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A project to change the retail landscape

Assembly Row will bring dozens of outlet stores close to Boston

(Essdras M Suarez/Globe Staff/File 2011)
By Casey Ross
Globe Staff / November 16, 2011

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Assembly Row’s developer plans to open dozens of outlet stores at the massive Somerville project, hoping to cater to Boston-area shoppers tired of trekking to the suburbs in search of bargains on popular brands.

Federal Realty Investment Trust said it expects to open as many as 50 such stores at the $1.5 billion complex, which is designed to be a mixed-use neighborhood with offices, stores, hundreds of homes, a new MBTA station, and a refurbished park on the Mystic River.

The strategy is a bold one, with Federal Realty betting that national retailers will break from the traditional practice of keeping their outlet stores far from urban centers to avoid undercutting their full-price stores.

The major outlet center closest to Boston is in Wrentham, a 45-minute drive from the city in light traffic.

Federal Realty executives said they are convinced the outlet strategy will work, given the shaky economic times, because consumers want their favorite brands at lower prices, and retailers are quickly adjusting to accommodate their changing habits.

“ ‘Outlet’ just screamed out at us as the right time, and [it’s] the right use for what we’re doing at Assembly Row,’’ said Chris Weilminster, the executive in charge of leasing for the project.

He said Federal Realty is not ready to name any of the stores, but added that “we can tell you with great confidence that retailers are embracing this opportunity and are very excited about it.’’

Jon Hurst, president of the Retail Association of Massachusetts, said it would be unusual for so many outlet stores to open close to a city that already has a heavy concentration of national brands. Typically, retailers cluster those stores in suburban locations that will draw crowds from several population centers.

But he noted that stiff competition in urban areas and an increasing emphasis by consumers on finding bargains has led many chains to offer more discount stores, in addition to their full-price boutiques.

“For retailers, outlets are a potential growth area in this day and age when consumers are watching every dime,’’ Hurst said. “Stores want to grow their customer base and provide more shopping alternatives.’’

After years of bureaucratic snags and false starts, Federal Realty has begun building roads and other infrastructure at the 45-acre site. The company expects to begin construction on the first buildings early next year: a pair of apartment blocks with 450 units and street-level stores, being developed by AvalonBay Communities Inc..

Work on a third residential building is scheduled to start soon, as well as on a retail complex that will include a 12-screen movie theater, restaurants, and additional stores.

Overall, about 45 stores are planned in the first phase of work, with 30 of them to be outlets, Federal Realty said.

The initial work will include construction of a new Massachusetts Bay Transportation Authority Orange Line station and revitalization of the six-acre Mystic River Reservation at the edge of the property.

Later construction will include office buildings, an IKEA furniture store, a hotel, and dozens of additional restaurants and stores.

Federal Realty, which got involved in the project six years ago, previously redeveloped the adjacent Assembly Square Marketplace, which includes a Bed Bath & Beyond, Sports Authority, Christmas Tree Shops, and other big-box retailers.

The property, formerly an industrial hub, once housed a Ford Motor Co. factory; it closed in 1958.

Federal Realty executives and Somerville leaders said the project will differ from suburban-style shopping complexes, where consumers simply park, buy, and leave soon after.

They said Assembly Row will function more like a district in a city, with people living and working above the stores. And the range of options - shopping, eating at a waterfront restaurant, attending an outdoor concert or a seasonal festival - will create activity throughout the day, they said.

“People will want to come to Assembly Square to experience its ambiance,’’ said Somerville Mayor Joseph Curtatone, who is a fervent supporter of the project.

“We’re building the best brand-new neighborhood on the Eastern Seaboard,’’ he said.

Federal Realty specializes in building mixed-use developments with lots of space for retailers, but its executives said Assembly Row will be their first project with outlet stores.

Don Briggs, the executive leading the project, said several things drove the decision.

One was the project’s location, just outside of Boston along Interstate 93 and near a major transit line, making it easily accessible to a large base of consumers in the region.

Another was the increasing frugality of shoppers, with industry research showing that more would shop regularly at outlet centers closer to their homes.

“The types of consumers out there are absolutely thinking, ‘How can I get great iconically branded goods, but get them at a reasonable price?’ ’’ Briggs said.

“That’s been a bit of a shift since the recession . . . and as for retailers, their sales growth in terms of the outlet product is far greater than it has been with their full-line product.’’

Federal Realty intends to begin naming the retailers planning to open at Assembly Row over the next several months, Briggs said.

Casey Ross can be reached at cross@globe.com.