American Dream unveils luxury wing as virus still looms
EAST RUTHERFORD, NJ – If you build it during a pandemic, will they still come?
American Dream put that to the test when it opened the new luxury shopping wing of its mega-mall in September, right across the Hudson River from Manhattan in East Rutherford, New Jersey, featuring Saks Fifth Avenue, Dolce. & Gabbana, Hermes and other luxury stores, as well as exotic fish ponds, gardens and 16 foot sculptures.
Like everything about American Dream, the timing has been far from ideal. The new wing comes as the world grapples with the highly contagious delta variant of the coronavirus, which continues to threaten lives – and business – to return to normal.
The American dream took nearly two decades – and many spurts in between – to become a reality. When it finally opened in October 2019, the giant shopping and entertainment complex was forced to close five months later as the coronavirus hit the world.
It reopened last October with new security protocols in place. But the pandemic has complicated its outlook, delayed expansion plans, cut its cash flow and robbed international visitors. American Dream has also lost a handful of key partners who have filed for bankruptcy – like Barneys New York, Century 21 and Lord & Taylor – or pulled out like high-end retailer Montcler.
The new luxury wing marks the final construction phase of American Dream’s retail and entertainment offerings; he still has plans to add hotels. The luxury wing is expected to be a key part of the 3 million square feet of rental space, more than half of which is dedicated to more than a dozen entertainment attractions like a 16-story indoor ski slope and a water park. By the end of the year, it will have rented more than 85% of its space, according to an American Dream representative.
Ken Downing, creative director of mall owner Triple Five Group, acknowledged a rocky start, but is optimistic about the future of American Dream. The spring and summer months were “very popular” as people looked for a safe place to shop, dine and get away from it all, he said.
The American Dream website says it is constantly cleaning up the facility. Employees are required to wear a mask regardless of their immunization status, while tenants and visitors are encouraged to do the same. The company delayed full-service indoor catering until the opening of an upscale Italian restaurant in its luxury wing.
Saks Fifth Avenue, which has just re-entered the New Jersey market with its store here, is focusing on the convenience of nervous shoppers.
John Antonini, store manager for Saks Fifth Avenue, said the pandemic had forced him to be “obsessed” with services that offer more shopping options for people who don’t want to go to Manhattan or visit Manhattan. a physical store.
He’s testing a service at the store where shoppers can sit in a private room with a large flat screen TV in the personal shopping area and virtually shop for the latest collection in his Manhattan store with one of his style advisors. . Customers who want to buy shoes but want to try them on at home can text their style advisor and someone will come up with an assortment to select from.
On a recent weekday, the sound of drills and the presence of construction crews repairing store interiors served as a reminder that American Dream is still in the works. The mall had a constant flow of people, many of whom were masked, but it clearly wasn’t crowded.
Cristal Fernandez, 24, of Wayne, New Jersey, visited American Dream for the first time when the luxury wing opened. She said she felt safe and liked the overall experience.
“It looks like they’re definitely on top of keeping things clean,” said Fernandez, who has bought a few items like cosmetics. “People seem pretty good at masks and stay at a distance. “
Downing says weekends bring 75,000 people to American Dream, which has a mix of high-priced and low-priced retail tenants. When it opened, American Dream said the initial goal was 45 to 50 million visitors in the first year. Officials did not directly say whether they had achieved this goal. Downing says people travel from greater New York City, New Jersey, the Philadelphia area and as far as California and Florida, but looks forward to international visitors, who are expected to make up 20% of the overall base. .
Triple Five, a Canada-based shopping mall and entertainment conglomerate, took over American Dream in 2011 from two developers and reinvented it as a community center for tourists and locals, taking a page from two other malls it did. he had developed: West Edmonton Mall in Alberta, Canada and Mall of America in Bloomington, Minnesota, the two largest shopping centers in North America.
But the shutdown of American Dream, which lasted nearly seven months, caused the company to default on an underlying mortgage. Meanwhile, the Mall of America has a $ 1.4 billion loan on its mortgage, according to Trepp, a New York-based research firm that tracks commercial mortgage-backed securities.
The pandemic has affected shopping centers in general. Still, analysts say high-end stores have been more resilient while low-end malls have suffered, with moderately priced department store chains like JC Penney closing stores.
The average vacancy rate of all shopping centers nationwide increased by around 2.2 percentage points between the end of 2019 and the second quarter of 2021 and now stands at 7.4%, according to CoStar Group, a real estate research company. Top-tier malls are averaging 4.5% vacancy rates in the second quarter of this year, while lower-tier malls have experienced a much larger slowdown, averaging around 13% .
Daniel Hodges is CEO and Founder of Retail Store Tours, which offers tours for retail executives to premier destinations to educate them on retail best practices. He says he’s bullish on American Dream, noting a combination of entertainment and attention to detail like a curvy design that doesn’t overwhelm buyers, use of natural light, and amenities like plenty of seating.
“It’s a very stressful time for retail, especially when you’re doing epic retail like American Dream, but all of the fundamentals are firmly entrenched,” he said. “This is the future of retail.”
Downing said that “the punch that the pandemic gave the whole world was something none of us expected.”
But, he added, “It’s time to open it up. And no matter what the world has in front of us, we’ll take care of it then. “
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