Will the American Dream Mall Be a Nightmare?
The publicly-funded mega-mall is finally open!
Today, after 17 years in development, the American Dream mall in New Jersey is open for business. (Well, at least part of it is.) In my book, I explained why we should be skeptical that it’ll be worth what taxpayers put into it, and why, more broadly, malls don’t really generate economic development in the year 2019. Here’s a bit of that story:
It’s fitting that the most disastrous mall project in America is in the Garden State. After all, the tiny state has dozens of malls; they’re an indelible part of the landscape and culture. Both “Mallrats” and “Paul Blart: Mall Cop” were set in Jersey for a reason.
The American Dream began as Xanadu, a megamall in East Rutherford, New Jersey, which is also home to the Meadowlands, the site of MetLife Stadium, where both the New York Jets and New York Giants play. Construction on the site began in 2004, but by 2006 the project was belly-up. Not until 2011 did the current developer — Triple Five — take over construction on what governor Chris Christie called the “ugliest damn building in New Jersey, maybe in America.”
That developer — which is owned by the Ghermezian family, who have done quite a bit of megamall development, including building the Mall of America in Minnesota — has promised to turn the American Dream into a shoppers’ paradise that is much more than a mall. The plans include a water park, a theme park, a ski slope, and an aquarium alongside the complex’s 450 stores. Triple Five claims that such attractions will render the mall “internet proof” — “on par with Dubai” is its vision for the shopping mecca.
To get there, the mall has received a hefty amount of support from the taxpayer. All told, the state and local governments have gifted it some $1 billion, and the project is also backed by more than $1 billion in municipal bonds.
The numbers got so high partly out of simple desperation; with the project having been stalled for so long, New Jersey lawmakers were willing to do just about anything to kick-start the construction of what locals began to refer to as Xanadon’t. A decade and a half is a long time to be staring at a hole in the ground.
Triple Five was also promising that tens of thousands of jobs would be created by the mall, in a state where postrecession unemployment lingered above that in the rest of the region; it also promised $3.5 billion in tax revenue over two decades. (For the record, the New Jersey Economic Development Authority has vastly lower estimates for job creation and tax revenue for the site, putting the latter more than $2 billion lower than does Triple Five.)
Is there any reason to think that a gigantic mall in the Meadowlands will be worth that much?
The key if and when the mall ever opens will be to draw in visitors who wouldn’t have been in the area if not for their pursuit of the American Dream. There’s certainly reason be skeptical that the spectacle of the American Dream will entice enough folks to make the massive cost worthwhile, as it is situated in the mall capital of the country.
Part of the boosters’ calculation even seems to be that New York tourists will want to spill over into New Jersey to hit the mall, having grown bored of Times Square and the Statue of Liberty. That’s a dubious proposition.
Plus, if the American Dream is such a slam dunk that people will come from far and wide to visit, why did it need so much public money? Tellingly, Triple Five is building another American Dream mall in Miami that is privately financed, showing that public money is not the difference between the developers plowing ahead or leaving a project to rot.
Maybe I’ll be proved wrong, of course. Time will tell.
If you want to read more about why malls are a bad way to boost local economies, there’s much more in the book.
Thanks for reading this edition of Boondoggle. If you don’t subscribe already, just click the green button below. If you liked this post, take a moment and click the little heart under the headline. It helps.
If you do subscribe, please send this around to friends, family, neighbors, or whoever you think might like it, and tell them to sign up too.
Finally, if you’d like to pick up a copy of my book, The Billionaire Boondoggle, go here. Thanks again!