- First envisioned in 1996, the American Dream complex in New Jersey finally opens Friday at an estimated cost of $5 billion.
- The project has seen multiple owners, and ground was broken for the project in 2004.
- Its first name was Xanadu.
After more than 17 years in the making, the first phase of America's newest megamall will finally open to the public Friday in East Rutherford, New Jersey.
What makes the $5 billion American Dream's opening so highly anticipated is its labyrinthine history. It was first envisioned in 1996 and has had several owners. Had you driven past it on the New Jersey Turnpike nearly a decade ago, you might recall a multicolored eyesore that the then-governor called one of the ugliest buildings in the state and maybe even the country rather than a massive shopping entertainment complex.
Because its timeline has been so drawn out, American Dream has quite literally been shaped as the retail industry has been flipped on its head. When ground was broken in 2004, under the project's original developers, Amazon's ascent was just beginning. Circuit City, Sports Authority, Blockbuster, RadioShack and Toys R Us were still in business. Retailers were grabbing real estate where they could find it, hungry to open as many stores as possible.
Fast forward to 2019, as American Dream opens, store closures are piling up, shopping is pivoting online and many of the retailers that haven't been nimble enough to navigate the turbulent landscape have been forced to file for bankruptcy.
Many look to the project as a case study, and the main question is whether the entertainment experience will be able to excite consumers enough to bring them back to the mall for shopping and more.
American Dream's first phase, a Nickelodeon theme park and a NHL-regulation-size ice skating rink will open Friday. The theme park will have more than 35 rides and attractions, including three record-breaking coasters: one for the steepest plunge, with a 122-foot drop; one for the tallest and longest free-spinning coaster; and one for the tallest, indoor-spinning-drop tower.
Then, later this year, real estate developer Triple Five Group expects to open a DreamWorks indoor waterpark, North America's largest, along with an indoor snow park. The retail shops and a handful of other entertainment venues won't open their doors until 2020, according to Triple Five. Because of Bergen County's blue laws, however, this means all of the retail shops must remain dark on Sundays.
Here's a look at how the American Dream came to be.
Back in 1996, a business developer known as The Mills Corp. proposed a shopping center, for retail and entertainment, that spanned roughly 2.1 million square feet in the Meadowlands area of New Jersey. The group was known at the time for developing major shopping malls, often with abstract architecture, massive movie theaters and food courts.
The Mills' proposal, however, was to build over an area of wetlands in Carlstadt, New Jersey. That sparked angry protests over the potential environmental impact because such a massive complex would destroy what many considered to be precious habitat. This particular project never came to fruition. A new plot of land, not far from Carlstadt, came into the picture a few years later for a similar idea.
The New Jersey Sports and Exposition Authority, an independent arm established by the state in the 1970s to oversee the Meadowlands Sports Complex, sought out proposals from developers in 2002 regarding what should be done with a swath of land that was already developed in East Rutherford, near the former Continental Airlines Arena.
The Mills and Mack-Cali Realty came out victorious. The Mills reworked its initial plan for the nearby swamp land. Mack-Cali was brought in to help with the office tower and hotel component of the project, having a history for working in those areas of real estate. The two had said they were planning to build four 14-story, 440,000-square-foot class-A office buildings, along with a 520-room hotel with conference facilities.
Triple Five Group, the property's owner today, didn't make the top three finalists selected by the state exposition authority. The partners chose the name Xanadu, which was taken from The Mills' Madrid Xanadu shopping mall in Spain. (Xanadu was also the name of the fictional estate of Charles Foster Kane in the movie "Citizen Kane." Over the years of starts and stops and millions of dollars in taxpayer bond sales, the name was used to mock the project.)
The partners said they would pay a $160 million development rights fee at the start of construction, once all permits and approvals were obtained. They expected the project to include the nation's first indoor Alpine ski resort, an indoor mini-Formula One style racing venue, a minor-league baseball stadium, an extreme sports park, a movie theater and live entertainment venue, according to an old press release. In many ways, these plans mimicked the blueprint for Mall of America, which brought attractions like roller coasters, mini golf and an aquarium to a shopping mall — something the U.S. hadn't seen before.
