Shinsegae outlet in holding pattern

The Shinsegae-Chelsea premium outlet currently under construction may not be able to operate because of government regulations.
If so, Yeoju county’s plan for a massive distribution complex and the 100 billion won ($110 million) that Chelsea Property Group, a U.S.-based premium outlet operator, plans to invest, could be threatened.
Shinsegae, operator of Korea’s third-largest department store chain, and Chelsea each have a 50-percent share in the venture.
The complex is to sell high-end luxury brands, including Armani, Gucci and Ferragamo.
The Ministry of Construction and Transportation claims that the complex, being built on a 265,500-square -meter lot (2.9 million square feet) in Yeoju, violates a law related to improving the capital region. The ministry has already informed the Yeoju county office of the matter.
According to the ministry, a sales facility bigger than 15,000 square meters is not allowed by the capital region improvement law.
The Shinsegae-Chelsea store is two buildings of 14,352 and 12,637 square meters each.
“Since the owner of the two building is the same and they are adjacent, the facility has to be considered as one. So it can be said that the store is in violation of the law,” said Park Mu-ik, head of the capital region policy team at the Construction Ministry.
Officials at Yeoju county and Gyeonggi province, however, dispute the ministry’s decision.
“Between the two buildings lies a 20-meter-wide road with four lanes. How can they be considered as one?” said an official who declined to be identified.
The official also said the 64 billion won already used to build the facilities will be a waste if the store is not allowed, and that 3,000 expected jobs will vanish.
Shinsegae is also confused.
“We acknowledged that the Construction Ministry had raised issues, but we continued with construction since there was no order to stop the construction from Yeoju county, which gave construction approval,” said an executive at Shinsegae.
A ruling by the Yeoju district government is expected by March 6.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]