BUSINESS/ECONOMY

The Ghermezians’ secrets

Michael Salter April 15 1985
BUSINESS/ECONOMY

The Ghermezians’ secrets

Michael Salter April 15 1985

The Ghermezians’ secrets

BUSINESS/ECONOMY

Michael Salter

As construction workers looked on in amazement, the short, grey-haired octogenarian stepped onto a brick platform. Then, a crane slowly hoisted him up to inspect the girders of the West Edmonton Mall’s new roof. But for Jacob (Pappa) Ghermezian, the desire to scrutinize every part of the giant shopping centre’s latest expansion—even from five storeys in the air—was very much in character. That same penchant for doing the unexpected has helped the former resident of Iran and his four sons, Raphael, Eskander, Nader and Bahman, turn their private Edmonton-based real estate development company, Triple Five Corp., into a major corporate concern in the West. Indeed, to more orthodox businessmen, the scope and aim of the wealthy family’s latest endeavor in Edmonton seem implausible. The family is spending $230 million to expand the 434store, 64-acre mall and entertainment showplace into the world’s largest shopping centre, even though it is situated on

the outskirts of a chilly, windy city which is itself perched on the northern edge of Canada’s Prairie.

One of Edmonton’s most controversial and publicity-shy business families —who control a real estate empire with assets of $1.5 billion—built the mall in 1981 and expanded it in 1983. But the Ghermezians’ drive to transform the mall into a tourist mecca featuring everything from submarine rides to indoor sunbathing is extending their reputation far beyond their home province. When the third phase of the West Edmonton Mall opens in September, the centre will be so big that to succeed financially it will have to attract millions of visitors annually from across Canada and the United States. Rubin Stahl, the mail’s president and Triple Five’s executive vice-president, calls the mall, which will measure 4.5 million square feet and house 825 stores on a two-level, mile-long concourse, “the eighth wonder of the world.”

To make the project a success, Triple Five Corp. has hired a tourism director and is spending $5 million this year on promotion—as much as the Alberta

government will spend in 1985 to advertise the entire province. As well, in their first major move outside Alberta, the Ghermezian brothers intend to begin a similar megamail in Burnaby, B.C., and they say that they are studying other North American cities as possible sites.

Despite the economic benefits to the city of the West Edmonton Hall—when completed the centre will employ 15,000 people in stores and various attractions —the Ghermezians’ business dealings have often led to controversy. Wellknown for their intensive political lobbying efforts, they have shown a remarkable ability to anger opposing local politicians while extracting tax concessions and rezoning approvals from the Edmonton city council.

The latest fight erupted last December when the brothers asked the council for tax concessions to help them build a $250-million indoor playground called Canada Fantasyland connected to the West Edmonton Mall, which will include a quadruple looping roller coaster. After a stormy debate in January, city aldermen voted to give Triple Five $20 million in tax concessions over 10 years

if the company is able to persuade both the Alberta and the federal governments to come up with matching $20million grants. In return, the Ghermezians will form a nonprofit organization to operate both the mall’s existing Fantasyland and the new and larger Canada Fantasyland. Any profits, said Nader Ghermezian, will be given to local charities. But Edmonton Mayor Laurence Decore, who opposed the concessions because he says that he is not sure the company needs the help, criticized the secrecy the Ghermezians maintained about their plans. Decore told Maclean's that the brothers “provided less documentation supporting their proposal than would a group of boy scouts asking for a $1,000 grant.” For his part, Nader Ghermezian insisted the council had enough information to make an informed decision.

The Ghermezians’ methods have also caused concern among Burnaby’s politicians and businessmen. Last year Triple Five told Burnaby’s city council that it wanted to build a $500-million mall near the town’s boundary —less than two kilometres away from a proposed town centre which has been under development for the past eight years by Vancouverbased Daon Development Corp. and Sears Canada Inc. of Toronto.

Last fall Burnaby city council rejected Triple Five’s proposal because it would attract business away from the town centre. But the Ghermezians are continuing to lobby retailers for support. And according to Burnaby Mayor Bill Lewarne, several department stores are now reluctant to commit themselves to the town centre because they want to locate in the project that ultimately succeeds.

