The owners of the Hudson Valley Mall say they’re bucking the trend in a plunging retail sector by making a $1 million-plus “sacrificial investment” in it.
Executives at the Georgia-based Hull Property Group hope the effort, which will involve new lighting, installation of historic murals to cover vacant storefronts and other interior improvements, will set the stage for a broader revitalization.
“We have to bust the perception of failure,” said Hull Vice President for Government Relations John Mulherin in a meeting with editorial staff Wednesday at Ulster Publishing’s Uptown Kingston headquarters. “And to do that we have to have an ‘oh wow’ moment when people walk in.”
The Hull group purchased the down-on-its-luck mall back in January for $8.1 million. Earlier this month, the company struck a deal with the Town of Ulster and the Kingston City School District to lower the assessment on the 65-acre property by 90 percent — the mall had been valued for taxing purposes at $66 million. The deal also calls for the town and the school district to refund some $1.4 million in tax payments made by Hull under the previous assessment. The money will be paid back over a period of five years during which the town has agreed not to raise the mall’s assessed value.
Company owner Jim Hull said in Wednesday’s meeting that bringing the assessment in line with the actual value of the mall was a crucial first step in what he described as a three-step revitalization process. The second phase, Hull said, would encompass the interior renovation. That work is expected to start within the next 45 days and take four to six months to complete. Signaling the importance of the remodeling to the company’s overall plan, the work will continue unabated through the busy holiday season when most retailers take pains to avoid any work that could disrupt customers shopping experience. As part of the reset effort, the company has also given eviction notices to several current tenants. Hull said the businesses asked to leave either did not attract adequate sales volume or did not align with the company’s vision for the future of the mall.
“It’s somewhat disheartening,” said Hull of the evictions. “They paid their rent, they operated their stores fine, they’re good citizens, but they just don’t comport with what we’re trying to do moving forward.”
Zombie mall apocalypse, now?
The remodeling, which Hull estimated would cost “well over” $1 million, comes at a time when malls nationwide are struggling to weather what’s been dubbed a “retail apocalypse.” Experts say the downturn, which began last year and is ongoing, was spurred by surging online sales. With more and more Americans turning to Amazon and other online retailers, business at mall-based stores and other bricks-and-mortar retailers has cratered. More than 4,000 retailers across the country have shut down since last year; experts say the bleed-out is unlikely to stop soon. A report in the trade journal Commercial Property Executive cited in a recent edition of Hull’s internal newsletter issued a dire warning for mall owners.
“In revitalizing a deteriorating mall, asset owners and developers may face a years-long uphill battle before the failed retail establishment can be profitable again — leaving investors to foot the bill.” the article reads. “What’s more, a property can linger for decades as a zombie mall while asset owners struggle to navigate numerous obstacles and recoup losses.”
At the Hudson Valley Mall, where victims of the retail die-off include onetime anchor stores Macy’s and JC Penney, the new owners are trying to reverse the “zombie” trend with a long-range plan emphasizing creating an attractive property with the ability to attract survivors of the retail apocalypse and repurposing vacant spaces for new uses. For example, the company is currently in talks with Health Quest about converting the 81,000-square-foot former Macy’s store into a medical center offering a wide range of patient care services.
Other items on Hull’s wish list include “luxurizing” the Regal Cinemas multiplex that anchors one end of the mall and upgrading the property’s landscaping, which he described as “like a jungle.” Much of the revitalization plan, Hull said, would have to take shape in response to market conditions and currently unknown factors like which retailers will be willing to move into the newly refurbished space.
“We know what has to happen,” said Hull, “We just have to figure out how to make it happen.”
The public sector
Another unknown is whether and what kind of assistance the mall’s owners may seek from the Town of Ulster or the county in their quest to stay alive. Town of Ulster councilman and Ulster County Industrial Development Agency President John Morrow said the company had already made some inquiries regarding the possibility of a payment in lieu of taxes (PILOT) agreement. Such an agreement could further lower the property’s tax liability, freeing up additional resources for further improvements. Mulherin said that the larger community had a stake in the mall’s survival as a linchpin of the entire Route 9W retail corridor.
“If the property fails it will be a 65-acre behemoth on the hill that will be a millstone around the neck of everybody around it,” said Mulherin. “We don’t need it to be like 1982 again — it doesn’t need to dominate, but it has to be competitive.”
Hull, meanwhile, said he hopes the investment in the property would serve as evidence that his company was committed to a long-term revitalization strategy for the mall. Hull contrasted the approach with what he said was the current trend of companies buying up distressed and dying malls and seeking to extract every penny from them and the surrounding community while investing nothing.
“We’re builders, we’re not financial players, we’re not flippers,” said Hull. “We fix roofs, we fix potholes, that’s what we do.”