There's a reason American Dream mall took 15 years to finish, ex-gov says
Retail developers in northern New Jersey finally achieved their American Dream. The hope now is that the entertainment and retail complex won’t become an economic nightmare.
Fifteen years and billions of dollars in the making, the ambitiously-named mall opened its first phase -- the Nickelodeon Universe Theme Park -- on Friday. The rest of the facility, which spans 3 million square feet in the Meadowlands Sports Complex in congested Bergen County, will open in stages over the next several months.
Still to come are an ice-skating rink, an indoor water park (featuring the world’s largest indoor wave pool) and indoor ski slopes. It all looks impressive, but will it actually bring in visitors? And perhaps most importantly, will it recoup the cost?
"If I had become governor six months before I did, I would not have allowed it," said Richard Codey, who served as acting governor of New Jersey twice, most recently for two years starting in 2004. "It is too much, too expensive and they have a hell of a lot of tax breaks. If you open up a shop on Main Street somewhere, you’re not getting a tax break. They certainly are.”
The project was known as Xanadu (the original vision in the mid-1990s was billed as Meadowland Mills) and had just gotten off the ground when Cody took the state's top job in 2004.
New Jersey Gov. Phil Murphy prepares to ride a roller coaster inside the Nickelodeon amusement park at American Dream in East Rutherford, N.J., on Friday, Oct. 25. The mall is the second largest in the country. (AP Photo/Dave Porter)
“There’s a reason why it took 15 years,” Codey told FOX Businees. “The reason is: Can it work? We’re going to find out. Hopefully, it does work."
While American Dream is located just a few miles from Manhattan, it is nonetheless in New Jersey, which means getting there requires navigating overcrowded highways, bridges and tunnels. The projection of 40 million annual visitors is aggressive compared with New Jersey's population of 8.9 million.
“It will take a long time to get there, but they need to get there and they need to get there soon, or else it will lose its luster and be a big flop,” Codey said.
“There’s a reason why it took 15 years. The reason is: can it work? We’re going to find out. Hopefully it does work. If I had become governor six months before I did, I would not have allowed it. I think it is too much, too expensive and they have a hell of a lot of tax breaks. If you open up a shop on Main Street somewhere, you’re not getting a tax break. They certainly are.”
The area surrounding the American Dream isn’t lacking for retail, boasting large shopping complexes and malls such as the Garden State Plaza and the Jersey Garden outlets, both just minutes away.
And tourist attractions and entertainment are never in short supply for a location in the shadows of Manhattan.
The project was seen as risky 15 years ago, and shifts in consumer habits -- with malls around the country shutting down as consumers spend more money online -- have made the environment even tougher.
“The jury will be out for a while to determine if the investment of tax dollars to develop what is now called American Dream was prudent,” former New Jersey state Sen. Ray Lesniak told FOX Business. “My biggest concern is its impact on traffic and what will be necessary to reduce congestion on the roads leading to the site.”
The mix of space from developers Triple Five, with 55 percent of the square footage devoted to entertainment and the remainder to retail, will need "more visitors than Times Square in Manhattan," said Larry Grantham, founder of Calmwater Capital, a nationwide bridge lender on transitional commercial real estate.
"While the owners have experienced success on other projects, [American Dream] is an ambitious project opening at a time of significant change in the retail landscape, not to mention late in the current economic cycle," Grantham said.
Outside of NFL games (both the New York Jets and the New York Giants call the Meadowlands home) and concerts, the Meadowlands is relatively quiet and underutilized. Harness racing and the sports book at the racetrack do bring in traffic, with the famous Hambletonian Stakes providing a big draw each summer.
"They need more visitors than Times Square in Manhattan."
But the massive acreage around the Meadowlands remains unused much of the year. If American Dream can take off, the economic impact on north Jersey and the region could pay back both investors and the state.
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“The attractions associated with this development will provide extensive sources of entertainment for families in New Jersey and the greater region," Matt Saidel, spokesperson for Democratic Gov. Phil Murphy, told FOX Business. "The tax revenue generated from this long-awaited project will be an added benefit.”