A Tale of Two Centers

During this past election cycle there was much talk about the need for, and the benefits of, the proposed Gloucester Premium Outlets®. As part of that discussion, the Shoppes at Cross Keys in the Sicklerville section of the Township was often mentioned as a relatively new shopping center that was underperforming.

Based on casual observation, I, too, believed what I heard others say, namely, that the restaurants at The Shoppes were successful, while the retail stores were not doing as well. However, I am now reminded of the dangers of basing my opinions on casual observation.

The owners of The Shoppes at Cross Keys want to commence Phase II of the center. On the agenda for the November 12, 2013, Planning Board Meeting was the review of the application by The Shoppes to add to the property two commercial retail buildings totaling 85,000 square feet. What is particularly noteworthy is that this is an increase of 29,160 square feet over previously submitted plans for Phase II that were approved by the Planning Board on January 24, 2012.

So, how can The Shoppes at Cross Keys expand if the shopping center isn’t doing well, and why expand now?

Well, The Shoppes must be doing better than many people think. No business is going to add two buildings totaling 85,000 square feet without being sure of the return on that investment. If you look at the stores that opened as initial tenants four years ago, a vast majority are still there: Banana Republic, Loft, White House/Black Market, Rack Room Shoes®, JoS. A. Bank, New York & Company, Chico’s, Lane Bryant, Justice®, sleep number®, and T-Mobile®. And while the eateries Bensi, Bok Bok Fresh, and Cheeburger Cheeburger have fallen by the wayside, Moe’s Southwest Grill® is still there, along with newcomers Bertucci’s and Starbucks.

As for the perception that the restaurants are doing better than the stores, that may be a result of the marketing plan for The Shoppes. In an August 4, 2009, Courier-Post article on the opening of the shopping center, leasing partner Charles Cristella is quoted as saying, “We know restaurants drive traffic to shopping centers.” The restaurants are there so that a certain percentage of the diners will also shop at the stores. Also, since most of the stores are considered higher-end retailers, the number of patrons that they have may not be as important as how much each patron spends. Higher dollar transactions can compensate for lower volume.

As for the question, why expand The Shoppes at Cross Keys now? Well, ever so slowly, the economy seems to be improving. Developers are now more comfortable with pursuing new ventures. Just look at the multiple new construction sites on the Winslow Township side of Cross Keys Road. Also, my guess is that the plan to build the Gloucester Premium Outlets® is another factor in the expansion decision.

Generally, the old retailing axiom “a high tide raises all boats” holds true. If more consumers come into an area because of one store, other stores in the area will benefit to a degree. Since the Premium Outlets® also will have higher-end retail tenants, The Shoppes are positioning themselves to take advantage of the increased consumer base brought to the area once the Outlets open.

However, their wait may be longer than they anticipate.

In the comments section of the October 13, 2013, Paul DiBartolo blog entry titled Ignore the Mayor Behind the Curtain . . ., poster gt asked, “Is this true that the outlets need a new sewer line ran under rt. 42 after installing a new bridge why was this not taken into account.” In later posts, gt says that these rumors came from friends who work for the state.

After asking some questions, I can confirm that the rumor is true.

A sewer line has to be run underground from the southbound lanes to the northbound lanes of Route 42 for the Gloucester Premium Outlets® to be built and opened.

This little detail may be the reason why the start of construction on the Outlets has been delayed from fall 2013 to spring 2014.

It also may be the reason why, as of November 4, 2013, Simon, the developer of the Premium Outlets®, had not yet completed the purchase of the land from Gloucester 42 Associates, LLC, the company owned by The Cooper Health System. After all, why would Simon buy the land if they could not start construction for six months but still would have to pay the higher tax rate?

The main question I have is who is going to pay for this underground sewer line? Mr. DiBartolo commented in the above-cited blog entry that “Laying sewer lines under Route 42 sounds like a massive and hugely expensive undertaking. . . .” I concur.

How much is this part of the project going to cost? I could not even venture a guess, but I would think “hugely expensive” just about covers it.

So, who is going to foot the bill for this sewer line? Let’s look at the possibilities. 

The Developer

In looking at the initial Land Development Application submitted by Simon, nowhere do I find any mention of this sewer line that needs to be run under Route 42. The only mention of sanitary sewer lines is in the Bach Associates, PC, letter to the Township. Under section C. Utilities (Section 518), it reads: “2. The applicant is proposing public sanitary sewer service for the development. We defer to Gloucester Township Municipal Utilities Authority (GTMUA) for review of sanitary sewer improvements. Documentation confirming availability of sanitary sewer service for the project site shall be obtained from the GTMUA and submitted to the Township.” In addition, under section D. Grading (Section 506), it says: “8. The sanitary sewer profiles shall illustrate all storm sewer crossings.” There are numerous mentions of storm sewer lines, but, again, there is nothing saying that any type of line needs to be run under Route 42.

Gloucester 42 Associates, LLC, and the Township of Gloucester have been trying for years to develop this piece of land. It seems unbelievable to me that no one knew before now that any substantial development of those parcels would require a sewer line to be run under Route 42. If I were Simon, I would be asking who knew what and when they knew it.

While the developer would pay for the installation of the sanitary and storm sewer lines on the property where they would build and operate the Premium Outlets®, why would they pay for an underground line on state-owned property and the private property on the northbound side of the highway?

Since nothing is mentioned about an underground sewer line in the Land Development Application, I am willing to bet that there is not a line item in Simon’s proposed construction budget for these Outlets either.

Some of the options I see Simon having are: budget it into the construction out of the company’s pockets; try to get a reduction in the purchase price to cover the cost of the underground sewer line; or apply for a tax abatement or PILOT to recoup the cost over a multiyear period.

The County

Since Camden County taxpayers have already paid for the construction of the bridge over Route 42 and the roadway system on the property, I think the County Freeholders would be hard pressed to find justification to cover the cost of the installation of a sewer line under Route 42.

The Township of Gloucester

Since some have called the Gloucester Premium Outlets® “the largest economic development project in the history of the township” and noted the project’s potential to “bring 1,000 jobs and thousands of shoppers to Gloucester Township,” Township Council might be persuaded to have the Township pay for the sewer line, citing the estimated $1.45 million in yearly ratables that the Outlets would bring into the Township coffers.

Alternately, even though Gloucester Township Council has in the past gone on record “against offering any PILOT to the developer,” Council could reason that this new underground sewer line changes the playing field and throws up a roadblock that could be removed with a PILOT.

I have also been told that the project needs the approval of the New Jersey Department of Transportation, which owns the land that includes Route 42. However, since this is part of the project not covered in the initial Land Development Application for the Outlets, would other outside agencies, such as the Camden County Planning Board, the Camden County Soil Conservation District, and the New Jersey Department of Environmental Protection, also have to approve and sign off on the underground sewer line?

The last estimate for the start of construction on the Gloucester Premium Outlets® was spring 2014. However, with this new underground sewer line development, I wouldn’t be surprised if groundbreaking took place in fall 2015.

Just in time for the next Gloucester Township election cycle.

Still to come:

Nine Years Down the Road: The Blackwood West Redevelopment Plan