(Bloomberg)—More than 17 years after developers began boasting about world-class retail and entertainment just eight miles west of Manhattan, parts of the American Dream mega-mall opened Friday in New Jersey’s Meadowlands.
But the retail side still isn’t ready. Neither is dining. Nothing about this complex—not the design, not the financing, not even the opening—has worked according to plan.
For now, American Dream is beckoning crowds to its Nickelodeon Universe amusement park and an ice skating rink built to National Hockey League standards. By year’s end, says the mall’s Canadian owner, Triple Five Group, it will operate the DreamWorks indoor water park as well as an indoor ski and snowboard park, billed as the continent’s first.
The rest won’t happen until next year. Saks Fifth Avenue, Tiffany & Co. and Hermes are among the planned tenants, and more than 100 dining options are in the works. They include a kosher food hall, found nowhere else in the U.S. or Canada, Triple Five says.
In all, about $5 billion went into construction that’s best described as tortured. Two earlier developers pulled out. Part of the roof once collapsed beneath snow and ice. While the project floundered, construction crews were replaced by security guards. On the coldest days, some gathered in a vacant parking deck, keeping warm around barrels burning wooden construction scraps.
Even tougher challenges may be ahead.
Barneys New York, a fashion touchstone that had signed on to American Dream, is closing many of its stores amid bankruptcy proceedings. Lord & Taylor, another tenant, shut its flagship Manhattan store in January and its new owner is closing several other locations. Closings have been planned nationwide for some locations of mall staples, among them Gap, Banana Republic, Victoria’s Secret, Ann Taylor, J. Crew, Abercrombie & Fitch and Forever 21.
Visitors to American Dream may even have a hard time getting there, while navigating some of the busiest highways in the U.S. Triple Five says it’s eventually expecting about 40 million visitors a year. That’s almost double the 2018 attendance at Disney World’s Magic Kingdom in Florida, according to the Global Attractions Attendance Report, and about two-thirds of New York City tourists in 2018, according to NYC & Co. data.
Here’s why a retail behemoth, rising above New Jersey swampland and contaminated former dumping grounds, took so long to become a partial reality:
The Mills Corp., a veteran regional mega-mall builder based at the time in Chevy Chase, Maryland, announces plans for a 2 million-square foot shopping complex on almost 600 acres near the New Jersey Turnpike in Carlstadt, New Jersey. But the vision for the tract, owned by a co-developer, Empire Ltd., quickly becomes controversial because of the site’s industrial contaminants and proximity to the ecologically sensitive Meadowlands, a network of freshwater swamps. In 2002, Governor Jim McGreevey says the state won’t issue permits; the land later is put into a conservation trust.
The New Jersey Sports and Exposition Authority solicits development plans for about 160 acres of its own at Route 3 and the New Jersey Turnpike in East Rutherford, adjacent to a National Football League stadium and a concert venue. It chooses Mills, partnering this time with New Jersey-based Mack-Cali Realty Corp. for retail, entertainment, office and hotel space expected to cost at least $1.3 billion and consume 4.8 million square feet, although the size will shrink in later years.
Groundbreaking starts in 2004 on what’s called Meadowlands Xanadu, a reference to the pleasure palace of Mongol ruler and Yuan dynasty founder Kublai Khan. Opening is planned for 2006.
Construction on the Meadowlands Xanadu complex in front of Giants Stadium on March 16, 2006. Photographer: Emile Wamsteker/Bloomberg
Mills—burdened by overall debt, increasing Xanadu costs and a U.S. Securities and Exchange Commission investigation—relinquishes control of Xanadu as Colony Capital Acquisitions LLC takes an equity stake for as much as $500 million. “The financing, major tenants and long-term vision are now in place to make Meadowlands Xanadu the entertainment destination of choice for millions of residents in the tri-state region,” Richard Saltzman, Colony’s president, says in a news release.
Colony’s partners include the Dune Real Estate Funds, KanAm USA Management XXII LP and, with a limited interest, Mills. “It’s a start, not a finish,” then-Governor Jon Corzine, a former Goldman Sachs Group Inc. co-chairman who had pledged state support to get the mall running, said the preceding August when the deal was first proposed.
A November 2008 completion date comes and goes, becoming part of the on-again-off-again pattern that will continue for more than a decade.
