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Mall developments including New Jersey’s American Dream and NYC’s Hudson Yards boasted amenities the likes of which we’d never shopped. But when tenants closed to enforce social distancing, these shopping centers took a dramatic hit—just like everyone else in retail.
- 75% of Hudson Yards’s tenants refused to pay their April rent, per the FT. That puts developer Related behind on taxes, wage bills, and debt interest.
- American Dream’s retail wing was slated to open in March, but that’s been indefinitely postponed. In the meantime, the mall operator furloughed some corporate workers and cut others’ salaries.
Time to pivot
Hudson Yards hasn’t said how it’ll persuade customers to come back when lockdown measures ease. But like a swimwear influencer caught using Photoshop, American Dream’s counting on a hasty rebrand to save its career.
- American Dream will now allocate 70% of its real estate to entertainment and 30% to retail. Initially, 45% of space was dedicated to retailers.
- In January, American Dream claimed 90% of its space was leased.
American Dream wagers that shoppers will find Instagram museums and a trampoline park cleaner than clothing racks. But only 33% of shoppers said they think malls will be safe when they reopen, according to a First Insight study.
Looking ahead...we’ll get an early sense of shoppers’ actual behavior later this week. Omaha’s Nebraska Crossing Mall will be the first U.S. mall to reopen following coronavirus-induced closures.
Looking further ahead...American Dream owner Triple Five’s portfolio was due for the Mr. Worldwide treatment in 2021, when it planned to break ground on American Dream Miami. Given the struggles its Garden State sibling is facing, I predict the ~$5 billion project could be dramatically altered—if not shelved.
My takeaway: The megamalls we thought represented retail’s future have become nearly obsolete in the span of a few months. The Shops at Hudson Yards, part of a $25 billion development, were hardly open for a year before the virus hit. American Dream, a $5 billion development, had only opened 8% of its total square footage to the public before it closed.