans investment in San Marcos outlet center

  1. Tanger does need an upgrade. It’s certainly down-market compared to its swankier neighbor. But I don’t envy the City Council on this one. To approach this correctly, I would think Council must do the math on the impact these 10-year “grants” to Tanger will have on city coffers vs.the impact on sales tax revenues that might result from Tanger losing the business of Mexican nationals who don’t want to drive several hours to get $10 off a pair of Levis.

    Oh, something else to factor in: With the explosive population growth anticipated along the I-35 corridor in the next couple of decades, perhaps Tanger won’t need those Mexican national dollars as much as it has in the past.

    This will be interesting to watch play out….

  2. If half the business at the Outlet Malls come from Mexico and other parts south of us. (and presumably half of the 10 million visitors), it seems like the opportunity would be in attracting them to other parts of San Marcos, to build our tourism revenue.

    Id be interested to hear what Tanger could do to promote the city as a weekend destination, in exchange for whatever tax breaks they get. They’re already marketing to those tourists, and the more they can offer, the better their mall looks, compared to those in Laredo and Corpus.

  3. I think that’s the key. Is San Marcos at large a destination worthy of a drive from Mexico? Certainly there’s the river, and Schlitterbahn in NB, and to a lesser extent the glass bottom boat tours at Aquarena and of course Wonder World Park. (Memo to Wonder World: landscaping!)

  4. Don’t the Mexican nationals who shop at the outlet mall all go to that little shop and get their sales tax refunded to them anyway (something about not being able to tax non-citizens)?

    If this is really the case, then wouldn’t losing the Mexican nationals be revenue neutral for the City?

  5. I’ve never seen any data on how many go to the trouble. They still support the city, in the form of “jobs” which keep our unemployment level low. If they stayed in our hotels, visited our downtown, and ate in our restaurants, that would also benefit our economy.

  6. from a 2012 article here at the Mercury:

    “Researchers found the multiplier for Mexican nationals’ cross-border retail tourist spending was $1.44 at the local level, meaning that for each dollar spent at a retail shop, an additional 44 cents was added to the local economy through other purchases such as for fuel, meals, lodging and entertainment. The multiplier effect for the regional economy was $1.68, the study further noted.”

    So yeah, there’s a bump to the local economy from having the Mexican nationals come up and shop here. AND the “grant” to Tanger is contingent on additional tax revenue collected above the current levels….which should mean that if these shoppers *do* claim a refund of their sales tax, the mall won’t qualify for the grant for those dollars spent since no additional taxes would be collected in the first place….the only place the City is placing risk is attaching property tax revenue to the formula.

    I do admit to chafing at the concept of “VIP lounges for international shoppers” though…..

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