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‘Zombie malls’: Not fully alive, but not dead yet

Lesson #657 March 14, 2024 Filed: Business

What happens to a large shopping mall after the biggest stores close? The mall often stays open in a
zombie state: fewer customers, lower quality, and a depressing vibe. But they can still be profitable
under the right circumstances.

Transcript

Is a mall still a mall if there aren’t any shoppers? It’s not a moot point. America is full of dying shopping
centers, with ever-fewer customers. Welcome to the zombie mall.

Lesson summary

Hi there everyone, it’s Jeff and this is Plain English for Thursday, March 14, 2024. Here at Plain English,
we help you upgrade your skills in English with stories about current events and trending topics. And in
every episode, we show you how to use an English expression.

Today, the story is a continuation of Monday’s story about the mall. On Monday, you learned that trends
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are shifting away from indoor shopping malls , the kind that were so popular in the 1980s and 1990s.
And today, you’ll learn about something called a “zombie mall.” That’s a mall that’s dying…but not
quite dead yet.

In the second half of today’s lesson, you’ll learn how to use the English expression “put off.”

This is lesson number 657. That means JR, our producer, has uploaded the full lesson content to
PlainEnglish.com/657. And that includes the free transcript. So if you want to read along as you
listen…that’s the place to do it. PlainEnglish.com/657.

Let’s get going.

Meet me at the ‘zombie mall’

In pop culture, malls are buzzing with activity, the backdrop to social drama and comfortable, suburban
life. But that’s not the full story—at least not anymore. A lot of malls in the United States are in a
“zombie” phase—a phase where they’re not quite dead, but not fully alive either.

Remember what we talked about on Monday : one, America has too many malls; and two, consumer
preferences have shifted away from this type of shopping. Put these two factors together and you can
see the problem: the number of shoppers simply doesn’t justify the amount of space that has been built.

So that means some malls are out of luck . These are the malls that are in less-wealthy areas, the malls
that are older, the malls that can’t compete with newer properties nearby, or the malls that are just too
far from the local population. These are the malls that are at risk of entering the zombie phase.

Here’s how a mall goes from being a thriving shopping center into a “zombie mall.” It all starts with
fewer shoppers and less sales. Retailers pay rent to malls based on the sales they generate in the store.
If there are fewer shoppers, if sales start to fall, then retailers have two options: they can close the store
or they can negotiate their rent downward. Either way , it’s bad for the mall owner.

When stores close and vacancies rise, mall owners scramble to fill the empty space with other tenants.
But all the typical mall tenants face the same economics. So when stores close, it’s not easy to replace
them with a similar store.

So mall owners often turn to other types of tenants, tenants that you might not associate with an indoor
mall. They try to recruit movie theaters, grocery stores, and gyms, hoping they’ll attract more shoppers
to the mall. If that doesn’t work, they might convert some space into call centers, offices for nonprofits,
government offices, or schools.

But those tenants can’t afford the high rents of the past. So think about this. Mall owners make less rent
from their space. But they still have to pay their fixed costs: electricity, heat, security, taxes, and
insurance. So what can they do?

They cut costs where they can. They don’t invest as much in marketing. They put off indoor
maintenance projects. They don’t resurface the parking lot as much as they once did. They cut cleaning
expenses. They may reduce opening hours.
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The retailers who remain look at this and think: “We’re not getting the same value for our rent as
we used to .” So they negotiate discounts on their rents, furthering the downward spiral of the mall’s
finances.

For many mall owners, the answer is to default on their loans. That means they stop paying their
mortgages and they turn the property over to their lenders. Lenders then quickly sell the properties at a
steep discount to other investors, who specialize in owning struggling malls.

From there, the cycle continues. The zombie malls have new owners, and those owners bought the
asset cheap. They bought it cheap and they run it cheap. They cut costs and manage the mall’s decline,
hoping to make enough of a profit before the mall has to close for good .

For shoppers, it’s depressing. The parking lot is full of potholes. There might be leaks or bad smells
inside. Entire wings are dark, with only empty storefronts and “for rent” signs. The corridors, once
buzzing with activity, are eerily quiet. The food court is a ghost town . The whole place looks like it needs
a good deep cleaning. Yes , it’s still open. Yes, you can go in and wander around . Yes, there are a few
stores still open. But going to a zombie mall is an empty, depressing experience.

If this were any business other than real estate, the business would shut down forever. But a mall is a
big place, and it can’t easily be repurposed into something else. Owners can’t snap their fingers and
make it an office park, a school, warehouses, or apartments. To do that requires more investment for an
uncertain return. Just tearing the building down can cost many millions of dollars.

So the investor owners hold onto these “zombie malls” and try to squeeze some value out of them while
they still can. The properties are dying a long, slow, painful, embarrassing death—but for the owners,
owning a zombie mall is still better than any alternative. While they’re dying, the malls are still profitable
for the owners who bought them at a steep discount.

These malls are a problem for the towns and cities where they’re located. Local governments fund
schools and local services through property taxes. Property tax is based on the value of the property. As
malls’ values slowly—or quickly—fall, the local property tax revenue also falls, squeezing budgets for
schools and other services.

Local governments can’t do much to reverse the decline. They can’t force an owner to tear down a mall
and build something else. One city manager said she wishes a large sinkhole would open up and
swallow the mall at night, allowing them to build something else on that site.

What comes next? About 150 large, enclosed malls have closed since 2008, leaving about 950 in the
U.S. Green Street, a data provider, estimates that a third of them will close in the next 15 to 20 years.

Jeff’s take

If you go to the transcript and find a section called “Dig deeper ,” you’ll see a link to a video that takes
you through a zombie mall. It’s a really good video. They walk through the mall. You can see what it
was like, once upon a time, and see just how empty and depressing it is today.

You can see the directory with almost every store name blanked out, a fire alarm is going off and nobody
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seems to notice, the escalators aren’t moving, the fountain is dry, there’s trash and graffiti everywhere.
It’s depressing. Anyway, watch that video—see what these look like. PlainEnglish.com/657 and find the
section called “Dig deeper.”

Practice reading in English

Did you like this lesson? Follow the links below to read English-language articles about the lesson topic.

Business Insider: There’s a terrifying mall ‘blight’ threatening communities across America

Video: Exploring the Cincinnati Mills Mall – Abandoned Yet Still Open

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