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American Dream in New Jersey, a retail and entertainment project that began in 2004, has faced a series of setbacks including construction delays, financial crises, lawsuits, and even a fire. As we will explore in today's email, despite opening in 2019, controversies and financial struggles persist, casting doubt on its future as a major retail destination.

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Now, let's dig in!

American Dream Mall Faces Fresh Controversy

Some properties just seem to be cursed. After yet another controversy has beset the renowned American Dream retail and entertainment complex in New Jersey, you could argue that it might be one of those cursed pieces of real estate. Since the inception of the mega-mall project in 2004 on the site of the former New Jersey Nets' stadium, the mall has been mired in misfortune, mismanagement, and controversy.

It started when the first pieces of the facade were being built. The bright colors planned for the building’s exterior were visible from the nearby freeway, drawing criticism from locals. The Governor of New Jersey at the time, Chris Christie, said it was “by far the ugliest damn building in New Jersey, and maybe America.”

Then the Great Financial Crisis hit, and the mall, whose lenders included Lehman Brothers, lost much of its construction funding. Work halted until it was purchased by the Triple Five Group, a Canadian conglomerate owned by the Ghermezian family, which also owns other mega-malls like Mall of America and West Edmonton Mall. Even after new funding was secured and construction resumed, a record snowfall partially buckled the roof.

After the Triple Five Group took over, the vision for American Dream expanded. Another three million square feet were added to the plans, including an ice skating rink, a water park, and an indoor amusement park. These new additions quickly became the focus of lawsuits by the NFL teams that play at the nearby stadium, the Jets and the Giants, due to the extra traffic it would bring on game days.

Eventually, the sports franchises and the mall’s owners reached a settlement on undisclosed terms, but the mall still struggled to find funding to complete the project. Local authorities attempted to use municipal bonds to help fund the final construction, but delays in bond funding caused more construction stoppages.

The mall finally opened in 2019, 15 years after the project began. The opening was to happen in four stages, the last of which was scheduled for March 2020. The pandemic prevented this full opening from happening until almost a year later.

Even after the mall opened, mishaps continued. A fire broke out in the building’s indoor ski slope, causing it to close for months. Last year, a group of lenders sued and were awarded a $398 million judgment for the non-payment of a bond used to finance the development.

Now local cities are pursuing the owners for $13 million in back taxes. The mall argues that taxes are not due yet since it is not considered “open” until it has full occupancy, but local officials disagree. The mall’s owners were able to get a four-year extension for their $1.7 billion loan back in 2022, which gives them some time to become profitable enough to pay off their debts. But, if history holds true, there might be yet another mishap that further tarnishes this mecca of American retail.

Insider Insights

🍵 All the tea in China: The Chinese city of Shanghai has ended a number of restrictions that limit who can buy property in the city limits to help prop up its struggling property sector.

🪟 Out the window: Researchers at MIT have discovered a new self-cleaning polymer that would allow windows to actively cool buildings with radiant cooling.

Overheard

Propmodo Technology: Construction Management

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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