business news in context, analysis with attitude

by Kevin Coupe

The Wall Street Journal reports that regulators in Miami have approved the building of the American Dream Mall there, which when completed will be some 6.2 million square feet in size and will cost $4 billion, making it both the largest and most expensive mall in the country.

According to the story, “The project provides a window into the thinking of North America’s largest mall developers as they confront the revolution in the shopping world sparked by e-commerce. They recognize it’s no longer enough to fill malls with stores selling clothing, food, electronics and other merchandise people can more easily buy online.

“Rather developers are filling malls with restaurants, rides, trampoline parks, gyms, services and other types of entertainment. This strategy taps into the increasing preference of consumers to spend their money on experiences as opposed to goods … the American Dream Miami originally planned to include 3.5 million square feet of retail space and 1.5 million square feet of entertainment space … Now it’s likely going to do the opposite, with the space mix focusing much more on entertainment.”

The Journal notes that the mall will “include 2,000 hotel rooms, indoor ski slope, ice-climbing wall and water park with a ‘submarine lake,’ where guests could enter a plexiglass submarine and descend underwater.”

Now, I find this all to be interesting and Eye-Opening.

The last bit is ironic, since there are some projections that all of Miami could send up under water in about 80 years; it is a problem that already is creating issues of flooding streets at certain times.

The last place I might build something like this would be South Florida, because I’d be worried that the whole thing might turn into a submarine lake.

On the other hand, as Michael Sansolo pointed out to me when we were discussing this story, the mall’s location is about 15 miles west of the Atlantic Ocean … so maybe they’re thinking that given enough time, they could end up with oceanfront property. (I was talking to Michael about a joke I wanted to use in this story but wasn’t quite sure about. He reminded me of a core MNB rule - that if I have to ask, I shouldn’t write it. Damn.)

I have to admit that I’m a little conflicted about this project. On the one hand, it seems a little speculative to put all this money into all this bricks-and-mortar space at a time when there is a shift toward e-commerce. It isn’t that bricks-and-mortar is dead, or even dying … but this strikes me as a gamble, to say the least.

On the other hand, at least the developers are conceding that they can’t just build an oversized shopping center, and that they need to make it more of an experience with a lot of other components to make it attractive.

But I’m not persuaded. The Journal story makes the point that “the American Dream Meadowlands project in New Jersey has become one of the longest-running sagas in the mall-development business. Ground was broken in 2003 on the project, originally named Xanadu, which included a snow dome with ski slopes, an indoor skate park, and an underground aquarium.

“But the unfinished project stalled after its first developer ran into financial difficulties. It wound up in Triple Five’s hands in 2013, but the company took years to obtain additional financing. The company says that work has resumed and that American Dream Meadowlands is scheduled to open next year.”

I’ve been driving past American Dream Meadowlands on my way to Newark Airport for years, and it stands like a giant sore to the side of the New Jersey Turnpike. (It has company. A little south of there are enormous gas tanks that always seem to smell like bad eggs. And the NY Jets play next door.)

It’ll take some work to convince me that this boondoggle ever is going to work, and that its Florida cousin is a good idea.
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