Plans for a $4 billion mega-mall to be built on the coast line city of Miami are pushing forward, despite the fact that the city is likely going to have to deal with rising sea levels and worsening weather as the years progress. Or, it simply could find itself underwater within years, if other projections are accurate.
But don’t worry – academics at the University of Penn Wharton School of Business have a solution: just ignore the fact that Miami will soon be underwater, because otherwise you could create a panic that could, in turn, slow down tax revenue that the city is desperately going to need to – wait for it – adapt to being underwater.
So in the great spirit of Keynes himself, the project is pushing forward.
Government and developers are collectively moving forward on a project for a 6.2 million square foot mall that would house on its property a waterpark, ski slopes, and 2,000 hotel rooms. You may be asking yourself one, or both, of the following two questions.
1. Will Miami be underwater in several years?
2. Aren’t most malls collapsing and simply going out of business?
But this mall is part of a new theory on building malls: one that focuses not only on customers buying things, but also buying experiences.
The Wall Street Journal reported on the project moving forward:
At a time when store closures are accelerating and struggling malls pockmark the country, county commissioners in Florida have approved a plan to build what would be the largest mall in the U.S.
American Dream Miami would also be the most expensive mall ever built, according to Canadian developer Triple Five Worldwide Group of Cos. The 6.2-million-square-foot retail and entertainment complex would cost an estimated $4 billion, Triple Five says.
The cost would include 2,000 hotel rooms, indoor ski slope, ice-climbing wall and waterpark with a “submarine lake,” where guests could enter a plexiglass submarine and descend underwater.
Edmonton, Alberta-based Triple Five secured zoning approval in May from the Miami-Dade County Commission in an 11-1 vote, and is now in the process to secure environmental and water permits for the 174-acre site.
The project provides a window into the thinking of North America’s largest mall developers as they confront the revolution in the shopping world sparked by e-commerce. They recognize it’s no longer enough to fill malls with stores selling clothing, food, electronics and other merchandise people can more easily buy online.
Rather developers are filling malls with restaurants, rides, trampoline parks, gyms, services and other types of entertainment. This strategy taps into the increasing preference of consumers to spend their money on experiences as opposed to goods.
And, of course, like any project developer that takes on massive, potentially risky projects, this one has a history of landing government subsidies, despite claiming that it doesn’t want to.
A big part of the debate is over whether American Dream Miami should get any public subsidies. The South Florida Taxpayers Alliance, a group of mall owners including Simon Property Group , Taubman Centers Inc. and GGP Inc , have lobbied county officials to prevent Triple Five’s project from being funded or subsidized by taxpayer dollars.
The alliance said its aim was to have a level playing field, “where the new employment opportunities promised by the developers of this massive project do not come at the expense of current jobs,” according to its website.
Triple Five had a history of landing public subsidies for Mall of America and for American Dream Meadowlands.
But Triple Five says it isn’t planning on subsidies for the Miami project. “American Dream Miami will be built by private dollars,” Mr. Diaz de la Portilla said.
And so despite the fact that things look ominous for Miami’s – well, existence – real estate development in the area continues to grow. Why is this?
Because along other “common sense” lines of thinking, there is actually a scholarly argument out there that makes the case that building more real estate in Miami could be a way to combat climate change. How? By ignoring the obvious.
Yes, according to a recent Bloomberg report, published in 2014, one way that Miami residents should be planning on dealing with rising sea levels is – wait for it – pretending it doesn’t exist. The report, ironically prepared by a Professor of marketing and the co-director of the Wharton Risk Center at the University of Penn, makes the following insane conclusion:
That’s right, this study (surprisingly not funded by mall developers themselves), concluded that ignoring the problem could be the best way to create a false illusion of safety in the area and help generate the tax money needed to eventually deal with the coming change that will have to happen as a result of the sea levels rising.
Only in the world of Keynesian economics does this project – or anything related to it – makes sense.
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