A Texas development group hopes turning the West Manchester Mall inside out will not only save the shopping destination but also make it grow.
M&R Investors, headed by partners Frank Mihalopoulos and Tony Ruggeri, bought the 33-year-old mall in October 2012 for $17.5 million from Lightstone Malls of New York with the intent of redeveloping it.
"Our view was that it had some strong anchors, generally good traffic, a good base to build on," Ruggeri said. "But the mall itself had seen better days."
Part of the problem is competition, including the York Galleria Mall in Springettsbury Township.
"It's typical of what you see in a second enclosed mall in a one-mall market," he said.
They hope to turn a property now valued at about $15.8 million to one worth about $50 million. The plan is to have the whole project redeveloped and running by 2016.
The idea is to do away with the indoor portion of the mall and have all the shops face outward, what is sometimes called a "lifestyle center" or "town center" format.
Plans call for roughly 25 stores — that number could vary with the leases signed, Ruggeri said — with about 600,000 square feet of retail space. The Macy's, which is owned by that department store, as well as the Wal-Mart will become free-standing stores.
The rest of the stores will be clumped together, with Kohl's acting as an anchor.
A landscaped avenue will run between the free-standing stores and the others. Also, three out-parcels will be developed facing Route 30 in what is now parking lot, Ruggeri said.
"We're going to de-mall it," he said. "We are reimagining it as it made sense to us, as we thought the market needed."
Jesse Tron, communication and media relations manager with the International Council of Shopping Centers, said using the same tactic at former malls has worked in other areas.
Before the recession, he said, such centers were the hot project type for new development. Since then, redevelopments have taken over as failing shopping centers try to reinvent themselves.
The council estimates there are about 1,500 enclosed malls in the country. Meanwhile, there are 113,000 open-air retail centers, such as strip malls. There are about 400 lifestyle centers.
"It makes sense from a business evolution standpoint in the industry," he said. "It's filling a different niche."
Ruggeri said a face-lift could help bring about several things that add intangible benefits that ultimately result in real dollars for local businesses and the township.
Bailey Construction and Consulting of Little Rock, Ark., is the general contractor, Ruggeri said. Most, if not all, of the subcontractors will be hired locally, he said, adding there could be between 500 and 700 jobs created for the demolition and construction phases.
Bailey owner Bob Bailey declined to name the contractors. Documents on file with the township do not list a demolition company.
Ruggeri wasn't sure how many employees each store would hire, but with at least 25 stores, the number could be substantial. Also, the mall would have a management and security team, plus a need for more landscaping services, thanks to the avenue design.
Though he could not be specific because the deals were not final, Ruggeri said a number of former mall tenants will return. But the developers also are seeking new tenants that do not have a presence in Central Pennsylvania.
Tron said the shopping center council has seen redevelopments with new tenants succeed.
"Typically, that does work, going with a lifestyle or town center format, or do something radical like knocking it all down and replacing it with all big box stores," he said. "But offering a slightly different mix of retail tenants tends to work.
Ruggeri said his experience has borne that out, too.
"With what we've experienced in other projects we've done, when you turn a floundering property into a dynamic, vibrant retail environment, people come to that area to shop because they can. Not only will the stores in our project benefit, but the stores in the surrounding area will benefit."
Getting into a TIF
West Manchester Township, along with York County and the West York Area School District, agreed last fall to a tax incremental financing district — or TIF — for the mall project.
TIF districts are used for blighted and distressed properties in hopes that development of infrastructure will lead to an overall improvement in surrounding property values and, ultimately, increased tax revenue.
It works like this: The taxable value of the property is frozen at the current year’s rate and another agency — in this case, the Redevelopment Authority of York County — takes out a bond to pay for the infrastructure improvements.
In 2028, the full assessed value — estimated at $50 million, according to the York County Economic Authority — for the mall would be returned to the tax rolls.
For West Manchester Township, the plan was worth it.
“It was on a steady decline over the last couple of years,” said township manager Kelly Kelch. “We were definitely interested in someone coming in and redeveloping it. A face-lift can do a lot.”