Mall of America, Minneapolis, MN.
Sanford Stein
Triple Five Group, the owner of the Mall of America, has put up Minnesota’s signature retail destination as collateral in a high-stakes gamble on a big dream. Specifically, the American Dream, a new mega-attraction near the New Jersey Meadowlands sports complex. City officials in Bloomington MN, where the Mega-mall is located were shocked to discover the $1.67 billion, 2017 guarantee in a bond document last fall. The inadvertent discovery related to the cities’ efforts working with Triple Five to develop a $250 million water park next to the Mall of America.
This was exacerbated by the fact that it involved the largest sale of unrated municipal bonds in 2017, according to Bloomberg. Bonds are generally unrated if they are deemed too risky to earn an investment-grade rating. “We would prefer that Mall of America wasn’t used as collateral for other projects,” said Schane Rudlang, administrator of Bloomington’s port authority in a recent Minneapolis Star Tribune article. Yah, I’ll bet! Mall of America generates about 10% of Bloomington’s tax base; but has an incalculable impact on the overall Twin Cities economy. Baltimore-based retail consultant Nick Egelanian said Triple Five Group is banking on high-profile attractions to stimulate retail sales, but there’s no agreement among the industry experts of its likely success.
Multiple False Starts
Drama has been the norm during the 15- year long saga of the 93-acre site, since it was first christened “Xanadu” in 2004. Lying in the shadow of the NYC skyline and across the highway from MetLife Stadium, the project endured two failed attempts to bring it to life, prior to Triple Five Groups 2011 acquisition. The new owners planned to complete the project in time for the Super Bowl at the Meadowlands Sports Complex in 2014. They missed the mark by a half decade. The project has faced obstacles of every imaginable kind including massive construction delays, legal challenges, financial and environmental issues, and on and on.
Since the Triple Five takeover they’ve used the success of Mall of America as their modus operandi. “Mall of America is a proof of concept that destination retail works,” mall spokesman Dan Jasper said in a recent statement. What is not often talked about is the role that Melvin Simon and Associates (now Simon Property Group) played in getting MOA in the ground. While Triple Five conceived the venture, after a four-year attempt to acquire adequate financing, they were dead in the water.
In 1987 Triple Five partnered with mega-shopping center developer and manager, Melvin Simon and Associates, to revive the project. Simon put together a financing package with Teachers Insurance and Annuity Association, (now TIAA) to get the project out of the ground. Along with the financing, Simon headed up leasing and management, and was instrumental in dealing with various governmental agencies to get the project built, leased and opened in 1992. Having been involved in the design of many of MOA’s early stores, as well as a consulting directly to Simon, I witnessed first-hand their mastery. Unfortunately for Simon a lengthy and contested court fight between them and Triple Five in 2003 resulted in Simon being forced to sell their 27.5% stake in MOA to Triple Five Group for $81.4 million, thus transferring control of the development.
Big Snow
The three million square foot American Dream, now scheduled for partial opening on October 25th has been an ambitious undertaking, to say the least. While under MOA’s current 5.4 million square feet, Dream’s intended mix of 55% entertainment and 45% retail, is more in tune with current trending, and Generation Y and Z’s appetite for experiences.
American Dream will contain 15 major event draws including a DreamWorks Waterpark, Nickelodeon theme park, an NHL‐sized skating rink, an Angry Birds-themed mini-golf course, an aquarium, a luxury movie theater and a Legoland Discovery Center. However, its premier feature is Big SNOW Ski and Snowboard Park, described as “North America’s 1st indoor snow sports center.” This mega-feature was the “anchor destination” of the initial failed development. Constructed almost a decade ago, the 16-story tall, 180,000 square foot indoor ski experience is wrapped in a kaleidoscopic veneer of bright green-to-blue and red-to-orange cladding. New Jersey’s then Governor Chris Christie often referred to it as “the ugliest structure in the state”. PR was never his strong suit.
The ski park is complete with an 800-foot slope, a chairlift, small terrain park, and ski school area. It will be kept at a constant 28 degrees and contain real snow. The facility will have lounges where parents can watch their kids ski, and the venue will be visible from neighboring restaurants.
Shopping and Eating Too
Besides the entertainment offerings, American Dream promises more than 450 retail and specialty shops along with over 100 dining and specialty food options including more than 20 full‐service restaurants. Publicly announced retailers include Saks Fifth Avenue, Lord & Taylor and Barneys New York, among the majors. Naturally, that assumes they all remain in-tact. Specialty retailers include Watches of Switzerland, Hermes, Dolce & Gabbana, Louis Vuitton, Gucci, Uniqlo, H&M, Zara, Banana Republic, Gap, MAC, Microsoft, Pink and Victoria’s Secret.
Getting There May Be an Epic Experience, In Itself
The developers have predicted 40 million annual visitors to the park; coincidentally that number matches MOA’s annual draw, for most of its 27-year run. However, from the project’s inception the issues of “getting there” have been a matter of much controversy. The site is located along Route 3 and the New Jersey Turnpike in East Rutherford, NJ. Apparently, neighboring Meadowlands sporting events, which include the Giants/Jets Stadium and racetrack are notorious for epic Rt. 3 traffic-jams. And that’s without the addition of as many as 150,000 additional visitors, expected on Dream’s busiest days.
Secaucus, NJ mayor Mike Gonnelli threatened to sue Triple Five as recently as this Spring over impending traffic problems. The Mayor has been unable to get Triple Five to contribute more than the meager $100,000 per year, agreed upon in a deal negotiated ten years ago, to assist with public transit planning. It has been reported that the state has already spent over $1 billion in tax credits, transportation improvements and subsidies on the project. On top of that, Triple Five had requested that the NJ Transit authority run daily train service to the site but no such commitment has been made. In spring Gov. Murphy indicated he’d like to build a high-speed monorail to American Dream, however no such plans are underway.
Missed Transportation Deadline
The land that the mall is on is owned by New Jersey Sports and Exposition Authority (NJSEA). Part of a 2014 agreement between Triple five, the NJSEA and NJ Transit officials called for an advertising campaign to begin three months prior to Dream’s opening, informing perspective visitors of their commuting options. That deadline has passed, and no new timeline has been offered.
A successful launch of this most ambitious project could be a boon to the New Jersey economy, as well as establishing a new national and international entertainment destination. However, if the 15 year long “storied history” is any indication of what’s to come, I fear the impact could spread from the Meadowlands to our own Twin Cities retailing treasure. Will the Dream come true? I certainly hope so.