For those who have questioned the viability of American Dream, the mammoth retail and entertainment complex in East Rutherford, New Jersey, that did stumble out of the gate, Don Ghermezian has something to say: “We’ve reached a point of critical mass.
“We have refinanced the center. Our lenders are our partners. They are starting to see a return. We are just getting warmed up,” said Ghermezian, the president and chief executive officer of American Dream.
Triple Five Group, the developer led by the Ghermezian family and the owner and operator of American Dream, in November 2022 secured a four-year financing deal for the mega center with a group led by JP Morgan.
In an exclusive interview, Ghermezian also said that Gucci and Balenciaga, both part of the Kering portfolio, will build 10,000-square-foot flagships in The Avenue luxury wing of the complex. The stores are expected to open in August or September this year. Back in November, Saint Laurent, another designer brand owned by Kering, expanded its store in American Dream from 3,500 square feet to just under 8,000 square feet.
François-Henri Pinault, the chairman and CEO of Kering, visited American Dream in late 2021. “He personally visited with his team and shared his amazement at what we created,” contended Ghermezian.
Additionally, Canada Goose and Watches of Switzerland (which will include a Rolex shop-in-shop) will open stores in The Avenue in late summer or fall.
According to Ghermezian, the 300,000-square-foot luxury wing, which also houses a 100,000-square-foot Saks Fifth Avenue, an 8,000-square-foot Hermès, as well as Dolce & Gabbana, Mulberry, and Carpaccio, an Italian restaurant from Bal Harbour, Florida, is about 70 percent leased.
Overall, “American Dream is roughly 85 percent fully leased and by the end of 2023, the center will be north of 95 percent fully leased.”
Elsewhere in the mall, H Mart, the Korean grocery chain, will open a 35,000-square-foot store that will include an Asian food hall in late February or early March. “We have a large Asian clientele that live in Bergen County and New York City. We know being in such close proximity to one of the state’s most densely populated Asian communities is a major opportunity and are meeting that demand with stores and experiences that will resonate them,” Ghermezian said.
American Dream’s “Main Street” wing for moderate-priced retail houses Zara, Uniqlo, H&M, Aritzia, Primark, and America’s only freestanding Toys ‘R’ Us, among other stores.
American Dream has a checkered history. Originally, Mills Corp. broke ground on the site in 2005 but went broke. Colony Capital became the site’s next developer but pulled out of the project in 2010, and subsequently Triple Five assumed the project. Triple Five leases the land from New Jersey.
It took a long time to get the $6 billion, 3 million-square-foot American Dream operating and open for the public. There were construction delays, leasing and financing challenges and the timing of the center’s launch, October 2019, could not have been worse: Four months later it had to temporarily shut down due to the pandemic. American Dream was initially expecting Barneys New York, Lord & Taylor and Century 21 Stores to move in but those retailers were all liquidated, forcing a search for alternative tenants and prolonging leasing efforts.
Many questioned whether New Jersey, already overstored with retail, needed another mall and whether the affluent would drive to American Dream when they could also shop luxury at the Mall at Short Hills in New Jersey, or in Manhattan. All of that led to skepticism about the project’s future.
“When you think about American Dream, my family and I became interested in this development over 10 years ago, and yes, it did take us several years to put the pieces together,” Ghermezian acknowledged.
“Nobody knew COVID[-19] was coming. We’ve had bad luck,” Ghermezian added. “But we faced those challenges and have entered this new normal where people are excited to get out. They’re thinking more about experiences, as opposed to just traditional bricks and mortar shopping.
“When we first opened in 2019, we had 60 stores and three attractions. Now we have more than 200 stores and 15 attractions, with another 14 attractions and 12 full-service restaurants in progress. We recently executed a lease with a high-end Japanese sushi and steakhouse restaurant and are closing in on the opening of Jarana, the high-end restaurant owned by famed Peruvian Chef Gaston Acurio. Where we started and where we are now are light years apart.”
Among the attractions up and running are the DreamWorks Water Park, Nickelodeon Universe Theme Park, the Big Snow ski slope, Legoland, Sea Life Aquarium and miniature golf. There are also four full-service restaurants and there will eventually be 12 more.
Ghermezian said more than 50 percent of American Dream’s gross leasable space is devoted to entertainment, whereas at Triple Five’s two other mega retail and entertainment centers — The Mall of America in Bloomington, Minnesota, and West Edmonton Mall in Alberta, Canada — about 25 percent of the GLA is entertainment.
According to Ghermezian, traffic for both the retail and entertainment attractions saw 35 to 40 percent increases from the beginning of 2022 to early November, and picked up from there. “From mid-November last year through all of December, the traffic and sales for the retail and the parks components surpassed all of our expectations,” said Ghermezian. “There were days when it took an hour and a half to two hours just to get a parking spot. We had to hold people back from entering the mall.”
The gains would be coming off a smaller base of volume and traffic from the year before, though Ghermezian said, “We are definitely not coming off disappointing numbers, though only how much business can you do with 60 restaurants and very few attractions?” he asked rhetorically, referencing American Dream’s limited retail and entertainment attractions early on.
He credited the revenue and traffic gains to “a matter of American Dream increasing brand awareness. More people know about us, see the concept and are experiencing what we’ve done first-hand. The level of repeat visitors has been tremendous. COVID was a challenging time for everyone, but now people are going out after staying home for such a long time.”
Aside from steadily adding to the entertainment and retail offerings, American Dream last year partnered with Live Nation to present performances held in the theme park or the water park, helping to draw crowds and familiarize people with American Dream. DJs Steve Aoki and Tiesto have been among the performers. There have also been fashion shows, contests and exhibits in different sections of American Dream.
“No other developer outside the United Arab Emirates understands what entertainment and experiential means or has the ability or the space to build and operate the type and scale of attractions that we have, including an indoor theme park, water park, and ski slope,” Ghermezian said.
“It’s been a lot of hard work and many years spent building American Dream. But we always knew we would get the buy-in and achieve the momentum…New York and New Jersey look at American Dream and appreciate what we have done,” in terms of the new kinds of experiences for families and the jobs created, he said. “It’s a project of the magnitude you would see in Dubai.”
He said specialty stores are generating $750 in sales per square foot. “The end goal is $2,500.”
“The entertainment for us drives traffic to the retail. We have been saying from day one, the entertainment is what drives American Dream.”