The Real Deal New York

Why outlet malls could soon be popping up in NYC

Simon Property Group will pay $945K to NYS, stop anticompetitive practices: AG
By Eddie Small | August 21, 2017 06:15PM

David Simon and Woodbury Common Premium Outlets (Credit: Premium Outlets)

The outlet malls are coming! The outlet malls are coming!

A settlement reached today between New York State and Simon Property Group will allow outlet malls to open in Brooklyn, the Bronx, Queens and Staten Island, according to New York State Attorney General Eric Schneiderman’s office.

The settlement requires Simon to change contractual restrictions that have stopped retailers at its Woodbury Common shopping center in Central Valley, New York from opening outlet stores in New York City, according to Schneiderman. It also requires the company to pay New York State $945,000.

“No business should be allowed to stifle an entire industry at the expense of consumers—but for years, that’s exactly what Simon Property Group did to New Yorkers,” Schneiderman said in a statement. “Simon’s anticompetitive conduct blocked competition and drove up prices for New York consumers. That ends today.”

There are hundreds of stores at the Woodbury Common center, including Vitamin World, Ralph Lauren and Godiva Chocolatier. The state’s investigation found that several of these stores wanted to open additional outlets in New York City but were not allowed to because of restrictions in their Woodbury Common leases typically stating they could not open a second store within 60 air miles of Woodbury. This created a zone of 11,000 square miles where Simon faced virtually no competition from other outlet centers, according to the attorney general’s office.

The state’s investigation also found that, despite dire statements about retail’s present and future, multiple developers have wanted to open outlet centers in New York City but could not do so thanks to these Woodbury Common restrictions.

Under the settlement, Simon will remove said restrictions from its existing leases and stop using them for the next 10 years. The company has also agreed to an independent monitor who will oversee their compliance with the settlement.

Simon released a statement slamming the Attorney General’s investigation as “meritless” and an “unnecessary distraction.” The company also claims it never tried to limit competition and granted exceptions to restrictions in its leases on a regular basis.

“While we do not agree with the suggested findings, the settlement has favorable terms for Woodbury Common and will permit Woodbury Common to focus on providing tenants and shoppers the type of premium experience they seek,” the statement reads.