On October 26, eight miles west of Manhattan in East Rutherford, New Jersey, the doors swing partially open to a mega, don’t-call-it-a-mall, entertainment and retail venue betting that it can sidestep the “Retail Apocalypse.”
“We have spent about $2 billion worth, plus we had another $3 billion dollars that had been spent by prior developers, so all-in, you’re looking at a magnificent $5 billion dollar project,” Paul Ghermezian, general partner of Triple Five Worldwide, the developer of American Dream, told Yahoo Finance during an on-site preview of the property.
Once fully opened, the venue will become the second largest shopping “mall” in the U.S.
American Dream goes big on entertainment
American Dream’s 3 million-plus square foot combined theme park, water park, ice rink, ski hill, cinema, live performance theater, shopping and dining destination shares similar concepts with Triple Five’s other marquee properties, Minneapolis metro’s Mall of America and Edmonton’s West Edmonton Mall, with the exception of its entertainment-to-retail ratio. While two established malls offer 20% entertainment and 80% retail, American Dream is 55% entertainment and 45% retail. American Dream’s currently open entertainment options include more than 35 rides, along with multiple roller coasters and a skating rink.
“The Retail Apocalypse has actually been really great for us, relative to our peers,” Ghermezian said. “I love Amazon. I love online shopping, but what I found from our business is it has weeded out the weaker centers and the weaker experiences, and that’s allowed for centers like ours... to actually take a bigger piece of that pie and do better. What we’re seeing is, at the end of the day, people are still social creatures and people want to get out.”
‘This is a huge step and it’s a long time coming’
The private company secured financing for American Dream, after a prior developer abandoned the project in 2003, by leveraging a 49% stake in its Mall of America property along with the sale of $1.1 billion in tax-exempt bonds. The developers reportedly received $390 million in tax concessions.
“Our commitment of that in order to secure the financing in getting it done, in that we pledged our crown jewel asset is really an example of our commitment and belief in the success of this development,” Ghermezian said.
“This is a big day for New Jersey. This is a huge step and it’s a long time coming,” New Jersey Governor Phil Murphy said during a press conference held for the opening.
With high-end retailers and anchor department stores including Saks Fifth Avenue and Lord & Taylor flanking the property’s entertainment venues, American Dream’s brick and mortar stores will have to impress. Over the past few years, prominent retailers have shuttered their doors and filed for bankruptcy, en masse. American Apparel, BCBG, Aerosols and Forever 21 filed for bankruptcy, to name a few. An April 2019 UBS report cited by The Washington Post predicted that 75,000 clothing, electronics and furniture stores would close within the next 6 to 7 years.
American Dream’s new tenants will also have to compete with Bergen County’s Blue Laws that prevent a majority of traditional retailers from opening for business on Sundays. The venue’s amusement and theme parks will remain open 7 days per week. Though American Dream could either get a boost or a boot from its location. A nearby shopping mecca in Paramus, New Jersey, also subject to Bergen County’s Blue Laws, famously drives more dollars in annual retail sales than all other zip codes in the U.S.
‘It’s so much more’ than a mall
Part of Triple Five’s plan for success is requiring stores to step up their game. The company turned down retailers that failed to offer more than a mere retail experience.
“We want you to walk in and have something special happen to you in a store, a retail experience on our property experience that you’re not going to get anywhere else,” Ghermezian said, though he wouldn’t reveal what retailers had planned or which were turned down for failing to offer a qualifying concept.
After its initial opening of its Nickelodeon Universe Theme Park and Ice Rink on October 25, American Dream will roll out 3 additional areas. On November 27 its DreamWorks Water Park will be open. On December 5, its indoor ski slope, Big Snow Ski and Snowboard Park opens. And in March 2020 a grand opening will be held for the full venue, including retailers, dining and entertainment operators.
The current fee for an all access pass permitting visitors to use all of the rides within the Nickelodeon Universe theme park and ice rink is $49.99. General access passes cost $39.99. Children under 2 years old are permitted free entry. Certain rides are prohibited for children under weight and age restrictions.
The facility is expected to boost tax revenues. So far, American Dream employs 1,200 people, directly. An additional 17,000 people will work on behalf of entertainment, retail and restaurant tenants moving into the space.
“People refer to us as a mall and Mall of America has mall in its name, as does West Edmonton Mall, and those are testaments to their time, though they’ve gone well beyond that today. American Dream doesn’t say that — it’s so much more,” Ghermezian said.
Correction: A previous version of this post stated that the American Dream would be the largest “mall” in the U.S. after completion. It would be the second-largest “mall.” We regret the error.
Alexis is a reporter for Yahoo Finance. Follow her on Twitter @alexiskweed.