Issue of Ghost Malls

India is witnessing the rise of “ghost malls” due to the rise of e-commerce, outdated infrastructure, and a failure to provide experiential retail.

Purpose of Shopping Malls in Urban Life

• Evolution of Shopping Malls: Shopping malls in India have evolved beyond mere retail spaces; they have become multi-functional structures that serve as social hubs in urban areas. 
• Diverse Functions: People visit malls not just for shopping but also for: Entertainment, Family outings, Dining and communal meals. 
• Rising Urban Importance: Their importance in urban life has significantly increased over the past few years. 
  • For example, Bengaluru has seen a 39% growth in retail leasing in shopping malls, compared to 13% in Chennai and 12% in Hyderabad, indicating a vibrant, though competitive, market.

About Ghost Malls

• Definition of Ghost Mall: A “ghost mall” is a technical real estate term for a shopping centre where more than 40% of the space is empty and experiences very low foot traffic.
• Commercial Impact: This situation leads to a decrease in the mall’s overall commercial value, affecting both tenants and owners.
• Underlying Trend: The rise of ghost malls indicates that while new malls continue to be developed, many older or less competitive malls are failing to attract customers.

Reasons for the Increase in Ghost Malls

• E-commerce Tsunami: The surge in online shopping through platforms like Amazon, Flipkart, and Myntra has profoundly impacted physical retail. 
  • Consumers prefer the convenience of home delivery, attractive discounts, and easy return policies offered by e-commerce. 
  • The COVID-19 pandemic further accelerated this trend, making online ordering a widespread habit.
• Outdated Infrastructure: Malls that were built 15 years ago often suffer from outdated designs, insufficient parking spaces, and slow amenities like lifts. 
  • When newer, more attractive malls with better brands, food courts, and an enhanced experience open nearby, customers naturally shift to these modern facilities. 
  • This phenomenon is also referred to as market saturation and competition.
• Financial Challenges: Modern consumers seek an “experiential retail” environment, focusing on how a brand makes them feel rather than just the product. 
  • Malls that do not offer unique experiences like VR gaming, diverse dining concepts, or live event performances struggle to attract footfall. 
  • When footfall decreases, tenants demand lower rents, and many retail outlets eventually close down. 
  • This leads to financial strain for mall owners, who still face high operating costs for security, maintenance, and electricity, making the mall expensive to run and often pushing it towards closure.

Consequences of Ghost Malls

• Environmental Cost: The construction of a mall involves the use of extensive resources such as cement, steel, glass, and water, resulting in a high carbon footprint and significant pollution. 
  • When a mall fails and stands empty, these resources represent complete wastage, which is entirely contrary to sustainable development principles.
• Economic Cost: Malls are often built on prime land in urban centres, which is extremely valuable. 
  • A ghost mall means this prime land remains underutilised. 
  • Mall owners might default on loans, leading to an increase in Non-Performing Assets (NPAs) for banks. 
  • Furthermore, the closure of malls results in job losses for many employees.
• Social Cost: Empty and abandoned mall buildings can render their surrounding areas unsafe, attracting antisocial elements. 
  • Property values in the vicinity may decline, and the overall image of the city can be negatively impacted.

Way Forward

• Adaptive Reuse: This involves modifying old, empty mall buildings for new purposes instead of demolishing them. 
  • This approach utilises the existing structural frame, saving environmental costs.
  • Examples include converting former shopping malls into offices, hospitals etc.
    • Globally, dead malls have been repurposed as schools, churches, data centres (USA), apartments (China), and cultural/community centres (Europe).
• Pre-planned Exit Strategy: Instead of seeking solutions only after a mall fails, it is crucial for shopping mall owners to design an “exit strategy” from the beginning. 
  • Developers should be mandated to submit a building plan that includes an alternative use for the structure.

Lessons Learned from the Issue of Ghost Malls

• Dynamic Urban Areas: Cities and urban areas are not static; they are constantly evolving. 
  • A shopping mall that is relevant today may become outdated tomorrow due to factors like the rise of e-commerce.
• Sustainability: Sustainable cities are not just about planting more trees but also about efficiently using resources. Adaptive reuse is a prime example of this.
• Governance: Ghost malls are often a result of poor planning. Future smart cities require flexible land-use policies and the design of buildings that can adapt to future changes.

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