It’s a variation of a national trend to rebuild failing malls into housing.
A prominent Hartford-based developer next year plans to tear down the sprawling Westbrook Outlets to make way for almost 600 apartments along with town houses, restaurants and a hotel.
Lexington Partners LLC intends to start demolishing the 30-year-old shopping center in 2026 to launch a massive redevelopment on the 41-acre property, where retailers have been closing for years and vacancies now far outnumber operating stores.
If work goes forward on schedule, construction could get under way in 2027 on the first phase of constructing 595 apartments.
The initial wave would create five studios, 88 one-bedroom units, 204 two-bedrooms and 42 three-bedrooms, according to the development plan. The second phase would be more skewed toward smaller units: 25 studios, 121 one-bedroom models, 102 two-bedrooms and eight three-bedrooms.
That would make it one of the biggest new multifamily residential complexes in southeastern Connecticut. Sam Gold, executive director of the regional planning agency, said it would appear to be the largest in the lower Connecticut River Valley.
Gold’s agency hasn’t issued an opinion on the project, which is called Westbrook Commons. But overall, it supports the concept and wants to ensure there are convenient connections between the property and the Westbrook Shore Line East station.
“Housing in this location is definitely needed,” he said.
Nationally, bricks-and-mortar retailers have been struggling for the past decade or longer, with much of the loss endured by large department stores and legacy brands that make up much of the tenants’ lists at malls. Developers have been either demolishing or rebuilding indoor malls for housing, but Westbrook is the first instance in Connecticut where a large collection of outdoor outlets is facing the same fate.
When Lexington first put forward the idea for a large-scale, mixed-use complex at the site two years ago, it suggested the cost could be around $425 million. It has not publicly disclosed updated figures to account for construction inflation, but national and New England experts put the industry’s annual increases at 5 to 10%.
The outlets’ owner, Inovalis, is partnering with Lexington on the redevelopment plan. Eric Fazilleau, deputy managing director of Inovalis, told the town last year that the shopping center isn’t sustainable.
Inovalis paid $40 million for the property in 2017, but saw business plunge during the pandemic and never recover.
“For the first three or four years we were pretty good at maintaining occupancy. Just before COVID we were roughly at 85% occupancy, but then we went to a complete disaster,” Fazilleau told a Westbrook public meeting after the plan become public. “Unfortunately when you own this type of mall you rely on national tenants’ strategy. You can negotiate, but it doesn’t work. When they decide to leave, they close. They walk away.”
The outlets were down to 38% occupancy in 2024, and the Fazilleau said it’s not coming back. Management works to bring in as many activities and events as possible to promote foot traffic, but that is just a short-term answer, he said.
Hanes, Old Navy and William Sonoma were just some of the stores that closed their Westbrook Outlets location in 2025.
Goman + York consulting firm reported in 2024 that the new annual tax revenue from Westbrook Commons’ 595 apartments, 100 townhouses, 100-room hotel and 75,000 square feet of retail space would be about $2.6 million, roughly 10 times what Westbrook is collecting from the outlets currently.
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