PRINT THIS STORY:

CHANGE TEXT SIZE:

Mills plans its first Canadian project

By Albert Warson

VAUGHAN, Ontario -- The curtain is rising on the Mills Corp.'s first megamall outside the United States.

Mills plans to build a 1.4-million-square-foot outlet mall about 25 miles outside Toronto. The mall, a joint project of Arlington, Va.'s Mills Corp. and Toronto's Cambridge Shopping Centres Ltd., will be the first of its type in Canada. The partnership has plans for value megamalls in Montreal; Calgary, Alberta; and Vancouver, British Columbia.

Construction is scheduled to start next year, preceded by a re-zoning of the site from industrial to commercial. Given the city's eagerness to proceed with Vaughan Mills, the developers say that this part of the process isn't likely to be more than a rubber stamping exercise. Unless subsequent objections are raised at an Ontario Municipal Board (OMB) hearing, the megamall is expected to open in the fall of 2000.

The 180-acre site is large enough to accommodate an expansion to 1.7 million square feet, the size of a typical Mills center. If it does, it will be surpassed in size in Canada only by the West Edmonton Mall. Even without the expansion, it will be the nation's third largest shopping center, behind Toronto's Yorkdale Shopping Centre.

While the retailing industry's development and structure in Canada and the United States are "remarkably similar," said Len Kubas, a Toronto retail industry consultant, "the one outstanding difference between the two countries is outlet malls, which have virtually bypassed Canada."

Mr. Kubas figures there are four hybrid outlet malls scattered across Canada, but nothing even remotely resembling a Mills center in size or depth of merchandise.

"They're so small they may not even warrant the designation of an 'outlet mall,' and there certainly isn't any outlet mall industry in Canada," he said. "The Mills/Cambridge development represents the first real outlet mall, and the retailers will be quite different from what we've seen."

Mr. Kubas said Greater Toronto and outlying markets have the critical population mass to support an outlet mall on the Mills' scale, as well as the right location; the site is near a major highway and across the road from Paramount Canada's Wonderland theme/amusement park, which attracts millions of visitors between May and October.

Mills and Cambridge signed their joint venture agreement in October. Asked why Mills hadn't previously scouted Canada, particularly since the Toronto market has long been large enough to support such a development, Mills spokesman Susan A. Goyette said, "We were looking for the right strategic partner and found it in Cambridge. We're a great match."

A recent report prepared by Kircher Research Associates Ltd., Toronto, noted that Mills' "no frills" approach to construction and store fixturing reduces common area maintenance costs for tenants to a point below typical regional malls. This helps consumers benefit from 20% to 40% reductions in prices charged at other locations.

Mills has brought its concept -- factory outlets, department store outlets, off-price retailers and entertainment venues/theme restaurants under one roof -- to seven major U.S. metropolitan markets, with others to follow. Tenant sales in 1996 were $1.53 billion, according to the company.

Each Mills center draws about 20 million visitors a year generating sales of more than $307 per square foot and is a proven retail concept, said Cambridge president and CEO J. Lorne Braithwaite.

"Our new mall will attract about 20% of its visitors from beyond 100 miles, which Mills regards as tourist traffic," he said.

Besides Greater Toronto, "Several Canadian markets have attractive metropolitan centers with impressive demographics and regional draw," said Mills' chairman and CEO Laurence C. Siegel.

"They are similar to our criteria for Mills' locations in the States [Tempe, Ariz., Dallas/Fort Worth, Los Angeles, Chicago/Milwaukee, Fort Lauderdale/Miami/Palm Beach, Fla., Philadelphia/Wilmington and Washington, D.C.]," Mr. Siegel said.

Vaughan Mills will be consistent with the Mills' format of 15 to 20 anchor tenants, each with 25,000 square feet to 125,000 square feet, and some 200 manufacturers' outlets, off-price retailers, department stores, specialty retail and catalog outlets, category dominant stores, entertainment venues and theme restaurants, Mr. Siegel said.

The typical anchor, specialty and entertainment tenants at Mills projects include Burlington Coat Factory, Virgin Megastore, Donna Karan Co. Store, Brooks Brothers, Off Rodeo Drive Beverly Hills, Neiman Marcus Last Call!, Nordstrom Rack, Saks Off 5th, GameWorks, American Wilderness Experience, Wolfgang Puck Cafe and Rainforest Cafe.

Some, if not most, of these are expected to be tenants at Vaughan Mills, said Mr. Braithwaite. Some already have arrived in Canada ahead of Mills -- there are two Rainforest Cafes and one Virgin Megastore lined up for other urban Vancouver and Montreal developments so far.

No domestic retailers have been identified as potential tenants yet, according to the development partners.

The next stops for Mills are markets in Latin America, Europe and Pacific Rim countries. Meanwhile, Cambridge is busy selling some centers after its acquisition in June of Marlborough Properties' shopping portfolio. It also is extending its Metropolis at Metrotown center in Burnaby, British Columbia.