In the mid-1990s, malls were being constructed at a rate of 140 new shopping centers per year. In 2001, however, disturbing trends began to emerge.

A PricewaterhouseCoopers study found that underperforming and vacant malls were becoming increasingly common. In 2007, for the first time in 50 years, there was not one new mall built across the United States. With the Great Recession in 2008, malls nationwide transitioned to a permanent new path thanks, in large part, to the creativity and flexibility of the country’s commercial real estate investors.

Since 2008, we have seen consumer preferences shifting from the confined ambiance of the mall to a more engaging, outdoor “lifestyle center.” This has included the slow sunset of the traditional big mall anchored by the big box store and the emergence of partnerships like those between Starbucks and Target, Drybar and Ulta, and Sephora’s presence within JC Penney stores. To prevent the spread of these “zombie malls” and preserve active property tax rolls, business owners and local governments are brainstorming creative solutions. Spotting areas where these solutions are going into effect can help you identify areas that may soon be attractive to buyers and tenants.

Why Retail Matters to Residential Investors

Whether you own a small strip mall or not, your properties will be affected by the changing face of traditional retail space. 2016 saw the closing of large retail stores like Sports Authority, Kmart, Sears, and even some Wal-Mart and Ralph Lauren stores. These closings did not have the impact on their communities that they once might have because consumers now shop anytime and anywhere with a click of the mouse or a tap of the screen. Proximity to retail shopping can still make properties more attractive to potential occupants, but look for “experiential” retail rather than focusing solely on the presence of certain brick-and-mortar stores.

Residential investors should be aware of how the retail experience in their local market is changing and how it may affect property values. If a “zombie mall” is scheduled for renovation into a more contemporary lifestyle center, that could be a good sign that property values in the area might be set to appreciate in the near future. If that zombie mall is simply stagnating and there are no actionable plans to improve the situation, you could be looking at a downhill slide in property values in the area. Networking with community development managers municipal officials will help you remain abreast of current development and commercial trends.

Zombie Defense Tip:

Get involved! Meet the neighbors and make a difference by building relationships in the community where you invest. Investing in yourself and your property always pays the highest returns.

Spotting Indicators of Change

Watch for indicators of change that may herald pending improvements in a zombie mall’s situation. These indicators include:

transportation upgrades

affordable housing initiatives

community efforts to improve the desirability of an area or proactively prevent crime.

Many times, “zombie malls” are a central location for criminal activity. If you have insight about an area that is about to have such a situation improved – possibly by converting an outdated mega-mall into one of those lifestyle centers we mentioned earlier – you can leverage that information and build a portfolio in the path of progress.

Tags | Commercial
  • Linda Liberatore

    Linda Liberatore is the founder and president of My Landlord-Helper-SecurePayOne, a unique virtual assistant solution for DIY real estate investors, and the author of Daily Inspirations to Achieve Your Real Estate Investment Goals. Contact her at

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