Ownership of the Hudson Valley Mall changed hands last week. Two representatives of Hull Property Group discussed their plans for the beleaguered property around a table on Wall Street in Kingston on Tuesday, Jan. 10, five days after the purchase was finalized.
“We think it’s great to be here, and we’re happy to be in the Hudson Valley,” said James Hull, owner and managing principal of Hull Property Group. He was joined by John Mulherin, the Augusta, Ga.-based company’s vice president of government relations. For Hull, the man and the company which bears his name, turning the Hudson Valley Mall into a success is part of a bigger picture.
“For us, our little company, if we can show Wall Street [in New York City] that we can make it in Pennsylvania, or we can make it in Indiana, and particularly if we can make it in New York … ,” he said, trailing off. “Let me tell you about these guys in Wall Street. If they don’t know it in Wall Street, it ain’t true. To have a property in New York, for our little company to get into the deal flow in Wall Street is very important. For us to be able to even break even here, it still will do a lot for our company.”
Plenty of pieces of the puzzle aren’t yet known, according to Hull. Work needs to be done before Hull decides how to rebrand the mall and invest a substantial sum in it. The process has only started with the mall’s purchase for $8.1 million, around 12 percent of the property’s most recent assessed value.
The mall was placed into receivership in June of this year, almost a year after the previous owners, Liverpool, N.Y.-based PCK Development Co. LLC, defaulted on its debt of nearly $50 million with the U.S. National Bank Association and saw the property foreclosed upon. The Hudson Valley Mall opened in 1981, and expanded the following year and two more times in the years since.
Hull Property Group’s 28 indoor malls, which it also operates, are located mostly in the Southeast. Until its Kingston purchase, its northernmost property was Fairgrounds Square Mall in Reading, Pa.
With the recent loss of anchor stores JC Penney and Macy’s among the empty retail spaces in the Hudson Valley Mall and several more tenants about to leave, the mall needs serious retrenchment. Hull concedes a further turnover of tenants is likely.
“What we’re advocating is making this property look and feel a certain way, and we’re acknowledging that until we make it look and feel that way, that we’re not going to have the tenants that we want,” Hull said.
Hull mentioned the need for cooperation among individual business to improve the look and feel of the Route 9W corridor. He mentioned the possibility of a Business Improvement District to help achieve that goal.
Town of Ulster supervisor James Quigley has said he has asked Hull to look at the town’s 2012 Corridor Enhancement Plan.
Hull said he doesn’t feel pressured to rush into anything. “Luckily we bought the property, we don’t have any debt on the property,” he said on Tuesday afternoon. “We’ve never sold a property and we hope we’re going to own the property for years and years and years. What we’re going to do, in the right sequence, is get it fixed up … Our viewpoint is much more optimistic than a lot of other people. We think we’re good on [traffic] circulation. We think it’s a good retail corridor. We’ve just got to get our sequence. The devil we’ve got right here is getting this consensus where it’s a win-win, where we can do what we think needs to be done.”
The mall concept
Hull thinks well-run indoor malls have a bright future. He quoted anthropologist Margaret Mead in noting that people like to be around other people. “We didn’t come to Kingston under a philanthropic endeavor,” Hull said. “We’re up here to feather our own economic nest, obviously. But we think that doesn’t make what we say any less true. And we think that the community and our property in it is a strong retail corridor, commercial corridor on Route 9W. We’re interested in how that corridor looks and feels. We think all these properties work together in how they look and feel, and we can create a sense of space or a unifying element.”
Ultimately, Hull said, the goal is to keep local shoppers local rather than have them head off to more distant malls. “What we know now is we are getting our lunch eaten by Poughkeepsie and by Albany,” he said. “We were here last night and the lady [at the hotel] told us, ‘The mall is closing.’ We said, ‘The mall is closing? Where’d you get that?’ She said, ‘Well, all the stores are closing.’ We said, ‘Well, where do you go to shop?’ She said, ‘I can be in Poughkeepsie in 25, 30 minutes. I can be in Albany in 40 minutes.’ Can you imagine the sales tax dollars? Right now we know that the mall has probably lost $25 million in sales in the last two years. Those sales have gone to Poughkeepsie. Those sales taxes are going down there to Dutchess County. Think of that multiplied.”
