The decline of the Hudson Valley Mall is not unique to the Town of Ulster. Malls are failing all over America. In a recent Wall Street Journal article, Green Street Advisors predicted that 30 percent of America’s malls, specifically malls with C and D classifications, are likely to fail in the coming years.
Retail is changing, and currently the market features an imbalance of too much retail space for the users available. Because of the changing nature of retail, Hudson Valley Mall has experienced a systemic failure. Neither the Town of Ulster nor the current mall owner bear the blame for the mall’s failure. Rather, the state of the Hudson Valley Mall is emblematic of current retail conditions.
Regardless of the widespread demise of malls, a mall is an important community asset. It is a gathering place, a community landmark, and it is often situated on the most prominent real-estate parcels. Because of its inherently prominent role in the community, the mall often dictates the overall success or failure of the entire community’s retail landscape. According to Thad Calabrese, associate professor at the New York University Wagner School of Public Service, “When you have large, blighted properties, which empty malls are, it does not telegraph that this is a community that you want to do business. It conveys … that it’s a community in decline.”
How can we correct this? What do communities do when burdened with more retail space than the community can support? The options are simple — do nothing or work collaboratively to chart a better path forward.
In the case of Hudson Valley Mall, the owners have chosen to work with Ulster County and the Town of Ulster governments to chart a better path forward.
Settling the tax issue
One of the first steps to create a path forward has been to address the value of the underlying property for ad valorem tax purposes. Unfortunately, ad valorem tax litigation is often an expensive and protracted court battle, and a prolonged dispute would result in additional deterioration of the already distressed Hudson Valley Mall. Thus, it was critical that the mall owner and the local jurisdictions craft a resolution to rejuvenate the mall and surrounding retail corridor.
In order to ensure that the mall would not be one of the hundreds of malls anticipated to close this and next year, an expedited settlement of the tax issue was prudent. The Town of Ulster, the Kingston City School District and Hull Property Group, LLC avoided the litigation alternative and negotiated a settlement of the ad valorem tax values that provides a compromise path forward to save an integral part of the Town of Ulster community.
As mentioned by town supervisor James Quigley in a recent NPR interview, “A redeveloped Hudson Valley Mall has the chance to attract new property tax increment via new tenants.” Representatives of Ulster County and Hull Property Group agree that the recent ad valorem tax settlement that was reached was the best possible outcome for Hudson Valley Mall and the surrounding community.
Reaching this decision sets the stage to reverse the decline of this valuable community property and allows the mall and the surrounding retail corridor to move forward. We as a company do not want to be portrayed as a taker, but rather as a contributor to the county tax digest. We want to add value to the tax base.
Investing in aesthetic improvements
Hull Property Group and its affiliates have developed a proven strategy for redeveloping failing malls. They plan to implement the second step of the redevelopment program at Hudson Valley Mall to stabilize the property by orchestrating aesthetic improvements. These improvements require significant sacrificial investment by the mall owner and are necessary to allow the mall to maintain existing tenants and attract new tenants. Cosmetic improvements will also help retain existing sales-tax revenue and preserve ad valorem values for the mall and -surrounding properties.
John Mulherin, vice president for government relations at Hull Property Group, elaborated, “The mall has failed in various ways, but the current mall owner did not cause that failure,” he said. “It’s not our focus to bicker about the past, but rather it is our task to bring the property back to the sustainable level of success this community deserves.” Rejuvenating the Hudson Valley Mall will raise neighboring property values, he said, encourage new retailers to locate within the surrounding retail corridor, and increase sales-tax collections.
Until the Hudson Valley Mall is improved, attracting additional investment via new tenants or outparcel development to the failing mall and surrounding corridor will be difficult. It is unlikely that first-generation tenants will locate in or around Hudson Valley Mall or within the U.S. Route 9W retail corridor if the area is deteriorating and if there is uncertainty regarding the corridor’s future.
Other communities around the country have turned to creative solutions to rehabilitate failing properties and deteriorating surrounding corridors. These efforts involved collaboration with community stakeholders to see a vision of success become a reality.
Attracting new tenants
The third step is attracting new tenants and retail uses that are well conceived and desired by the community. Step three begins with conversation among the various stakeholders (e.g., property owners in the retail corridor, tenants, community leaders and municipal officials) to create a shared understanding of the problems, and to build a consensus on the best path forward.
There is much work to do to create and then implement the right vision for the future of the Hudson Valley Mall and the surrounding Route 9W retail corridor. For example, we know that the community wants a luxury theater offering, more and better restaurant and food-purveyor offerings, and an updated and pleasing atmosphere for convenient retail shopping.
Hull Property Group is immediately implementing the second step on its own dime. Step three will require community leaders and key stakeholders to develop a coherent strategy that sets the table for successful retail development and redevelopment.
A plan of action to enhance the existing Route 9W retail corridor and encourage a sustainable future can only be developed through teamwork and collaboration. Getting property into the hands of good stewards; demolishing old, rundown buildings; creating an appealing location for new retail; refusing to let existing buildings deteriorate in the Route 9W retail corridor, enhancing good vehicular circulation; and creating the right synergy of operators are all key concepts for consideration.
Improving the Route 9W retail corridor through a programmatic approach requires participation from the entire community. Solutions for navigating the new realities of retail will not spring to life overnight or accidentally or as a result of a single intervention. They will take time, patience, and common sense. Moving forward requires agenda-free, cross-functional leadership and the fostering of relationships with community goals at heart. The alternative is to watch the Route 9W retail corridor and the attendant benefits to the community erode through inattention.
Our company is pleased with the cooperation and professionalism it has experienced from community officials and stakeholders in connection with its investment in and stewardship of the Hudson Valley Mall. We are excited about the future.