Ground was broken on the massive plot of land in September 2004, with The Mills and Mack-Cali saying they were targeting an opening date in 2007. The project was expected to cost about $2 billion. That price tag would later creep up, and the opening pushed back.
Real estate investment firm Colony Capital in 2006 announced it would take over Xanadu from The Mills and Mack-Cali. The Mills had been under investigation by the Securities and Exchange Commission for suspected accounting irregularities and wouldn't be able to continue financing the project. The biggest mall owner in the U.S., Simon Property Group, and hedge fund Farallon Capital Management would go on to acquire The Mills for $1.64 billion in 2007.
When Colony Capital announced in November 2006 that it had secured additional financing to be able to resume construction, it said it was targeting a completion date of late 2008. It also said it had signed leases with six anchor tenants at this point: outdoor lifestyle retailer Cabela's, a concert hall operated by AEG Live, upscale movie theater chain Muvico, a bowling alley and martini bar concept by Strike MX, plus Forever 21 and The Children's Place stores.
Ground was broken in 2007 for the new MetLife Stadium for the New York Jets and the Giants next door and was expected to cost $1.3 billion. This will eventually lead to more problems for Xanadu.
On top of everything else, Colony Capital announced in 2008 that Xanadu will include an observation wheel similar to the London Eye. Residents complained about another eyesore, on top of Xanadu's already bright exterior. In a 2008 story with The New York Times, The Mills chief Laurence Siegel said people criticizing Xanadu's aesthetic was akin to "judging the Sistine Chapel after Michelangelo put on the first coat of paint." Siegel had stuck around to help Colony Capital after The Mills was acquired. He told the Times in April 2008 that 60% of Xanadu was leased at this point.
The opening of Xanadu, however, got pushed back from November 2008 to the summer of 2009, with construction still not complete.
The financial crisis hit Xanadu, and money dried up. One of the project's construction lenders, Xanadu Mezz Holdings, was a subsidiary of Lehman Brothers, which filed for bankruptcy on Sept. 15, 2008. The Lehman affiliate defaulted on loan obligations, leaving Xanadu short about $22.9 million, The New York Times reported.
At one point, The Wall Street Journal reported, there were talks between Colony Capital and Stephen Ross, CEO of real estate developer Related Companies, to lend more cash to finish the development. But those never bared any fruit.
Meantime, the retail industry began to see seismic shifts amid the Great Recession. Plans to add new stores as quickly as possible suddenly didn't seem so smart. KB Toys, Whitehall Jewelers, Sharper Image, Circuit City, Linens 'n Things and department store chain Mervyn's all eventually fell victim to bankruptcy.
In February 2011, a portion of Xanadu caved due to heavy snow on the roof, leaving a dent in the unfinished ski slope.
Triple Five Group entered the picture that year. The group announced it would take over the project, which sat untouched and unfinished for years after lending dried up. It also gave the megamall a new name: The American Dream.
The Ghermezians, the family behind Triple Five Group, said in 2011 they planned to invest $1 billion to expand the development, which had already rung up a tab of about $1.9 billion. They said they would grow it to 3 million square feet, through additions like an indoor water park. And they began targeting a fresh opening date ahead of the 2014 Super Bowl that was slated to be held next door.
Although the company might not be a household name, it had operated the Mall of America, the nation's largest mall, since it opened in 1992.
In a presentation with then-Gov. Chris Christie, the Ghermezians said in May 2011 they expected about 50% of American Dream's visitors to be local. Christie said he expected the project to create 35,000 jobs, and that New Jersey would help finance the project with $200 million in sales tax incentives.
Triple Five Group promised to make over what Christie had in March called "by far the ugliest damn building in New Jersey, and maybe America."
