A proposal in Kittery would demolish one of the town’s famed outlet malls in favor of apartments and a hotel, mirroring a statewide shift toward mixed-use development as the housing crisis worsens and traditional brick-and-mortar retail evolves.

The Outlets at Kittery, a 6.4-acre retail plaza on U.S. Route 1, would be razed and replaced by a four-story, 120-room hotel and a 100-unit apartment building, with 10,000 square feet of restaurant and retail space. Some of the apartments will be considered affordable housing. 

The outlet mall, which is one of more than a dozen in the town’s commercial shopping district, is currently a three-building complex that’s home to LOFT, Le Creuset, OshKosh B’Gosh and other merchants. The mall is also the site of a former Bass outlet store.

Outlet malls and shops span a mile-long stretch of Route 1, anchored by the Kittery Trading Post and including The Outlets at Kittery, The Kittery Outlets, Kittery Premium Outlets, the Maine Outlet Shopping Center and others. 

According to property records, the Outlets at Kittery property at 283 Route 1 has an appraised value of $7 million, about $4 million of which is the value of the land.

Jason Garnham, the town’s director of planning and development, stressed that the redevelopment of the Outlets at Kittery is still just a concept. The proposal allows the developers to “dip their toe in the water” to see if the project is even feasible. 

“There are quite a few unanswered questions on their end, as well as ours,” he said. 

Garnham said he wasn’t sure whether the project would be done in phases, and if so, what they would look like or when the project would be completed. If built as planned, the hotel would sit immediately next to an existing 83-room Hampton Inn & Suites.

So far, Garnham said, the “biggest sticking point” is whether the area can support the necessary infrastructure. Any changes are doable, he said, but they might not be easy or inexpensive.

Ryan Plummer, director of development and construction at Two International Group, the New Hampshire-based commercial real estate company spearheading the project, could not be reached for an interview Wednesday. The Kittery Planning Board will review the sketch plan Thursday night. 

SIMILAR PROJECTS IN THE PIPELINE

The proposal is the latest in a string of mixed-use development projects aiming to revitalize retail-dependent areas.

Freeport’s downtown is in the middle of a rebirth. Town officials there are trying to reshape the outlet-centered Main Street into a bustling hub, complete with walkable streets, local shops, nightlife, an arts scene and ample housing.

In Scarborough, developers are building The Downs, a planned “town center” near the former harness racing track grandstand. Plans call for hundreds of housing units, a community center, recreation center, restaurants, breweries, stores, office buildings and more.

Over in Westbrook, Rock Row, the 2.7 million-square-foot, open-air campus of shops, restaurants, offices and residents centered around a 400-foot-wide quarry, is already taking shape.

And a concept plan to transform the 90-acre Maine Mall property in South Portland into a village center, complete with housing, shopping, a street grid and recreational spaces, was named the 2020 Plan of the Year by the Northern New England Chapter of the American Planning Association. 

Garnham said it’s likely more of these developments will pop up.

“What we understand at the macro level is that retail and office sectors have been taking hits for quite a while, and at the same time there’s an almost infinite demand for housing,” he said. “(Mixed use development) is perceived as having a good potential for shifting the use of these types of properties to sort of solve both problems.” 

AN EVOLVING INDUSTRY 

While retail is changing, it shouldn’t be discounted entirely, said Curtis Picard, president and CEO of the Retail Association of Maine.

“We’ve seen an evolution, but from our perspective, people continue to appreciate an in-store presence,” he said, noting that Gen Z in particular has shown it favors in-person shopping.

Location analytics company Placer.ai reported that the numbers of visits to indoor malls and outlet malls fell 7.4% and 8.6% respectively last month, compared to the numbers in March 2022. 

Outlet malls may be seeing a decline from their heyday, but sales data in Kittery and Freeport also show that retail isn’t dead. 

In 2018, shoppers spent $304.8 million in Freeport. In 2020, that plummeted to $218.8 million, but since then, sales have rebounded and even surpassed pre-pandemic levels. In 2021 and 2022, the town reported about $315 million in “taxable sales,” according to the Maine Revenue Services. 

In Kittery, it’s a similar story. In 2018, shoppers spent about $257 million. That dropped to $205 million in 2020, but just two years later, it jumped to $279 million. 

Mixed-use development makes sense, Picard said.

The state needs more housing, but many of the big-box retailers that anchor commercial developments aren’t going anywhere. Target just opened in Auburn, Topsham is getting a Market Basket, and a Costco is in the works in Scarborough, he said. 

“We’ve seen the trends,” he said, “but there’s still a need for that larger retailer in some markets.”

Still, the size of some mixed-use development projects has sometimes provoked resistance. Kittery residents spiked a similar, but larger proposal last summer. 

Dennett Landing, a 900-unit project with a $300 million price tag, was designed to provide much-need housing around the Portsmouth Naval Shipyard, while also adding a brewery, about 30,000 square feet of retail and restaurant space; a medical or office building; a laboratory or life sciences building; an assisted-living center; a day care center and walking and biking paths. The development would have occupied an 82-acre stretch of previously undeveloped land west of the Maine Turnpike and could have increased Kittery’s population by over 20%. 

Garnham said that the proposal for the Kittery outlets likely won’t draw the same level of public outcry, since the proposal involves a site that’s already developed rather than forested wetland.

“In general, (the Outlets at Kittery proposal) seems a better fit,” he said.

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