http://www.nytimes.com/2011/05/11/re...er=rss&emc=rss
Bringing the Mall of America Magic to New Jersey
The roller coaster at Mall of America.
By TERRY PRISTIN
May 10, 2011
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When the Ghermezian brothers, immigrants from Iran who had settled in western Canada, wanted to build the largest shopping center in the United States a quarter-century ago, they shipped a submarine that had been custom-built for them in Vancouver — and was an offbeat attraction at their mall in Edmonton — to Bloomington, Minn., and parked it in front of City Hall. Their company, Triple Five, won the development rights for what would become the Mall of America.
But the Ghermezians, who last week unveiled their vision for reviving and expanding the long-stalled Xanadu retail-and-entertainment complex in East Rutherford, N.J., no longer have to resort to stunts to promote themselves.
Since they assumed sole ownership of the Mall of America in 2006, after wresting control from their partner, Simon Property Group, the nation’s largest shopping center operator, they have improved the performance of the 4.2-million-square-foot mall, drawing tens of millions of shoppers and tourists even in the worst economic climate in decades. They reported sales last year of $640 per square foot, well above the industry average of $385. “They’ve done a pretty amazing job at Mall of America,” said Dick Grones, a partner in Cambridge Commercial Realty, a brokerage in Edina, Minn. “It’s better than when Simon had it.”
Triple Five’s flagship, the even larger West Edmonton Mall in Alberta, is also thriving, with a vacancy rate of only 1 percent, said Don Ghermezian, who is president of both malls and will have a similar role at Xanadu, which is being rebranded as American Dream@Meadowlands.
Sales per square foot at West Edmonton, which occupies 5.3 million square feet, were 625 Canadian dollars ($648) last year, compared with an average in that country of 565 Canadian dollars, said Mr. Ghermezian, who is 37. He is a member of the younger generation of Ghermezian men who are assuming more control now that the eldest of the founding brothers, Don’s father, Eskander, is 71.
The West Edmonton Mall opened in phases beginning in 1981 and has about 550 stores. It is undergoing a multimillion-dollar renovation. Among its attractions are a five-acre water park, an ice-skating rink, an artificial saltwater lake with sea lions, an 18-hole miniature golf course, a 447,000-square foot amusement park and a casino. A Simons department store, the first outside Quebec, is expected to open in September. The brothers have said they were inspired to combine shopping and entertainment on a large scale by Iranian bazaars.
Both malls are “wildly successful,” said Jim Sullivan, a senior retail real estate analyst for Green Street Advisors of Newport Beach, Calif. “They draw a lot of people, and retailers want to be where the people are.”
New Jersey officials are pinning a lot of hopes that a similar formula will work at American Dream, the long-dormant 2.4-million-square-foot complex with a 600-foot indoor ski slope and a much-derided exterior design that is on state-owned land in the Meadowlands Sports Complex. The Ghermezians plan to invest $1 billion to expand the mall — which has already cost $1.9 billion — by adding features like a water park and ice rink.
But Triple Five does not have an unblemished track record. Like many developers, it became overextended in Las Vegas and stumbled badly. Lenders have foreclosed on five loans, and four other loans are in distress, according to Real Capital Analytics, a New York research firm. In 2009, for example, Triple Five had to abandon plans for an $800 million Great Mall of Las Vegas on 60 acres of land that it had acquired for $42.5 million in 2004. Triple Five surrendered the site, which is in North Las Vegas, to its lender, Key Bank, which sold it last December for $6.3 million.
In addition, Triple Five’s plans to add 5.6 million square feet to the Mall of America — announced in 2006 — have had to be postponed and scaled back. Last August, Bank Midwest of Kansas City, Mo., foreclosed on a Ramada Inn that Triple Five had bought for $19.5 million, apparently for strategic reasons because it was between Interstate 494 and the land where the mall expansion is planned.
But some plans are moving forward. Last week, developers of a 500-room Radisson Blu that will be the first luxury hotel at the Mall of America completed their financing and announced a ground-breaking for late this month.
Triple Five is named for three generations of Ghermezians and the five founders, four brothers — Eskander, Nader, Raphael and Bahman — and their father, Jacob, who died in 2000. Raised in Tehran, the brothers came to North America to study at McGill University in Montreal. As students, the three older brothers became successful rug merchants. After their father left Iran in the late 1960s to join his sons, the family moved to Alberta because of the booming oil and gas business and began accumulating vast amounts of land, most of which was eventually sold. Today, the company’s business interests include mining and biotechnology.
...Don Ghermezian said the family had learned from its troubles in Las Vegas. “We’ve become a lot more conservative in our approach, in terms of the projects we’ll go after,” he said. “We have to be 100 percent confident we’ll be able to make it successful. With American Dream, we think we’ve found that.”
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