Two decades in the making, the American Dream mega-mall is about to open its doors to shoppers. The question is how many will show up.
The $5 billion complex next to MetLife Stadium in East Rutherford, New Jersey, will roll out its retail portion in March, after cutting the ribbon on its amusement park, indoor ski slope and ice rink last year.
Much is riding on the retail behemoth. It’s employing some 17,000 to staff its 450 stores, restaurants and services in the space of about 3 million square feet (almost 280,000 square meters) — equivalent to about 50 football fields.
But American Dream’s stores are opening during what may be the industry’s darkest nightmare. Retailers from apparel chains to department stores have succumbed to bankruptcy as consumers migrate online, sapping malls of their lifeblood. Fewer than half of U.S. malls are expected to survive the onslaught. Add to that the lengthy and troubled development process preceding American Dream’s opening, and not everyone is convinced.
Macy’s Chief Executive Officer Jeff Gennette, for example, said his company “certainly did consider it,” but the department-store chain held off, given the property is “unproven.”
“We gotta figure out if that’s a viable property,” he said in an interview.
It also faces plenty of nearby competition: The mall in Short Hills, about 30 minutes away in Millburn, New Jersey, is an established luxury shopping mecca. The Westfield Garden State Plaza in Paramus is even closer.
Still, American Dream looks on track for its March retail opening. As of January, developers had leased almost 90% of available space at the white-walled construction of skylights and giant windows. When including leases under negotiation, that rises to almost 100%.
Companies like Japanese fashion brand Uniqlo and retail chain Primark have stores lined up, and Gap Inc.’s Old Navy and Banana Republic are opening.
There were times when it seemed hard to imagine that American Dream would ever open. The mall’s development started in 1996 and was marred by setbacks all along the way. Developers pulled out and a roof partially collapsed. There were funding shortfalls and issues with contaminated soils. Then, one of its prospective high-end and anchor tenants, Barneys New York Inc. filed for bankruptcy last year, nixing that plan.
Due to the long and tortured process, the opening of the Nickelodeon Universe amusement park, ski slope and ice rink last year was something of a milestone. The attractions are part of Canadian owner Triple Five Group’s strategy to defeat the retail curse — it’s banking that the allure of roller coasters, skiing and swimming will drive traffic.
It’s a play used by other mall operators such as Simon Property Group, which just agreed to buy rival U.S. shopping-mall operator Taubman Centers Inc. Consolidation is another strategy for malls to survive.
The outlook for 2020 remains dicey. More than 7,600 stores closed from the start of 2019 through October, according to Credit Suisse. Last year, department stores were the worst performing sector in the S&P 500, and Moody’s Investors Service has forecast the sector will continue to face falling operating income.
“How many people are going to raise their hands for yet another traditional mall side of things,” said Craig Johnson, president of the consulting firm Customer Growth Partners. He noted that many mall stalwarts are trying to cut down their square footage. “The market is rising for online, so they have a bit of a dilemma there.”
A representative for American Dream didn’t have immediate comment and Triple Five did not return a request for comment.