American Dream: can this giant New Jersey mega-mall revive US retail?
The owners of a massive new shopping complex are convinced of success. But has Americas once-great retail format simply had its day?
On a dreary Tuesday morning shortly before Christmas, two passengers boarded the 9.30am 355 bus from New Yorks Port Authority bus terminal bound for American Dream, the most ambitious new mall to be built in the US in a generation. One was a mall worker who didnt want to talk to the media; the other was me.
Depending on who you speak to, American Dream, the optimistically named $5bn mall-slash-entertainment center under construction in New Jerseys Meadowlands is either the future of shopping and a soon-to-be tourism mecca, or its an environmental disaster, taxpayer ripoff and a hubristic folly gambling on a retail format that has had its day.
Only time will tell who is right, but after 23 years of false starts, and amid a clearout of the retail sector that would make Marie Kondo shudder, Triple Five, the owner of American Dream, is confident that soon 40 million people a year or more will flock to the a 3m-sq-ft mall to surf in its wave pool, ski and snowboard on its indoor slopes, ride its rollercoasters, play with sting-rays in the aquarium and shop, shop, shop.
Critics are less convinced. Meadowlands, a toxic marsh and mafia dumping ground that features in the opening credits of The Sopranos, has long proved a graveyard for other ambitious projects.
The mall, under different ownership, was once called Xanadu and suffered so many false starts locals called it Xanadont. The former New Jersey governor Chris Christie called the project the ugliest damn building in New Jersey and maybe America.
Environmentalists have campaigned against the building for decades, as it sits on wetlands that are still home to 125 different bird species and have suffered a century of abuse. And local residents are angry that more than $1bn of taxpayer money is tied up in the property.
They filled in wetlands to build a water park. Its almost funny, Jeff Tittel, the director of the New Jersey chapter of the Sierra Club environmental group, said bitterly. He predicts that the site will need to attract 100,000 cars a day to be successful, exacerbating the areas awful traffic and pollution issues. This is a symbol of all that is wrong with New Jersey politics.
Paul Ghermezian, the chief marketing strategist of Triple Five, which owns the mall, has a different vision of the American Dream. The project will create 17,000 jobs, pour back billions into the New Jersey economy in taxes, and maybe, just maybe, breathe new life into a battered retail industry that is being eaten alive by Amazon and online shopping.
The American mall is in crisis. Once the center of retail and a magnet for young people, more and more malls are dying as shopping moves online and social media becomes the forum for youth. Credit Suisse estimates that 20% to 25% of malls will shutter between 2017 and 2022. Retailers that once anchored malls, including Toys R Us and Sears, have gone bankrupt.
But Ghermezian, whose family control Triple Five, believes people still hunger for real experiences. Its real experiences like ride a coaster you know, come in and touch something, sting-rays, lace up your skates and get out there, he said.
About 55% of American Dream is about experiences. Cinemas, restaurants and hotels are in the works; the rest is shopping. Its a mix that Ghermezian hopes will one day make American Dream the largest single attraction in the tri-state area of New York, New Jersey and Connecticut.
The bus drops me off on the edge of a vast covered car park. It has space for 11,000 cars. Inside, the mall looks more like a swanky abandoned airport than a shopping center. Long white curving corridors open into a series of high-ceilinged atriums lit by skylights and currently dotted with tastefully minimalist Christmas trees.
A few workers and security guards walk the shopless halls. Down one corridor I spy them working on a secret garden where live rabbits may one day frolic among the curvy Alice in Wonderland-style topiary. (However, 2,500 people have signed a petition asking the mall not to use live animals as Instagram props.)
Triple Five is a family firm and plays a long game. American Dream is opening in stages. The shops dont open until next year, hence the lack of visitors for now. Big Snow, billed as North Americas first indoor, real-snow ski and snowboard center, opened earlier this month and a handful of skiers braved its massive icy hall during my visit featuring 160ft slopes and 5,500 tons of real snow.
