Eric Schneiderman for Attorney General

State Attorney General Settlement with Property Firm May Bring More Outlet Stores to New York City

August 22, 2017

As published by The New York Daily News, on August 21, 2017.

New York City could see new outlet stores under a settlement deal announced Monday by state Attorney General Eric Schneiderman.

The agreement prohibits Simon Property Group from continuing to use anticompetitive tactics to thwart the development of competing outlets in the city.

Simon Property agreed to revise existing leases to do away with the contractual 60-mile radius restrictions that prohibited outlet stores at its flagship Woodbury Common center in upstate Central Valley from opening in New York City. The development company also promised to cease the use of radius restriction and other exclusionary tactics for the next decade.

The anti-competitive restrictions, Schneiderman said, not only hurt retailers, but also drove up prices for New York consumers who would have benefited from outlet locations in the city.

Schneiderman said the settlement will allow for outlet malls that provide the same stores as in Woodbury Common to open in Brooklyn, the Bronx, Queens, and Staten Island.

A source close to the settlement talks said Manhattan was excluded largely because “we found that there wasn’t much interest from mall operators in opening something in Manhattan, most likely due to real estate costs, we let it go.”

Simon Property Group also agreed to pay the state a nearly $1 million fine.

 “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. “I am pleased this agreement will allow for new shopping outlets to finally open within New York City, and make affordable shopping more accessible for residents across the region.”

In a statement, Simon Property Group called Schneiderman’s probe “meritless” and “an unnecessary distraction.” One source close to the group questioned how competition has been hindered when an outlet center is already planned for Staten Island.

“We believe the Company’s time is best spent focusing on providing the best shopping and working environment to the Woodbury Common community,” the statement said.

Schneiderman said that outlet centers are becoming more common near major cities. Chicago and Los Angeles, he said, have a number of competing outlet centers.

He said an investigation by his office found that the radius restrictions on Woodbury Common stores made it difficult for developers competing with Simon Property Group to open outlet centers within the city.

But while there are over 200 outlet centers across the U.S., Woodbury Common is the one that dominates the New York City area.

In addition to the popular Woodbury Common outlets, Simon Property owns six other shopping centers in New York.

“This is a huge win for New York City residents who have for years demanded easier access to affordable shopping,” said Don Capoccia of BFC Partners, which is developing Empire Outlets. “We look forward to opening the city’s first outlet center on Staten Island’s revitalized North Shore, with a unique mix of shopping and dining that will provide an incredible destination for millions of residents and tourists.”