‘Aspirational’ tenants sought, lady shoppers prized
While upgrading the mall visually and in its retail offerings is crucial, Hull said that doesn’t mean the plan is to appeal to an elite clientele.
“Poor people like nice things too,” he said. “That’s not relegated to just rich people. So the atmosphere that we’re talking about creating … is a first-class aesthetic atmosphere that is enjoyed by all types of people, and we welcome all types of people. What we want to encourage is shoppers, and those are primarily ladies. And everything we do is to be conducive to that shopping experience. And it is a shopping experience.”
Hull says he is likely to hold off on committing to anything specific until the property is reassessed. His firm needs to be deliberate in how it proceeds.
The mall’s assessment situation is in flux. Ulster town government expects a new appraisal of the mall’s current value to be presented to a court next month. A refund of the mall’s back taxes would negatively impact the town’s other taxpayers.
“To be fair to ourselves, we have to know what our economics are going to be before we do an investment,” Hull said. “The purchase price has very little to do with valuation. It’s one indication, but [it’s also] what’s the income of the property, what are the comparable sales of the property, and there’s a lot of methodology and procedures that you have to follow. We think we’ve got some real smart people, and we’ll figure all that out.”
Whenever Hull figures all that out, it’s likely the mall will look different than it does today. Hull has talked about investing up to $10 million to spruce it up. It will also bring in different tenants, hopefully national “aspirational” ones that fit into the new aesthetic. And that could mean fewer local retailers, with an emphasis on female shoppers.
“The one thing we do know is the success we’ve had in stabilizing, transforming and repositioning these type of properties is that our success has been with nationally branded tenants,” said Mulherin, his governmental relations aide. “What you try to do is you keep the ones that you’ve got. It’s critically important, because once a retailer leaves, they’re gone, they won’t come back. Keep the ones you’ve got, and then by orchestrating a certain look and feel that’s accretive to the shopping experience of a female — because retailers really don’t care about us men, they care about these lady shoppers — so you orchestrate a certain look and feel through the physical plant, and we’re pretty good at caulk and paint and bricks and all that kind of stuff. Then you’re very, very disciplined to not bring the wrong kind of tenant back into the property.”
The shift in aesthetics will also be seen in the retail options in the middle of the mall’s hallways.
“We wouldn’t have any kiosks,” said Hull. “Well, we’d have one or two, but as a general rule we don’t have the kiosks. We want to have wide corridors, we want to have long lines of sight, we want to have the ceilings high. We want consistent light and we don’t want darkness. And we have to deal with the vacancies and turn the negative old rollup gates into a mural or a positive atmosphere. The whole concept is that less is more.”
And that means shedding shops that don’t appeal to women.
“The first thing we do, and it’s a programmatic approach, is we eliminate a lot of the tenants we don’t think are conducive to a woman’s shopping experience,” Hull said. “And these women we’re referring to are women from five to 95 years old, and we want a certain aesthetic, and we don’t want tenants who detract from that. We wouldn’t want a male-only barbershop.”
Hull bought the Hudson Valley Mall because of his confidence he can turn the property around. “This is a failed property,” he said. “Make no mistake about it, this is a big-time failed property. Why is a property a failed property? It’s because it doesn’t have the income. But there’s no bad property, it’s just lack of investment and bad stewardship. And that’s what’s occurred.”
Mulherin said Hull plans a smaller on-site staff at the mall. The operator plans to cover everything from accounting to leasing from its home office in Georgia. “Out of necessity, we’re a smaller company, we’ve got to be centralized,” Mulherin said. “We do all that back-office stuff back in Augusta.”
Hull said the company’s goal is to be part of the community’s success. “The thing that I take offense against is this idea that we would be a taker,” he said. “That we would come into this community and try to take away either in the taxes or anything else. We want to be a contributor. We want to have an environment that makes more taxes and that is successful. And we’re willing to not just talk the talk, but walk the walk and be a constructive part of a rising tide. That’s what we want to be associated with. We’d never want to come in here and take.”