Housing At A Shopping Mall? It’s Becoming More Common In Mass.

HANOVER — In the woodsy back corner of the 77-acre Hanover Mall, the new owners of the long-struggling shopping center see an opportunity to change its fortunes.

​It’s not the movie theater that sits there now, or another big box store. No, it’s housing — four buildings with nearly 300 apartments that PREP Property Group, an Ohio-based company that bought the mall in 2016, wants to build.
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If it wins town approval, PREP would sell the land to a housing developer and use the proceeds to blow up the half-century-old indoor mall and turn it into an outdoor-oriented “lifestyle center,” like many of its newer competitors, with hundreds of customers in those apartments, just steps away.

“When I heard about their plans, it was like a revelation,” said Ed Callahan, who has managed the Hanover Mall through years of foreclosure, bank ownership, and slumping sales. “We really lucked out with a new owner that saw this place as an opportunity.”

It’s the sort of opportunity mall owners are seeing all over Greater Boston these days.
South Bay Center in Dorchester is set to open a 475-unit apartment building in early 2019, part of an 11-acre expansion that owners say is just the beginning of a broader plan to knit the huge shopping center more neatly into its surrounding neighborhood.

The same company, shopping center giant Edens, is proposing to put about 375 apartments at the Woburn Mall, while Town Meeting members in Kingston approved a plan for about 300 apartments and a hotel at the Kingston Collection. The Arsenal Mall in Watertown is midway through an overhaul into mixed-use Arsenal Yards, with housing and a huge co-working facility. Even busy Cambridgeside Galleria, fresh off a $30 million face lift last year, is seeking approval to turn its moribund top floor into as much as 140,000 square feet of office space.

It’s the latest sign of the fast-changing landscape for brick-and-mortar retail.

While mixed-use shopping centers, such as Assembly Row in Somerville and University Station in Westwood, have been common in the region for decade or more, most were built as new developments. Now, with estimates that one in four malls could close by 2022, older properties are following the mixed-use playbook to stave off obsolescence, hoping to turn their vast parking lots and emptying anchor stores from an albatross into an asset.

At South Bay, reinvention meant acquiring land on the southern end of the property and creating something more walkable, with restaurants, smaller-format stores, a movie theater, and apartments. As the only large big-box shopping center in Boston, bustling South Bay is still quite successful, said Edens managing director Brad Dumont. But the $200 million expansion was about positioning it to stay that way in the future.

“Having people live there, it becomes a more dynamic, active place,” he said. “Retailers want to be in places that are active 24/7.”

The result is a few square blocks with a very different vibe from the traffic-choked strip across the way. There’s a big garage instead of the vast surface lot, and sidewalk stores with four stories of apartments above, murals and other touches from local artists, and a street grid designed to mesh with the narrow streets of Dorchester’s Polish Triangle to the south. Eventually, Dumont said, much of the 50-acre South Bay complex could look this way, though planning for future phases is just beginning.

“This was a blank canvas to prove we could create a mixed-use destination at South Bay,” he said. “We hope it’s the catalyst for more.”

In Cambridge, New England Development has big plans for its Galleria as well, eying a row of tall office and apartment buildings where its garages and a just-shuttered Sears now stand. But first, it’s seeking city approval to convert the third floor of the mall into office space.

That’s despite a $30 million renovation of the mall, which spruced the place up but has done little to improve the fortunes of its stores, especially on the hard-to-reach upper floors, said Rich McKinnon, a development consultant working on the project. Swapping those stores out for office space will likely fetch higher rents in red-hot East Cambridge, and should bring more weekday foot traffic to the retail that remains below.

“People will eat at the food court, stop at the Dunkin’ Donuts, shop in the mall, and then go upstairs to their office,” John Twohig, New England Development’s executive vice president, said at a recent Cambridge Planning Board meeting.

Still, not all these projects are universally well-received.

PREP’s plan in Hanover has met some pushback from residents concerned about the impact that all those new apartments might have on school populations and water systems in the town. About 300 people, many of them skeptical, came to a public meeting on the project last summer, and the developers’ request for zoning variances has been slowly making its way through town approvals, with a key hearing scheduled in January.

​Still, said Peter Forman, president of the South Shore Chamber of Commerce, the region clearly needs housing. Many malls have the land, and the infrastructure, to support it, and housing can help to preserve at least some of the retail — and resulting commercial tax base — that suburban towns have come to depend on.

“We’re urging anyone who will listen to think differently about their shopping centers,” Forman said. “Apartments and condos at malls can help their owners keep things active.”

And the old model of signing a few anchor stores and watching the foot traffic roll through are clearly over, Twohig said. The malls that will survive the age of online shopping are the ones that draw people in for reasons beyond simply shopping — often by giving them a place to live or work — no matter how successful they might appear.

“We can’t stand still,” he said. “We have to do something with this space. We have to give people a reason to come here.”

​By Tim Logan GLOBE STAFF DECEMBER 27, 2018