The American Dream mega entertainment and shopping complex in New Jersey. Photo / AP
The American Dream mega entertainment and shopping complex in New Jersey. Photo / AP
The retail landscape has darkened but will consumers come along for the rides?
The man-made snow was piling up on the 16-storey indoor ski slope and workers were testing whizzing rides at the theme park.
These were some of the surest signs that the opening of the American Dream Meadowlandsmegamall was finally at hand some 16 years after the star-crossed project was initiated on the New Jersey marshlands, just across the river from Manhattan. We have been here before. "It's been a very difficult process but we're reaching the culmination of all our hard work and efforts," Don Ghermezian, the president of Triple Five Group, the family-owned development company overseeing the project, told a reporter.
That was seven years and nearly US$3b ($4.7b) ago.
The first phase of the American Dream came to life Friday with a grand ceremony to kick off the opening of its theme park. That will be followed in the months to come with the christening of North America's largest indoor water park, the ski slopes and then hundreds of shops and restaurants.
Much has changed since the project, originally known as Xanadu, was born in 2003. New Jersey has seen five governors since then. The pastel tiles that prompted one of them, Chris Christie, to call it "the ugliest damn building in New Jersey" have been replaced. The original developer, Mills Corp, dropped out long ago after running into financial trouble. So did its successor, Colony Capital. Triple Five agreed to take control of the project in 2011.
Triple 5 CEO Don Ghermezian, developer of the American Dream mega entertainment and shopping complex. Photo / AP
Above all, the shopping mall, once the mainstay of American retail commerce, is under pressure as never before thanks to the rise of ecommerce. Vacancies in US shopping malls hit an eight-year high in the third quarter, according to Reis, a division of Moody's Analytics, with vacancies at their worst level since the financial crisis. As consumers shop online and department stores buckle, many malls are grappling with a glut of space. It would not appear to be the best of times to open a 3m-square-foot jumbo mall.
"This was conceived 20 years ago, and the world has changed a lot for retail since then," said a well-respected real estate investor. Another questioned whether any department stores, the traditional anchor tenant for shopping malls, would even exist in 10 years.
Nor do the mall's trio of helipads overcome the challenge of luring shoppers from Manhattan to a traffic-clogged corner of New Jersey. "How do you get a large number of people from Manhattan to this property in an efficient way?" asked Vince Tibone, a retail specialist at Green Street Advisors, a property research group.
Still, the Ghermezians have not lost their faith in American Dream. They pledged as collateral 49 per cent of the two other megamalls they own — the West Edmonton Mall in Canada and the Mall of America in Bloomington, Minnesota — to secure a US$1.67b ($2.6b) construction loan from JPMorgan and Goldman Sachs to realise their vision.
Visitors ride the Kraang Prime Pandemonium. Photo / AP
Their conviction is that so many superlative attractions will make American Dream a destination in its own right. Among them: the world's largest indoor wave pool, with a 1.5m gallon water park and beach heated year-round to 30C, a Nickelodeon theme park featuring the world's steepest rollercoaster, a Lego Discovery centre, a Sea Life aquarium, two 18-hole miniature golf courses, a kosher food hall, an aviary featuring local birds, a KidZania children's village, a regulation National Hockey League skating rink, and the aforementioned Big Snow indoor ski hill, with two slopes, a chairlift and an Alpine village serving hot chocolate.
"We're thinking a lot of people will do ski vacation prep there," a guide explained during a recent tour.
Soon to come is a London Eye-style Ferris wheel with a view of Manhattan and perhaps a luxury hotel. On their way to those activities, guests will be funnelled past luxury shops, including a two-storey Hermes.
"It is obviously a very unique retail property, to say the least," Tibone observed.
A rendering of the ice skating rink. Photo / Supplied
The Ghermezians, a family of Iranian Jews, have a history of defying expectations. The family relocated to Montreal in the late 1950s and entered the rug trade. They quickly expanded their business until, eventually, they were holding auctions all around the US and Canada, including well-attended sessions at the Waldorf-Astoria hotel in Manhattan. (A New York Times reporter who observed one in 1976 described Mr Ghermezian's uncle, Nader, as "mesmerising audiences of up to 800 with his glib chatter and entertaining chant".)
Drawn by an oil and gas surge in western Canada, the family ploughed their money into thousands of acres of Alberta prairie, eventually opening a mall in 1981 that featured submarine rides and a man-made lagoon. Five years later, after a visit to Minnesota, they set about repeating the trick on an even bigger scale. These days, the Mall of America pulls in more than 40m visitors a year.
"People didn't understand [the concept] and thought it would fail," Mr Ghermezian told Women's Wear Daily in 2012.
An artists impression of the completed mall. Photo / Supplied
American Dream will feature the best of those projects, as well as new baubles for an "interactive" generation. One of the reasons construction was so costly is because the Ghermezians ripped out virtually everything from the nearly finished Xanadu when they took over.
But this time the Ghermezians are not building in "middle-of-nowhere Canada," as one observer put it. Rather, they will be competing for visitors in one of the busiest urban areas in the world.
Moreover, New Yorkers and affluent tourists seeking a luxury mall have a brand new palace at the Related Companies' US$25b ($39b) Hudson Yards on the west side of Manhattan. It had its own grand opening in March.
Visitors ride Dora's Sky Railway. Photo / AP
As if all that were not enough, American Dream is in New Jersey's Bergen County, where trading regulations — known as "blue laws" — do not permit Sunday shopping.
"It's so big and there's just no infrastructure to make it work," one rival developer said of American Dream's prospects. But, knowing the Ghermezians, he could not bring himself to bet against them: "They have a tremendous will not to fail."