Nickelodeon Universe, the largest indoor theme park in North America, opened in November and houses some quite terrifying-looking rollercoasters and kids rides, featuring the media companys star assets including SpongeBob SquarePants and Rugrats.
Opposite the theme park, watched by a giant model of Shrek, workers are still putting the finishing touches to the DreamWorks Water Park, which houses a wave pool where people will one day be able to surf a 6ft wave while people lounge in cabanas, with views of Manhattan, fitted out by the New Jersey-born designer Jonathan Adler.
There is no doubting the scale of ambition. Ghermezian has challenged retailersto offer something experiential the latest buzzword in retail and a word Ghermezian loathes but uses a lot.
The first shop to open is ItSugar, billed as the worlds first candy department store. The entrance to the three-floor, 22,000 sq ft shop is dominated by a giant Statue of Liberty made of 1.5m jelly beans. Taking liberties with Lady Liberty, the sign beneath the statue reads: Give me your tired, your poor, your huddled masses yearning for the sweet life, and I will give you ITSUGAR.
But if you build it, will those huddled masses come?
Mark Cohen, the former chairman and chief executive of Sears Canada, has his doubts. In his past life Cohen, now director of retail studies at Columbia University, dealt with the Ghermezians when they had Sears stores in Triple Fives Mall of America in Minnesota, the USs largest mall, and West Edmonton Mall in Canada. He remains impressed by what they have achieved there but doubts it can be replicated in New Jersey.
Mall of America, south of Minneapolis, and West Edmonton are in relatively thinly populated areas with extreme winters, making a big, indoor entertainment and shopping space a mighty draw, he said. Now they come further south, said Cohen life will be harder. If this succeeds, its going to be entirely on the basis of its over-the-top entertainment core. The shopping, he said, is a pimple on a whale.
New Jersey like the rest of America already has more than enough malls, way too many in Cohens opinion. New York has some of the best shopping on the planet. Its not like customers in New Jersey are facing the prospects of walking around without any clothes on, he said.
In a recent conversation with Triple Five chief Don Ghermezian, Cohen said the mall boss implied he had induced some big brands to open in the mall with very attractive leases. So I said: So, Don, youre buying your tenancy. Great. Good for you. How long do you think thats going to last? We had an interesting couple of hours.
These days, physical retail is a tremendously difficult business, said Cohen. There are still just too many places to shop, and even American Dream will struggle to turn the online tide. Customers will go for the experience and then go home and buy something sitting in their living room, in their underwear, he said.
Even the scale of the project could end up being a handicap. Financed by debt, American Dream will need to make a lot of money to recoup its investment. Youve got to do an enormous amount of business to pay off the kind of liability that theyve created for themselves, said Cohen. This has to be very successful just to be OK.
Unsurprisingly, Paul Ghermezian disagrees. The most important thing in real estate is location, location, location. Look at Triple Fives success in less prestigious locations, then do the math, he says. This location is second to none. Ghermezian is a big fan of real numbers he said, before reeling off the statistics he believes will make the American Dream come true.
There are 25 million people near enough to American Dream to visit, and on top of that New York City attracts 65 million visitors each year. Triple Five is expert at getting its properties on the tourist agenda, and Chinese and Japanese shoppers already flock to Mall of America. Why not American Dream?
My ambitions are to be the greatest we can be, and to share that success with New Jersey as well, said Ghermezian. If they hit their numbers they will have done something phenomenal he said.
If Im just able to do conservatively what Im doing at the other two properties, you know, I think 40 million or 30 million visits is conservative.
Its way too early to say whether the American Dream will reinvent retail or sink into the New Jersey marsh, but its success or failure will affect retail for a generation.
I had the bus to myself on the ride back to New York. The driver said the bus was usually pretty quiet.
But its not really open yet, she added, apologetically.
Read more: https://www.theguardian.com/business/2019/dec/26/american-dream-retail-mall-new-jersey