The showpiece of the Ghermezians’ growing empire remains the giant West Edmonton Mall, which already is a retailing extravaganza. The attractions include an NHL-sized skating rink, saltwater aquariums and exotic aviaries. And the mail’s third phase will include a “Water Park” with a man-made lake equipped with a wave-making machine for surfing and waterskiing, 40 rides and an artificial sun. In a second indoor lake, four fully submersible submarines will travel through water infested with real sharks.

Despite their growing reputation, the Ghermezians’ obsession with secrecy in their business dealings and personal life is legendary. The entire family, with

wives and children, live in two closely guarded houses on a quiet street in Edmonton overlooking the North Saskatchewan River. Although they generously support charities, the arts and athletics, the family routinely refuses requests for interviews and has been known to wrestle with reporters to avoid being photographed. “They want to be able to watch the [Edmonton] Oilers without being recognized,” explained Triple Five publicist Deane Eldredge.

Still, the main events in the family’s odyssey to Edmonton have passed into business folklore. Jacob Ghermezian originally lived in Azerbaij an, an area in the southern Soviet Union between the Black and Caspian seas. As a young man, Jacob moved his family to the Iranian capital of Tehran and started a carpet export business. In the early 1950s, for reasons they have declined to make public, the family emigrated to

Montreal. Jacob quickly formed a rug importing company called Ghermezian Bros., building it into a 16-store chain operating mainly in the United States. But by the early 1960s his sons—then in their 20s—decided that land development would be ultimately more rewarding.

They were right. By the mid-1960s the family had acquired sizable property holdings in Edmonton, prompting them to sell their carpet business and move to the western city from Montreal. In 1967 the brothers incorporated Ghermez Developments Ltd.—renamed Triple Five Corp. Ltd. in 1973—and continued assembling suburban land and selling lots to home builders.

Virtually unknown to the public for years, in May, 1974, the brothers suddenly found themselves at the centre of a political scandal in Edmonton. At that time a former city alderman, Alex Fallow, claimed that Raphael Ghermezian had offered him $40,000 as a gift for

voting in favor of a zoning amendment. A lengthy judicial inquiry followed, but no charges were ever laid.

Despite the unfavorable publicity, the brothers’ development activities in Edmonton grew rapidly. In 1976 Triple Five opened a hotel, the Convention Inn South, and the Northtown Mall, a 289,000-square-foot regional shopping centre. In the early 1980s, when other developers were abandoning Alberta because of the sagging economy, Triple Five kept growing, opening up rental housing units, office buildings and shopping centres. The company’s Alberta landholdings are now believed to total more than 15,000 acres.

Although Triple Five has 2,000 nonunionized employees, the Ghermezians still run the firm like a small family business. Jacob Ghermezian plays a figurehead role while the brothers, who are all in their 40s, run the business.

Raphael is the accountant, Eskander arranges project financing, Nader is the consummate lobbyist, and Bahman handles operations. But those who work closely with them say that all four brothers are involved in every aspect of every major decision, creating an often confusing spectacle for those used to traditional business practices. Said Ronald McCarthy, a landscape architect whose Toronto firm designed both Fantasylands: “Sometimes I felt like I was giving the same presentation four times. Different brothers come hurtling in and out of the room at all times, each wanting to know what was just said.”

Some Edmontonians are unabashedly enthusiastic about the brothers and their ambitious plans. Said Allan Bleiken, general manager of the Edmonton Economic Development Authority, an independent, government-funded group that promotes the city’s growth: “Every city should be lucky enough to have a family like the Ghermezians.” Added Bleiken: “They are unorthodox, so they are resented. They move at a faster, more intense pace than Canadians are used to—and that makes many of us uncomfortable.” The family’s accomplishments have even drawn praise from their political opponents. Admitted Decore: “They turn their dreams into reality. They are incredible.” And if the Ghermezians deliver on their pledge of building new retail fantasylands, citizens across the country could be confronting the wonders of their work.