DreamWorks Animation announced in July 2012 plans to bring a themed water park to American Dream, sparking renewed excitement about the development. Construction picked back up, and entertainment-based tenants signed deals to move in.
But also that year, the New York Giants and the Jets filed a lawsuit to block American Dream from being completed, arguing it would hurt games being held at MetLife Stadium. They said it would cause transportation and parking nightmares. Triple Five Group later countersued, but the two ultimately reached an agreement to drop the suits in 2014.
There still weren't concrete plans in 2012 to handle the surge of traffic that American Dream was expected to generate.
After four years, construction started again at American Dream, with Triple Five Group now at the helm. The year also marked the 10-year anniversary since plans for the original Xanadu were approved. But Triple Five Group said the complex wouldn't be complete ahead of the 2014 Super Bowl, as had been hoped. The developers said it would take more time to finish the DreamWorks theme park.
Department store operator Hudson's Bay Company in September 2015 announced that three of its banners — Saks Fifth Avenue, Lord & Taylor and Saks Off 5th — would join American Dream, which at the time was targeting an opening date for late summer 2017. Luxury accessories maker Hermes became the second high-end brand to sign on in 2015, leading retail analysts to believe others would follow.
Triple Five Group in 2015 started to cover the multicolored facade of American Dream with white panels.
Construction work stalled again briefly in 2016.
In September 2016, Triple Five Group said it would bring a Nickelodeon theme park to American Dream, based on its success with Nickelodeon at Mall of America.
In December 2016, Triple Five Group told The New York Times it was targeting an opening date in the fall of 2018. The developers also said American Dream was about 70% leased at this point, and that they were spending roughly $1 million daily on construction.
Having already spent $700 million on American Dream, Triple Five Group closed on $1.67 billion in construction loans. The municipal bonds, issued in two different offerings, would come to a total of $1.1 billion, The New York Times reported in May 2017.
Construction picked back up.
Reports citing the developers said the cost of construction had risen to about $3 million daily. Triple Five Group promised in May 2018 that the first phase of American Dream would open by the spring of 2019. Leasing was said to be about 80% done.
Meanwhile, Miami-Dade County in Florida in 2018 approved the development of Triple Five Group's next American Dream retail-theme park in Miami, a project that's expected to cost about $4 billion and span a whopping 6.2 million square feet. This complex, which doesn't yet have a firm completion date, will surpass Mall of America to become the biggest shopping center in North America when — and if — it opens its doors.
Triple Five Group in May pushed the opening of phase one at American Dream to the fall. An exact date of Oct. 25 wasn't announced until July.
Retail tenants at American Dream were now slated to include Barneys New York, Dolce & Gabbana, Saint Laurent, Moncler, Tiffany, Zara, H&M, Uniqlo and Primark, according to its website.
The developers said their idea of what American Dream would be, once completed, had evolved over time, as the retail industry had clearly undergone its fair share of changes since before the Great Recession.
"When we originally took on the project seven or eight years ago, there could've been 200 retailers out there that I thought would be tenants at the center. A lot of them just went bankrupt," Triple Five Group President and CEO Don Ghermezian said in a recent interview with CNBC. "In a very advantageous way, it caused us to shift our focus ... on driving people to the center and getting them off their phones. America has 1,000 shopping centers they don't need."
Triple Five Group is expecting 40 million visitors annually, similar to what it sees at Mall of America.
Getting there from New York could be a bit more complicated for some folks, however. (Unless you have a private helicopter — because blueprint plans outline three helipads at American Dream.)
New Jersey Transit is adding a new route, called the 355 express bus, that will run daily, every half hour, from the Port Authority Bus Terminal to American Dream. A ferry service will start running Friday from the West Side of Manhattan to New Jersey, which requires a short bus ride to then get to the megamall. Ride-hailing service Lyft has also said it will have designated pickup and drop-off spots at American Dream.
All told, American Dream has racked up a roughly $5 billion price tag.