The Last Shopping Mall? New Jersey Awaits Xanadu

It rises out of the Tidal Murk of northern New Jersey like a garish monster-movie swamp thing, a mishmash of boxes covered in aqua, blue and white tiles, with a little mustard yellow and brown thrown in. Welcome to Xanadu, a 2.4 million-sq.-ft. retail-and-entertainment complex under construction in the Meadowlands, the polluted wetlands on which the sports complex of the same name was built some 33 years ago. Its moniker is a nod to both a Samuel Taylor Coleridge poem (“In Xanadu did Kublai Khan/ A stately pleasure-dome decree”) and a ridiculous 1980 roller-disco film starring Olivia Newton-John (which might explain the color scheme). Slated to open its doors in August, it is the most expensive mall ever built in the U.S., at an estimated $2 billion. It’s also the only one with tentative plans to open this year, in the teeth of the worst downturn since the Great Depression.

The American mall is suffering a slow, painful death. With consumer spending much reduced by the ongoing economic slump, the International Council of Shopping Centers predicts that 73,000 stores will close their doors in the first half of 2009. Retail expert Burt Flickinger III, managing director of Strategic Resources Group, projects that as many as 3,000 shopping centers nationwide could go under this year. Xanadu–which says it has leased 73% of its space as of early March–is running straight into every possible economic headwind. “It’s the poster child for bad timing,” says Howard Davidowitz, chairman of consulting firm Davidowitz & Associates.

Worse, the mall is making a virtue of its discretionary amenities at a time when consumers are in survival mode. In addition to casual dining, an 18-screen movie theater and upmarket fashion retailers such as H&M, Guess and Zara, plans call for a skydiving simulator, an indoor wave pool and a 286-ft. Ferris wheel with views of the Manhattan skyline (as well as the squalid North Jersey landscape made famous in the opening credits of The Sopranos). A ski-jump-shaped superstructure will hold a 165,000-sq.-ft. indoor skiing-and-snowboarding facility. “Xanadu is the epic discretionary story,” says Davidowitz. “It’s the epicenter of ‘not needed.'”

Naturally, executives for Xanadu offer a different spin. “It’s not like people aren’t looking to recreate,” says Larry Siegel, president of Xanadu. “They are. People may not be able to rent that house on the beach or pay a few hundred bucks for a three-day pass at Disney. But they can come here and spend $100.”

On paper, Xanadu’s business plan makes some sense. A huge video screen will broadcast sporting events to draw shopping-averse men to the mall. The Children’s Science Center, Legoland Discovery Centre and Wannado City–where kids can hold “jobs” as firefighters, cops and other professionals–may help lure families. The New York City metropolitan area, home to some 18.8 million people, hasn’t been hit quite as hard by the recession as the rest of the country. Xanadu’s location–at the intersection of the New Jersey Turnpike and two heavily trafficked state roads, through which 88 million vehicles pass each year–should also help. Plus, the state has built a rail line to the site. It’s now just a 23-minute ride from Manhattan, making a day trip more tempting for carless New York City residents who traditionally cringe at the thought of crossing the Hudson.

If the commute doesn’t give shoppers pause, the scenery might. Its eye-crossing exterior aside–“It’s basically a lot of junk,” says former New Jersey governor Brendan Byrne; “I drive by with friends, and we’re embarrassed”–Xanadu is surrounded by weedy wetlands, decrepit factories, shipping containers and railroads. Xanadu’s president, however, insists that the mall is the real deal. “For people driving by who don’t like how the front of it looks, please, give yourself a chance to understand the whole package,” Siegel says. That would be a reasonable request from any mall developer–in 2006. These days, Xanadu should forget about paradise and focus on staying out of hell.

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