Call Center Rings Up New Life for an Old Outlet Center

Long before e-commerce took down many retailers, an outlet center about 15 miles west of Knoxville, Tennessee, had already seen its demise.

It sat empty for years. But after a winding path, the 38-year-old, 162,000-square foot building has been transformed into office space with help from an investment made in an unsuccessful venture years ago and bit of luck snagging the first tenant.

A call center for Miami-based customer service firm Sitel Group recently opened in a little more than a quarter of the space.

Outlet Corporate Center’s conversion is a lesson in how old space can be made new again. And it is a trend that is becoming increasingly commonplace. Bed, Bath & Beyond, for example, opened a call center two years ago in empty space in Orlando’s West Oaks Mall.

Sitting off Interstate 40 in Farragut, Tennessee, the former outlet center was purchased by a local group of investors calling themselves Kodak Properties for the bargain price of nearly $2.4 million. Converting it to office wasn’t the initial plan. They first opened a home décor and furnishings market they leased to vendors called the Turkey Creek Public Market.

“We spent a fortune on it,” said Jim Nixon with Turley & Co., one of the investors in the property who developed a large area of retail on the other side of I-40 called Turkey Creek.

But the market closed within a year because it never quite measured up the property owners' expectations. Next, home furnishings retailer Garden Ridge, later rebranded to At Home, moved in in 2012.

Nixon said At Home did well. Yet it left last July after six years, decamping to a better, more prominent spot a couple of miles up the road in a former Gander Mountain store.

Knowing that the building may sit empty again, the investors decided to shift course away from retail. Even though At Home did well in the location, they figured they didn't have the traffic or the visibility to reel in a big retail tenant.

So the investors decided to take a risk and transition it to office use, even before landing a tenant, and play to a trend toward more open office environments. The risk was made a little easier with At Home negotiating a buyout on the lease.

The timing proved propitious. Jay Cobble, a partner in Knoxville firm Providence Commercial Real Estate, happened to be working with Sitel to find space it could consolidate two locations – one in Oak Ridge and another in nearby west Knoxville. And he thought he found a location, carved out space in a Burlington Coat Factory center not far away.

But negotiations dragged on and the deal eventually collapsed -- leading Cobble to turn his attention to the former outlet center.

The empty center ultimately won out, primarily for ease of building out the space and location. Cobble said the company already knew that west Knoxville “was the best recruiting base.”

The building was a shell and had plenty of parking. For the market, the center’s owners had put drop-down power throughout the building for the bays vendors rented.

“Having systems already distributed throughout the space makes it easier to build out,” said Cobble, who now markets the building.

From the beginning of conversations in November, “The first hammer swung on the building Feb. 4,” said Kelin Mock, Sitel’s site director.

Some 600 employees were in the space by May working for major insurance and financial clients. Sitel put some touches on the exterior such as reusing the steel beams for design features along the wall. There’s still some exterior branding work to be done, the result of moving quickly.

Inside was most important. Mock said the goal was create a space that’s engaging for employees. That means pool and ping pong tables in the company’s café area and more colorful space throughout.

Mock said the previous space “used to be bland and boring” and this new space sets the bar for others being built around the country. “This is really the new standard for Sitel,” Mock said.

He said the outlet center location could probably end up growing to 1,000 employees. And for the center owners, that means more leased space.