Toronto-based RioCan has entered into a joint venture agreement with Greenboro, N.C.-based mall developer Tanger Factory Outlet Centers that could further transform a Canadian retail environment already bracing for an influx of high-profile U.S. retailers.
The potential $1 billion deal calls for the development of 10 to 15 outlet centres in major markets and tourist areas across Canada over the next five to seven years. The malls will be developed on a 50/50 basis and branded as Tanger Outlet Centers.
In a release, RioCan president and CEO Edward Sonshine said that the agreement with Tanger is a response to “increasing demand” by U.S. retailers to expand into Canada, and seemed to suggest that it will help curb cross-border shopping. “This venture will fill a void in the Canadian retail marketplace and will provide consumers with a distinctive outlet shopping experience closer to home,” he said.
“Tanger’s top retail partners are looking for growth in the Canadian market,” added Tanger president and CEO Steven Tanger, “and it is our intent to provide them with the outlet shopping centre sites to meet their needs.”
Tanger is a leading developer of U.S. outlet malls, counting “leading designer and brand name” manufacturers like Polo Ralph Lauren, Kenneth Cole, Coach and Calvin Klein among its tenants. The company currently has operations in 21 U.S. states including California, Texas, Florida and New York. A typical Tanger mall is approximately 350,000 square feet, but is dependent on tenant demand.
RioCan owns and operates an estimated 296 shopping centres across Canada—including 10 under development—and has an 80% interest in 31 grocery-anchored and new format retail centres in the U.S.
Earlier this month, U.S. department store Target struck a $1.8 billion deal to acquire more than 200 Zellers stores from Hudson’s Bay Co. in a deal that appeared to pave the way for the “cheap-chic” retailer’s long-awaited expansion into Canada.
A week later, however, a Target spokesperson told Canadian Press that the company was only exploring the possibility of Canadian expansion, and was also looking at Mexico and Latin America as other expansion targets. The story quoted a retail analyst as saying that a lack of attractive retail space was a deterrent for companies contemplating Canadian expansion.
