The New York mall is struggling financially from investing in theme parks, but the introduction of vaccines gives hope
According to Lydia Hu of FOX Business, entertainment options in shopping malls are reopening after suffering from the coronavirus pandemic.
In some of the largest malls in the country, the strategy of adding theme park-like attractions to offset declining foot traffic looks less like a lifeline than a burden.
Efforts to win back customers with amusement park features like mini golf, laser tag and ferris wheels have been disrupted by pandemic restrictions. These entertainment extravaganzas cost some malls billions of dollars, and as bills come due, malls are in dire straits. It is now estimated that 25% – or roughly 1,000 U.S. malls – will close by 2025, according to Coresight Research.
“Shopping malls across the country are suffering from the fact that many moved to amusement park-like entertainment centers with rides and attractions before Covid,” Lydia Hu of FOX Business told Your World with Neil Cavuto.
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Two of the country’s more immense and impressive malls – Mall of America in Minnesota and American Dream in New Jersey – are using vaccines and looser restrictions to offset their spending problems.
American Dream, the mega-mall that was once considered the “future of retail” and includes attractions like water slides, indoor ski slopes, cinemas, and multiple theme parks, is now putting nearly half of its property up for sale to help keep you afloat.
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The owner of both operations, the Triple Five Group, has taken out approximately $ 2.7 billion in loans and has even defaulted on a loan for the New Jersey project. Just five months after opening, the March coronavirus outbreak resulted in a no-revenue event with no insurance to cover losses. As a result of the failure, the lenders JP Morgan and Goldman Sachs have a 49% stake in both the Mall of America, the largest shopping mall in the country, and the West Edmonton Mall in Canada.
Similarly, Pyramid Management Group, owner of Destiny USA in Syracuse, NY, and Palisades Center in the suburbs of New York City, took on a large amount of debt to build great eyewear and is now facing a cash flow crisis. In April, the privately held company defaulted on commercial mortgage-backed securities (CMBS) and later negotiated renewals and deferrals, according to Trepp LLC, a real estate insight company.
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Despite financial troubles, easing restrictions offers a glimmer of hope to the Palisades Center in West Nyack, New York, as the state now allows indoor entertainment centers to reopen at 25% capacity.
Although the mall has been open since July, attractions like the ferris wheel have been closed for over a year. According to Stephen Congel, CEO of Pyramid Management Group, pedestrian traffic has decreased by 20-25%, but optimism has increased.
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“It has been difficult to navigate the closings and the reduction in occupancy because the entertainment, recreation, food and entertainment venues are major traffic drivers for our properties,” Congel told FOX Business. “But we’re encouraged because even if these venues are closed and limited in capacity, we’re still seeing traffic at 75 to 80 percent of the pre-Covid numbers.”
With numbers based on pent-up demand for personal shopping and entertainment experiences, malls may be making a comeback right now.
“The return of entertainment venues like the ferris wheel here at Palisades [Center] gives new hope to industry insiders, ”said Hu. “They hope it will bring the pedestrian traffic and people back in the malls to do their shopping.”
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