Photos by Craig Bares
First look at the Mall of America’s new wing: Sky view from the Atrium and the new grand entrance
First look at the Mall of America’s new wing: Sky view from the Atrium and the new grand entrance
Despite Mall of America’s huge presence in the Twin Cities, we don’t see or hear a lot from its owners and founders, the Ghermezian family. They’re known for grand statements—starting with showing up at the Bloomington City Council in the late 1980’s with a submarine pulled out of the manmade lake at their West Edmonton Mall to show how big they were thinking for Mall of America. As the mall approaches its 25th anniversary in August, Don Ghermezian, CEO of his family's Canadian-based Triple Five Group, talks about the making of MOA, and what the next quarter century could look like at the largest mall in America.
It seems the rest of the retail world is just now figuring out what your family knew 30 years ago about the importance of making shopping entertainment. What gave your father and uncles the vision?
My father ( Eskander Ghermezian) has been the visionary from day he was born. He left Iran when he was 16, wanting to start empire. He didn’t know anything about retail when got into retail. But he somehow knew: shopping not just about retail. It was, how do you fill your centers? Let’s build a gathering place. What do we need to do to cause people to come together. We are big believers that once people are there, they will ultimately shop.
Your next big project, American Dream in Miami does not have the word mall in the title. Is that intentional?
That is 100 percent on purpose. We’ve forbidden the use of the word mall.
We’re not going to change Mall of America. But we’re not big believers in shopping centers. Everyone talks about B and C class malls falling away. I’m a big believer that the “A” malls have limited time as well. There’s no doubt in my mind that you’ll see many more malls close. We are not in the mall business, we’re in the entertainment/ leisure business. American Dream will be 55 percent entertainment when it opens.
How much of Mall of America is entertainment?
Currently about 30 percent. The goal is to take it north of 35-40 percent entertainment in the next few years. Ultimately, we want it to be 50-50.
Do you still believe in retail?
There’s always going to be a demand for retail. As much as Amazon is competitive, people can’t just sit at home and live off of their couch do everything via computer. People need social engagement, to be with friends. I’m not worried that retail will stick around, I just strongly believe there won’t be as much of it. The country doesn’t need a 1,000 Macy’s, 3000 Gaps. As all of these tenants pare down, we’re going to see fewer stores (per market), in more prominent locations. More flagships.
(More: What if Mall of America Didn't Exist?)
It’s not just about the product you’re selling; it’s how you’re selling it. That’s not only relevant, but needs to be top of mind. We are moving towards really pushing our retailers. We look at it as a partnership. Developers in this country haven’t figured out how to generate traffic. They put in marble floors and fill up with tenants. For too long, the assumed people would come. We need to make centers experiential. Visitors expect you to have digital displays, interactivity—features that today’s generation wants to see. We’re going to push (retailers) to do that.
Today’s anchor is not a traditional fashion department store. We don’t consider those to be anchors anymore. Theme parks, water parks. We’re doing a Cirque du Soleil theater at American Dream, and we’re looking at bringing it to Mall of America for next phase. We want a major live theater component—we’re working on a 12,000 seat theater.
So the next MOA expansion really is happening?
We’re in the final planning stages of design for Phase 3. We have several executed deals already. We’re looking at getting into construction in the next 12 months. The money is there. There’s no shortage of capital. We hope to open in 2020.
But it seems you’ve had some challenges filling the latest addition—the $325 million north wing opened in late 2015 and still has many vacancies.
It took longer than we would have liked, but there’s no concern for us there. We’re close to finalizing with three major brands that will take up remaining space. One, we hope to have open prior to the Super Bowl.
Originally, that wing had been earmarked for luxury retail, but that didn’t happen. I know there’s talk of Phase 3 including luxury. Do you believe it can thrive in the Twin Cities?
There is absolutely a demand for luxury in the Twin Cities. More than we anticipated. Originally, we were thinking smaller, but 15-20 tenant spaces has mushroomed into 40-60 tenants. Meanwhile, Zara wanted 30,000 square feet, and Anthopologie (in the north wing). Right now, there isn’t the project where all of these great tenants feel their presence is warranted. We’re building what luxury retailers want to see—first and only of its kind in the entire state.
What has been the biggest challenge for you with Mall of America?
Every center has its challenges, but Mall of America has been a thoroughbred from day one.
Okay, let’s try it this way: what has been the biggest surprise in running MOA?
I never imaged it could generate 36-40 million visits per year. We didn’t know how powerful the theme park component could be. Nickelodeon Universe is the No. 1 traffic driver to the mall. Over the last 10 years, through some serious downturns, it has continued to set sales records. So that’s a pleasant surprise. And it validates that we’re not a mall. We’re a significant tourist generator. Just take a look at the number of hotel rooms within two miles of Mall of America. Aside from Las Vegas and Orlando, there isn’t an area that has seen such a proliferation of hotel rooms. And (visitors) aren’t just staying at MOA for 3-5 days, they’re exploring the city and state. It’s been as great for the state as it has been for MOA. We take a lot of pride in that.
