Economic Impact of Tejon Outlets

Tejon Ranch’s business advantage improves quality of life, generates jobs and investments

It’s one of the most highly anticipated projects around Kern County with implications of positive impacts to local business, job growth and overall quality of life for Kern residents – and we aren’t talking about the Monterey Shale. Just ask any “shopoholic” or “fashionista” what the big news is around town, and they will tell you that with The Outlets at Tejon Ranch, high-end outlets are finally coming to the region. With excitement over Tejon’s outlet center underway, it is important to look beyond impressive savings that one will be able to find on the finest of brands, and consider the economic impact that the outlets will have on our local community.

Tejon-Ranch-Outlets-rendering-405“The Outlets at Tejon Ranch will provide Kern County another economic shot in the arm,” said Hugh F. McMahon IV, Vice President of Commercial and Industrial Real Estate at Tejon Ranch Co. “We estimate that the center will feature between 70 to 75 stores and will generate up to a thousand new jobs.”

1,000 New Jobs
30,000 Square Feet
70 to 75 High-End Stores
$100 Million Capital Investment

In addition to the economic impact produced by the substantial capital investment in The Outlets at Tejon Ranch, Kern County will also benefit from the millions of dollars of sales tax revenue that will be collected, not to mention the economic multiplier effect of the outlet center’s multi-million-dollar payroll.

Timing is Everything

Outlet centers were originally conceived as a channel for eliminating slow moving and distressed inventory with a strong focus on value and minimal energy put into the shopping experience. Today, the outlet channel has evolved into a high quality, designer- brand retail experience that appeals to consumers across socio-economic levels who share a similar desire to pursue value. During this past recession consumers were reluctant to trade down to private label brands, instead, they searched for value in their same preferred brands in lower price point products and more affordable channels. Outlet centers benefitted greatly from this phenomenon making them the most profitable and fastest growing channel in retail year-over-year since 2006.

“Outlets have proven themselves to be almost recession-proof,” says outlet industry expert Lisa Wagner of EWB Development. “They are good in bad times and even better when the economy’s rolling.”

Wagner and her partners at EWB Development are assisting Tejon with the development, leasing and marketing of the new center. EWB has assisted and/or directed the development of more than 45 outlet centers throughout the United States, Canada and Europe.

Sales at outlet centers have steadily increased since 1995 and they’re still growing. In 2012, the average sales per square foot (psf) reached $357, 16% above the 2008 figure, and the U.S. outlet industry as a whole is now estimated at $25.4 billion, which is $3 billion higher than the 2011 figure. To put this in perspective, the Outlets at Tejon have the capacity to generate sales upwards of $10,710,000 annually!

As one would predict, when sales go up, so does the rent. According to 31 chains who reported to Value Rental News (VRN) in 2012, average base rents are $29.76 psf, a whopping 23% increase since 2007.

If that seems impressive, take a look at this: according to Wagner, interest being generated by The Outlets at Tejon Ranch is almost unprecedented. “We have rarely seen a project generate so much momentum so early,” she says.

McMahon says that’s largely because the retailers recognize that the Bakersfield area is a growing, thriving market, and one that’s been underserved in terms of retail.

“We have been very pleased with the response from the retail community. They love the project and they love the market,” says McMahon. “So much so that our biggest challenge is being able to accommodate all the great brands who want to have a presence here.”

“Needless to say,” added Wagner, “such demand means strong economic returns for the developers while maintaining a very profitable distribution channel for our tenant partners.”

Recipe for Local Success

“Location, location, location” a phrase most businesses must live by if they want to turn a profit. For Tejon, the Outlet’s location couldn’t be more ideal. Nestled nicely between one of California’s busiest highway junctures, Interstate 5 and Highway 99, the Outlets at Tejon have positioned themselves to potentially receive 14 million visitors a year.

“Generally speaking, an outlet center’s primary market is considered to be the consumers who live with an hour’s drive of the location,” said Barry Zoeller, Tejon’s Vice President of Corporate Communications and Marketing. “In the case of The Outlets at Tejon Ranch, that’s more than 3.2 million people. Add to that the millions of travelers who regularly make their way up and down I-5, and I wouldn’t be surprised if we don’t surpass the 14 million visitor estimate.”

Tejon Ranch is partnering with The Rockefeller Group in the development of the outlet center. The partnership broke ground in May 2013 and construction is expected to take a little more than a year.

“If people want to stay up-to-date on our construction progress, I would recommend they go to,” said Zoeller. “The website will feature a live camera showing the latest images from the construction site and all those who join the VIP Club on the site will be the first to know about new store announcements, plans for the grand opening, and other news.”

Tejon is calling The Outlets at Tejon Ranch, “California’s new brand in outlet shopping.” From offering a new venue for fashion to its significant financial and economic impact, this new brand will certainly make a positive mark on Kern County.

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