At Hanover Mall, ‘the opportunity of a generation’

The Patriot Ledger | By Lane Lambert

With a new owner and plans for a $40 million redevelopment, the 46-year-old Route 53 mall will be changed from an enclosed shopping center to an open-style retail area.

HANOVER – The food shops inside the Hanover Mall had a scattering of customers at lunch time on a recent weekday, but the rest of the mall was as quiet as a church.

A handful of senior citizens lounged on benches. A few parents with young children walked idly along. A pair of women browsed the going-out-of-business racks in the Rue 21 clothing shop. Store fronts in every wing of the Route 53 mall are shut and empty. So is onetime anchor JC Penney.

No one is calling it a “ghost mall,” but Town Manager Troy Clarkson says “it’s tired.” Now he and many others are hopeful that prospects for the South Shore’s first enclosed mall are poised for a turnaround – with a totally different look.

If all goes as planned, new owner PECO Real Estate Partners of Cincinnati will spend $40 million to transform Hanover’s commercial pillar into a contemporary-style, open retail area to be named Hanover Crossing.

“This is the opportunity of a generation,” Clarkson said, one that could eventually generate an additional $1 million in tax revenue and hundreds of new retail jobs.

Like other malls around the country, Hanover Mall’s decline has multiple causes – chiefly an untimely, expensive purchase just before the 2008 real estate crash and a nationwide trend away from in-person visits to online buying. In the past decade, the mall’s leasing has dropped from near-100 percent to barely above half, with many tenants now short-term, local businesses.

“What’s happening to malls is an extension of what’s happening to retail generally,” South Shore Chamber of Commerce president and CEO Peter Forman said.

To navigate that change, Forman said Hanover and the new owner – also known as PREP – will need “re-imagine what a mall is,” with more entertainment and community events that attract people who may then become shoppers.

PREP vice president Lloyd Sova said that’s what the firm has in mind. But first, they want to tear down the enclosed mall, and replace it with a layout similar to that of the Derby Street Shoppes and The Launch in Hingham.

PREP also aims to sign up a full roster of the kinds of national brands Hanover Mall used to have. It’s not clear who the future anchors will be. Sova wants to keep Macy’s. Sears is doubtful, given the company’s national troubles. Walmart’s lease expires in 2020, around the time the demolition and rebuilding is scheduled to start.

Sova said Trader Joe’s, Dick’s Sporting Goods and other stand-alone businesses around the mall are doing well and won’t be affected, though Patriot Cinema could be moved into the new open area.

PREP bought the mall property from CW Capital Asset Management of Needham in October 2016. It’s the third ownership change since 2003, and the first to propose such a complete makeover.

“We wanted it to be sold, and we’re happy with the company that won,” Selectman Brian Barthelmes said.

The deal got plenty of support and no opposition at a June 14 town-hall forum that drew 50 residents. “Do not let it become a ghost town,” one longtime resident said. But the crucial decision will come at a June 19 special town meeting.

For the redevelopment to proceed, voters must approve a 16-year tax-break and financing agreement the town has negotiated with PREP The town meeting will be at 7 p.m. on June 19 at Hanover High. Sova told the town hall audience that town meeting’s approval of the agreement is crucial, since it’s the first step to securing bank loans and new, long-term anchor tenants.

If voters reject the agreement, Sova said PREP would have to “mothball” the enclosed mall and probably put the whole property back on the market.

Selectmen unanimously endorsed the agreement in May. The deal would lower PREP’s tax exemption by stages over 16 years. Clarkson said “at no time” will taxpayers subsidize the redevelopment. The town will continue to collect property taxes at the current $39.5 million assessed value until the redevelopment is finished.

That value is PREP’s 2016 purchase price. Under the “tax incremental financing” agreement – known as a TIF – PREP’s tax exemption would drop from 100 percent of future increased value, starting in 2022, to a 50 percent exemption in 2032. The agreement also requires PREP to recruit local job applicants.

The town currently gets just under $787,000 in property-tax revenue for the 77-acre tract and buildings. Individual businesses pay an added $33,000 in personal property tax. Meal tax revenue wasn’t immediately available.

Built by the Campanelli Tedeschi Trust, Hanover Mall opened with much fanfare in October 1971, when Richard Nixon was president and gas was 40 cents a gallon. TA Realty Associates bought the mall in 1995, made expansions and improvements, and in 2003 sold it to Gregory Greenfield and Associates of Atlanta for $68 million.

In 2007, at the peak of the real estate bubble, Walton Street Capital of Chicago paid $99 million for the property. Walton Street stopped making loan payments two years later. In 2010 CW Capital bought the mall at a foreclosure auction for $36.7 million – a 63 percent drop from its peak market value.

“We were owned by a bank, and we didn’t know what to expect,” longtime mall manager Ed Callahan said of the last six years. Tenants didn’t know either, and short-term, local businesses only partly replaced national stores that didn’t renew their leases.

Sova, the new owner’s vice president, said the firm first visited the mall in the spring of 2016. He said PREP liked the property, distressed as it is, because the Route 53-Route 3 area has “excellent demographics” – with an average household income of $103,000 – and convenient highway access.

Derby Street Shoppes is just five miles and a nine-minute drive away, but Sova said Hanover Crossing will have “a little bit different customer base,” with a theater and community event space that Derby Street doesn’t have.

Chamber of Commerce president Peter Forman applauded PREP’s plans and the company’s collaboration with the town. “It’s good to see new investment,” he said, especially since the South Shore’s economy relies on strong retail business.

But Forman said even a $40 million redevelopment won’t be enough, unless Hanover Crossing can successfully meet changing shopping patterns.

“It isn’t whether you’re enclosed or open space,” Forman said. “What happens inside and around the mall is more important than how the mall looks.”

Sova agreed with Forman. “We will have those amenities,” he said. “We want to provide that experience. That’s the way we’re looking at it.”

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By | 2018-06-29T15:43:57+00:00 June 20th, 2017|About Hanover Mall, Media|