Construction halts after an $11 million expected loan fails to materialize from a subsidiary of Lehman Brothers Holdings Inc., which had gone bankrupt in September 2008, and other lenders pull out. The ski slope, jutting skyward alongside the New Jersey Turnpike, becomes a forlorn symbol of unfilled promises, its garish, Lego-like exterior mocked by social-media users, architecture critics and elected officials. In 2011, then-Governor Chris Christie will refer to Xanadu as “the ugliest damn building in New Jersey, and maybe America.”
Manhattan-based Related Cos., led by Stephen Ross, expresses an interest in the project, according to NorthJersey.com, which reports the mall needs $500 million in financing for completion. By December, the state has another construction commitment, from Edmonton, Alberta-based Triple Five Group, owner of the West Edmonton Mall and Mall of America in Bloomington, Minnesota, the largest U.S. retail destination.
The project, now known as American Dream, will rely even more on entertainment, a strategy that Triple Five says should allay fears about faltering retail nationally. An early 2014 opening date is timed to coincide with the NFL’s Super Bowl, the annual football championship game, at the stadium adjacent to the mall. But when Triple Five secures ownership after financial and permitting hurdles, the Super Bowl splash no longer is in reach. The new opening target is late 2015. In the months ahead, that will change to late 2016. Then 2018.
The New Jersey Economic Development Authority authorizes $390 million in tax breaks for American Dream.
Construction on the site continues on June 10, 2015. Photographer: Craig Warga/Bloomberg
The state Sports and Exposition Authority approves borrowing more than $1 billion to help Triple Five finish by early to mid-2017. The site plan now is for 2.9 million square feet, and will grow to include a movie theater with wind, rain and other special effects; a performing-arts theater; 450 shops; parking for 33,000 cars and helicopter service. In December 2016, Triple Five shows plans for a re-do of the much-derided facade, for a “contemporary, pristine” look.
Goldman Sachs Group Inc. manages a $1.1 billion issue for American Dream construction in the year-to-date’s biggest unrated muni-bonds sale. The deal is unusual, involving a tax-free, low-interest debt sale by the New Jersey Sports and Exposition Authority to the Wisconsin Public Finance Authority, which then will sell to the public. The bonds, due in 2050, are backed by developer payments in lieu of taxes. New Jersey officials liken the deal to an investment, with jobs and retail-tax revenue as positive returns, and say the borrowing is structured to protect taxpayers from repaying if the mall flops.
Details about another Goldman deal, to help secure $1.67 billion in financing weeks before the bond sale, emerge later. In August 2019, The Minneapolis Star Tribune reports that as collateral, Triple Five had pledged 49% of Mall of America. The condition alarms some municipal officials and leads Bloomington, the mall’s hometown, to demand disclosure for any such future agreements.
New Jersey's 'Dream' Mall: 40 Million People and a Traffic Nightmare
Simplified signage on the exterior of the mall in August 2019. Photographer: Gabby Jones/Bloomberg
Triple Five conducts an American Dream tour for media and elected officials, and the website suggests a first-quarter 2019 opening. Later, the date shifts again, to Oct. 25, 2019—but just for ice skating and the amusement park—and some other attractions are planned to open by year’s end.
Oct. 25, 2019
The opening of American Dream got off to a rocky start. The developers only received a temporary state occupancy permit on the day before it was due to begin operating the park and rink.
And it appeared far from being ready to welcome the thousands of visitors its owners expect. In the morning, vendors were still setting up displays, and employees didn’t know how to enter the facility. Security guards directed people to an entrance that appeared to still be under construction, with workers in hard hats and plywood in place. The permit ensures that the facility is safe for people to occupy, according to a spokeswoman for New Jersey’s Department of Community Affairs.
That the retail portion of the complex wasn't open also disappointed visitors like Yisenia Rivera, a 41-year old from nearby Belleville, New Jersey. She made the trek to American Dream not knowing that the shops aren’t slated to debut until March.
“I think a lot of people are confused,” said Rivera, who complained about a lack of clear signage for parking and entrances. “They should have explained to the public step by step how everything was going to work, what's going to be open and when. I got lost coming in here.”
--With assistance from Donald Moore.
To contact the author of this story: Elise Young in Skillman at [email protected].
To contact the editor responsible for this story: Stephen Merelman at [email protected]
Lisa Wolfson Matthew Townsend
© 2019 Bloomberg L.P.