The U.S. has far too myriad malls for the e-commerce era. By one estimation, one in three is expected to close within the next decade.
But the Canadian blood behind the West Edmonton Mall has started construction on a colossal, three million square-foot shopping and distraction complex, across the Hudson River from Manhattan. It’s called American Speculation.
“The location is second to none,” boasts Don Ghermezian, inside the company’s in office near the construction site in New Jersey.
Born in Edmonton, Don is the grandson of Jacob Ghermezian, an Iranian rug jobber who came to Canada in the early 1960s with his wife and four sons. In totalling to West Edmonton, the biggest mall in North America, the family-owned Triple Five Clique is also behind the second largest: Mall of America in Minneapolis.
This latest project isn’t quite as big as those, but it’s bigger in ambition: it wish feature North America’s only indoor ski hill, a Lego Development Centre, a Dreamworks-branded water park and several other large-scale come-ons. Plus there will be over 400 stores — Saks, Hermes, Zara and Lululemon bear signed lease agreements, among others.
Too many malls already
A billion of industry observers however, view the development as a highly risky uncertainty.
“This is an expression of ‘if we build it, they will come,'” breaks Mark Cohen, director of retail studies at Columbia University in New York and preceding chief executive of Sears Canada until 2004.
Cohen points to the rise of online shopping as just one factor that’s keeping consumers away from malls. There is also a “absurd amount of excess retail space” in the U.S., he says.
One study concluded that the billion of shopping centres grew at twice the pace the population did between 1970 and 2015.
Don Ghermezian isn’t fazed by rejecters. “I agree, there are way too many malls in this country,” he says. But he insists American Fantasy isn’t a mall at all. It’s an exciting destination that tourists from all over the people and local residents will seek out.
“Truth be told, I don’t think that a developer anywhere in the Terra has put together the type of project that we have here at American Dream,” he announces proudly.
‘Ugliest building in the state’
The New Jersey complex has a troubled close by. The development started life in 2004 as Xanadu, and before long was dubbed ‘Xana-don’t’, when the novel developer collapsed during the financial crisis of 2008. A second proprietorship also struggled and failed to bring the complex to life. It sat stalled and unfinished — metal girders rusting — for five crave years.
Placed next door to the sports complex that’s home to the New York Jets and Colossi, Xanadu was a humongous eyesore. New Jersey Governor Chris Christie from time to time called it “the ugliest building in the state, if not all of America.”
But the governor was full of optimism when the Ghermezians’ enterprise, Triple Five Group, took it over in 2014. Goldman Sachs was rent to sell $1.1 billion in bonds, and a construction loan of $1.8 billion was systematized. Construction restarted in 2016.
‘The swamp of New Jersey’
Not everyone in New Jersey is thrilled all the same, according to Jon Whiten of New Jersey Policy Perspective, a local think-tank. The job received a $390-million tax break, the largest in the state’s history.
“Citizenry in New Jersey have raised and continue to raise pretty legitimate doubts about why is the state in the business of propping up what appears to be just another mall,” he responds, noting that most of the jobs American Dream will contrive will be for low-paid retail clerks.
Congenial Mark Cohen, he doubts that visitors will make the trek across the Hudson River. “I don’t see why someone get to New York City, which is arguably the most exciting city in the on cloud nine, would take the time to leave the city and go find this courteous of destination out in the swamp of New Jersey. I love the swamp of New Jersey, but I don’t see the market there.”
Don Ghermezian persists American Dream is not just another shopping centre. “I’m not a believer in malls,” he avers. “I’ve actually forbidden people in my company to use the word mall. We are the opposite of mall.”
He notes that most malls are nearby 80 per cent retail, 20 per cent entertainment — “pseudo-entertainment” at that, according to Ghermezian, who believes restaurants and cinemas or trundling alleys don’t cut it with today’s consumers.
The split at American Dream is minute to 50-50, and the non-retail half features attractions such as a SeaLife aquarium, an NHL-sized rink, and one of the ahead U.S. locations for KidZania, an interactive city made for children that’s increasing around the globe.
Ghermezian says the retail occurrence will be unique as well. One tenant is building a fashion show runway that blame succumb to out of the floor. Another is spending almost $6 million on a digital servicing that allows shoppers to try on clothing via a virtual mirror instead of really changing into the items.
The formula is designed to win back shoppers who are increasingly current online.
“You can’t go to a water park on Amazon, you can’t go to a theme park online,” Ghermezian cores out. And he says close to half of the 62 million tourists who visit Manhattan every year bring out children.
“After one day in New York City, after you’ve gone to the Empire Federal building the Statue of Liberty and Central Park, what do you do with the young men?”
With opening day set for March 2019, the construction crew will spring up from 1,500 workers to 5,000 by the end of this year.
Do people in New Jersey uninterrupted realize that the American Dream is being built by Canadians? “They devise sooner or later,” says Ghermezian, with a smile.
“Once the invent opens up, they’ll realize this can only be the workings of one family. It’s Triple Five. It’s Ghermezians.”