The West Edmonton Mall has been put up as collateral on a troubled mega-mall development now open for business on the site of a former swamp in New Jersey.
After endless delays and billions of dollars in investment, the American Dream mega-mall opened Friday in the Meadowlands Sports Complex in East Rutherford, N.J.
Triple Five Group, founded by the Ghermezians — Edmonton’s mall-building billionaire family — put up 49 per cent of its interest in West Edmonton Mall, and 49 per cent of its interest in the Mall of America, in Bloomington, Minn., to finance the problem-plagued development.
Edmonton’s mega-mall was wagered in exchange for a construction loan with Goldman Sachs and JPMorgan Chase.
Triple Five is all in, said Nick Eglenian, president of Siteworks, a retail advisory company based in Annapolis, Md.
“They bet the farm and then they threw the kitchen sink at the mall itself,” Eglenian said in an interview with CBC Radio’s Edmonton AM.
“They not only pledged 49 per cent of the West Edmonton Mall, they also pledged 49 per cent of the Mall of America. They are building a theme park, a water park and ski slope to support this mall and that’s pretty incredible.”
One question looms large over American Dream. Will anyone come?
Its developers expect to attract 40 million visitors each year but as malls across the United States shutter and online shopping continues to grow in popularity, it’s a high-stakes bet.
“There’s been no shortage of ink spilled in commentary among talking heads like myself about exactly what it’s going to be and how successful it will be,” said Sanford Stein, a Minneapolis-based retail expert.
“It’s hard to know what ultimately is going to happen. Retailing has changed so much in recent years, it’s going to be anybody’s guess.”
West Edmonton Mall, the largest mall in North America, is 5.3 million square feet and has 800 stores.
At three million square feet, American Dream is the second largest mall in the United States, and third largest in North America.
It will feature more than a dozen entertainment attractions like a 16-storey indoor ski slope, roller-coaster, water park and eventually 450 retail, food and specialty shops.
Attractions include a bunny field, an aviary and an NHL-size ice rink.
The mall, about 16 kilometres from Manhattan, will also boast a doggy daycare and a luxury wing where shoppers can sip champagne and sample caviar as they wait to have their designer handbags wrapped.
Two hotels with a total of 3,500 rooms are being planned next to the complex.
“You can make it your backyard playground if you live in Manhattan or even if you’re in New Jersey,” said Ken Downing, chief creative officer for Triple Five Group in an interview with the Associated Press.
“It’s a staycation. So, it’s a little bit of competing with mindset and emotion, far more than a property or even Disneyland.”
Plagued by delays
American Dream, originally dubbed Xanadu, has been plagued by delays and investment failures.
The project broke ground in 2004 but it languished during the early years, with its multi-coloured, checkerboard exterior drawing derision, including from then-New Jersey Gov. Chris Christie who called it “an offence to the eyes” and “the ugliest damn building in New Jersey and maybe America.” The exterior design has since been changed.
The project was suspended in 2009 during the financial crisis after a Lehman Brothers affiliate failed to fund its share of the construction. Creditors seized the project in 2010. Triple Five came on board a year later.
“The original developer ran into financial problems and it was eventually sold in parts,” Eglenian said.
“It required an enormous amount of public support which went through various stages of approvals and disapprovals. Three million square feet of anything is complicated and takes a long time.”
Its developers are banking on entertainment to attract consumers, Eglenian said.
“I will say this, entertainment is a very good generator of traffic,” he said.
“There is no question that in the United States right now there is no need for another typical retail mall. We are shedding malls in the United States but this is not a mall in the typical sense because it has so much entertainment.
“You can create a tourist attraction pretty quickly in the New York area and tourists will go.”