There are 222 outlet centers in North America today and another 130 overseas totaling some 80 million sf, according to ICSC. Most of the growth of late has been in Europe, where between 1999 and 2005 no fewer than 56 centers opened, or about three times the number that opened in the US during the same period. Over the next two years, the first phases of another 32 projects are slated to come online, 25 of them in Europe.

Kenneth Gunn, an associate director with CACI information solutions, a London-based advisor to the retail industry, says the UK market in particular is actually becoming overbuilt to the point where the growth there will have to slow and individual locations will have to better differentiate themselves or face weakening sales. After the UK's 48 centers, the next highest number of centers in any one European country is 15. "The outlet center market is increasingly crowded (in the UK), but there is still room for strong development elsewhere in Europe," he said.

Brendon O'Reilly, a partner with GVA Grimley Outlet Services in Glasgow, Scotland, says expanding in Europe is a lot different than in the US, where there is relative uniformity in laws and regulations and most everybody speaks English. "It's more than just navigating the different languages and cultures," he said.

In France, for example, its illegal to put two prices on an item, so it's difficult to show people what the full retail price was relative to the discount price. In Austria, it's illegal to work on Sundays, traditionally a big shopping day in the US. In Germany, if there is a lease for any retail development that obliges a tenant to sell products at a discount, the whole lease is null and void.

Another real issue is educating people overseas about the concept. "In Prague we polled 23 business journalists and only one had visited an outlet center," he said. "The rest had never even heard of them."

Another real issue is the changing nature of brands. The esteem value can change in as little as six months overseas. "If you go to Copenhagen, Hilfiger is (not well known or received,) while in Warsaw it's one of the highest rated," he said. "In a 12-month period there can be a complete change in terms of the ideal mix and brand positioning of these centers."

Philip Palisoul, president of the Palisoul Co., a Carlsbad, CA-based outlet center developer that built the first center in Italy and is now working on the first outlet center in China, says it's all about relationships, which is harder overseas than in the US. "The various US retailing brands are not operated from their headquarters; they either have satellite operations or licensees," he said. "So there's an entirely new group of people we have to meet, create relationships with and explain how we will operate a successful outlet center."