American Dream Meadowlands, Conceived as Entertainment-Shopping Mecca, Demands 'Experiential' Retail
Long-Awaited N.J. Project Also Lines Up More Luxury Tenants
American Dream Meadowlands, the multi-billion dollar entertainment-shopping complex slated to open next year in North Jersey, is demanding that retail tenants have “experiential” components to their stores. In fact, the project’s developer says that its leases require it.
Don Ghermezian, president and chief executive of American Dream, is pitching the mega-project to the business community as being far from a mere mall, but rather a Las Vegas-style destination that will offer all kinds of entertainment and activities, including a large indoor water park and a separate amusement park as well as cutting-edge retail. In keeping with that goal, Ghermezian said that a weekly show will be broadcast from one of the 3 million-square-foot development's various food halls.
Offering shoppers experiences and entertainment, not just merchandise, is now considered the way for brick-and-mortar stores to compete with online shopping offerings, with “experiential” the go-to buzzword for the survival of traditional stores. But several retail experts said that it is unusual for a landlord like Triple Five Worldwide to actually stipulate and require in writing such “experiential” components in a shop.
"For the current customers that we are servicing now, I would say it is not common for [an experiential-element clause] to be embedded in their lease," said Moses Carrasco, chief executive of CS Hudson Inc., a retail-services provider. But landlords are being more discerning and demanding in what they want from retailers, according to Carrasco.
Ghermezian talked about retail leases, and revealed some new flagship luxury tenants that American Dream has lined up, at a recent luncheon hosted by the Commerce and Industry Association of New Jersey in East Rutherford, New Jersey, right across the road from the new development. The project, which couldn't get off the ground for more than a decade with prior developers, is now being finished by Ghermezian's family business, Triple Five Worldwide, the creator of Mall of America in Minnesota and the West Edmonton Mall in Canada.
Ghermezian told the gathering that Collections, the luxury wing of American Dream, has now signed up Rolex, Gucci, Tiffany and Montcler as tenants. They will join Saks Fifth Avenue, which will be the only one in New Jersey when it opens at American Dream, and Hermes in the luxury zone.
“We’re about to announce a number of major, major luxury signings, that again are first to the New Jersey market," Ghermezian said at the event. "They are executed deals.”
At the lunch, Ghermezian said that the 50,000-square-foot-store that Zara, the Spanish fast-fashion women’s apparel chain will have at American Dream will be the retailer’s largest. Uniqlo, Victoria’s Secret, Lululemon and Auritizia will also have stores at the development, according to Ghermezian.
“We’ve signed all of those great tenants inside the center and each of those tenants has an obligation actually written into their lease where their store at American Dream has to have multiple experiential components to it,” Ghermezian said at the CIANJ event, which drew 500 attendees. “I keep telling the tenants it’s not just about me bringing traffic, but it’s about you innovating and understanding what it means to sell to customers today – not just putting clothes on the shelves and expecting what would work in the past is going to work in the future."
Immediately after the luncheon Tony Armlin, Triple Five senior vice president of development and construction and man in charge of American Dream's completion, told CoStar News that offering experiential retail is crucial to the huge complex.
“We really think that’s the future, and the whole idea of the shopping experience being interactive," Armlin said. "You can do lots of things online, but you can't touch, feel, taste, smell. The more the retailer does to engage the customer that's exciting, interesting and it's not just a merchandise transaction, it's really important. And I think that Don's been focusing on that since day one. It’s been in the leases for a long time.”
While he hasn't seen leases requiring experiential elements in stores, Carrasco said that landlords in general are being much choosier about who they lease space to, requiring more information than ever from potential tenants about their store layouts and concepts.
“Landlords are definitely getting more involved with the spaces … If you go back five or 10 years, the landlord was just happy filling a space," Carrasco said. "He didn’t care, as long as the space was filled for the rate they were looking, the square-foot price. But now, realizing how much turnover they’re getting and how much empty space they’re getting, they want to understand the design concept to see if it is something that’s going to survive in that market.”
Chuck Lanyard, president of The Goldstein Group, a Paramus, New Jersey, brokerage specializing in retail, said American Dream's strategy with retail tenants is a sound one.
“They’re looking to build an entertainment and shopping complex which is going to be very unique throughout the United States," Lanyard said. "And in doing so, they recognize the importance of retailers who are not going to be typical mundane retailers just putting products on a shelf. The result of that is we’re going to see these tenants who, aside from whether or not it is a stipulation in their lease, in order to succeed and thrive will need the experiential concepts to draw people into a store and more importantly, once they’re in a store, to entice that shopping experience that much more by way of presentation.”
Since the lunch, American Dream declined to provide any detailed information about its leases, such as whether all it retail tenants had experiential-component stipulations. Overall, the development will have about 450 retail, food and specialty shops.
"Every tenant we engage with has been asked to think outside of the box in terms of presentation and customer engagement," American Dream spokesman Lincoln Palsgrove IV said in an email. "Munchies is great example of this."
Munchies is a food website that's part of the Vice Media empire, a millennial-focused company that also owns a cable TV network called Viceland. Munchies is creating a 38,000-square-foot food hall at American Dream. It will provide Munchies with a venue complete with a cooking studio and kitchens to do demonstrations and to film video content.
“We’re going to put a show on the every week on the Vice network," Ghermezian said. "People are going to come and learn how to cook this, cook that.”
American Dream and Munchies didn't respond to several inquiries about the planned shows.
Courting the retail community, Ghermezian was slated to be a speaker at Women's Wear Daily's annual CEO Summit in Manhattan earlier this week, where 300 C-Suite executives from apparel brands and retail discussed "The Consumer Age: Deciphering The New Codes."
During the summit, Ghermezian was expected to "present attendees with a 'VIP' ticket for CEOs and 500 of their company's employees and families to participate in a chance to visit the Nickelodeon Universe Theme Park, one of American Dream's attractions, as part of a series of special opening events in 2019 "with a value of over $30,000 for the experience," according to a press release.
First published by CoStar.