Finding an Outlet : Camarillo Transforms Itself Into a Bargain Hunter’s Mecca

The last time Pat Flynn drove to Santa Barbara, she squeezed in a visit to the Camarillo Factory Outlets. Although the Altadena real estate consultant was tempted by an Armani blazer, she didn’t buy anything after scouring the Saks, Barneys and BCBG outlet stores. But the bargains were good enough that she will stop when she drives the road again.

“You can get cheap clothes cheaply any day of the week,” she said. “But I’m looking for the opportunity to score Donna Karan at 70% off.”

Until recently, no one, including many local residents, thought of Camarillo as a place to shop. This quiet Ventura County bedroom community of 60,000 once lost about a third of its potential sales tax revenue to nearby cities, such as Thousand Oaks and Oxnard. But through planning and luck, Camarillo has transformed itself into a mecca for bargain hunters. It’s a scenario that many communities dream about but few realize.

Armed with a prime location next to the 101 Freeway, the city set out to cash in on the factory outlet phenomenon in the early 1990s. Even after a legal challenge killed the lure of tax subsidies, Camarillo landed Chelsea GCA Realty Inc., one of the most successful upscale-outlet developers in an industry that has a checkered track record. The outlet center’s first phase opened in 1995, just as Southern California was emerging from a deep recession.

Boasting 90 upscale outlets, the Camarillo Factory Outlets is now in its third phase of development, with 18 more stores, including Versace, Liz Claiborne and London Fog, scheduled to open this fall. The 42-acre development attracts locals, highway travelers and a stream of shoppers from Los Angeles to Santa Barbara. About half the shoppers drive at least 50 miles to get to the center.

The result is a retail sales boom that is enriching the city.

“It’s explosive growth,” said Mark Schniepp, director of the UC Santa Barbara Economic Forecast Project. “I’ve never seen anything like it.”

Retail sales in Camarillo, fueled in good part by outlet center sales estimated at $50 million in 1996, rose almost 20% to an estimated to $268 million last year. That compares with an estimated 4% to 5% increase for all of Ventura County. The city’s share of taxes on the outlet center sales was $500,000 in 1996, about $150,000 more than originally estimated. In addition, the outlet is providing jobs to about 400 people.

With the outlet still expanding, sales and tax revenues are expected to rise even more. Although there is always a risk consumers will tire of outlet shopping, retailing experts say Camarillo is well positioned to keep the gravy train rolling. The outlet now has a critical mass of stores that will attract shoppers coming from miles away. Other discount stores that appeal to local residents, such as Target and Petco, have opened nearby. And with good visibility and an established clientele, Camarillo’s outlet center will be likely to withstand the competition if another outlet center pops up elsewhere in the region, analysts say.

“We’re very pleased that the outlet is here and that it is expanding,” said Bill Little, Camarillo’s city manager.

Seven to 8 million people are expected to visit the outlet mall this year, up from 5 million last year, according to Michele Rothstein, Chelsea’s vice president of marketing. The challenge for the future is to make the center an even stronger destination for out-of-town visitors.

Keeping an upscale store mix, which currently includes Ann Taylor, Geoffrey Beene and Villeroy & Boch, is critical to maintaining interest among customers, which in turn keeps tenants happy. The company has not ruled out adding more stores although expansion beyond Phase 3 would require purchasing adjacent land. Meanwhile, Chelsea is promoting the center at international travel and trade shows and on its Web site. Potential customers from Europe and Japan now contact the company for information on Camarillo.

The development story began in the late 1980s, when the Camarillo City Council decided it had to find new businesses that would keep shoppers within city limits.

The city’s solution was to attract a factory outlet mall, a concept that had captured the imagination of shoppers nationwide. In the 1970s, a few manufacturers opened outlets to sell seconds and overruns in factory towns in the East. As their popularity increased, outlet stores began to group together, and outlet store malls--many with more than 100 individual shops--began to sprout across the country.

At the same time Camarillo decided it wanted an outlet mall, Roseland, N.J.-based Chelsea was looking for a spot in Ventura County, attracted by a median family income of $50,000, in 1990, and its proximity to the Los Angeles metropolitan area.

“Just look at the demographics, and you know that Ventura County was a natural for us,” Rothstein said.

No one remembers who made the first call, but a partnership was quickly forged.

Specializing in upscale malls, Chelsea has one of the best track records in the outlet industry. The concept’s reputation has been tarnished lately because the bargains at many outlets often are not as good as consumers expect. Outlets carry seconds, overruns, off-season goods and merchandise specifically manufactured for the outlet. What has disappointed some shoppers is the lack of deep discounts they once found in outlet malls and which drew them to the far-flung centers in the first place. Merchants would argue that the overall mix of clothing and other items is better than that found in the early discount malls.

“Chelsea is one of the best at screening tenants,” said Marc Halle, senior real estate analyst at Purchase, N.Y.-based Evergreen Asset Management, which owns stock in the company.

The payoff is in higher sales. With 19 centers in 11 states, Chelsea, a real estate investment trust, has the highest sales per square foot in the industry at $345, significantly above the average of $213, according to Rothstein. On the West Coast, its flagship is the Desert Hills outlet center, a highly successful mall in Cabazon on Interstate 10 on the way to Palm Springs. Chelsea executives hope the Camarillo outlet will rival its flagship’s success.

The road to building the Camarillo outlet center had its bumps. Most notably, a judge ruled in a lawsuit against the city that a planned sales tax revenue rebate to the developer was an illegal gift of public funds. Cities often use financial incentives to attract development. But Chelsea built the center without the promise of tax rebates, and Camarillo now keeps all the sales tax revenue it’s due.

Another lawsuit by the same plaintiff objected to the increased traffic the mall would create. The city agreed to speed up traffic flow by improving freeway ramps at Carmen Drive and Las Posas Road and building a new bridge at Carmen for $12.5 million. The developer contributed $4 million; state and local funds paid for the rest. More improvements at Carmen Drive and on nearby Ventura Boulevard are scheduled for next year. Now, old opponents are fans.

“I love the mall, and I’m a good shopper there,” said Camarillo resident Stephen Maulhardt, the plaintiff in both lawsuits.

The lawsuits delayed the start of development so that an outlet mall in Oxnard, five miles to the west, was the first to open in the county. But Camarillo’s upscale store mix soon became more popular. The Oxnard mall never went beyond its first phase. Retail analysts now consider it a complementary destination with shoppers sometimes stopping at both locations.

Meanwhile, a host of discount stores and a theater complex have sprouted near the Camarillo outlet, creating an even bigger draw for locals. A proposal to build a sports complex nearby is on hold. Camarillo, which has traditionally championed controlled growth, is proceeding cautiously.

“We’ve got to be careful how much we approve,” said Little, the city manager. “Even more important is what we approve.”