GlobeSt.com: What in the world is happening to retail?

Alexander: A lot of things have happened. The economy certainly has slowed it down, and Christmas, while it ended up being better than feared, wasn't a great season. I haven't seen any data yet on how merchants fared from a profit standpoint, but it seems clear that Christmas was weighted more toward the end--the first few weeks were down with a minor flurry toward the end. So margins were strained.

GlobeSt.com: What will be the immediate upshot of this downturn. With the exception of cases such as Kmart, should we expect to see more cost cuttings?

Alexander: The market very much favors doing things at once and flushing it out with a one-time charge. We're seeing it with Payless ShoeSource, which is a very strong operation at its core. Other companies, like Service Merchandise--which has been struggling to find itself for some time--just decided to fold up.

GlobeSt.com: You'd put Kmart in that category as well, I assume.

Alexander: In a sense. The Kmart bankruptcy is something that we've been talking about for some four or five years now. So while the bankruptcy was significant, it wasn't a shock.

GlobeSt.com: Is it all bad news?

Alexander: There are unquestionably a lot of closings, but I don't believe that things are as bad as some reports make it seem, and there is a lot of expansion going on. We're concerned about the number of closings, but we've also been sending a lot of new leases to our legal department so, knock on wood, things in all are pretty good.

The Gap, for example, which was a very hot chain before it stumbled from a fashion perspective and too-rapid expansion, will find its stride and come back. Kmart is going to have to do some serous work, but I'm optimistic that they can figure out a niche. Walmart and Target are pretty formidable, and it will take some real effort for Kmart to figure out what exactly that is.

The current situation is reminiscent of the theater housecleaning of a few years ago. The theaters all hit the skids at about the same time, and the entire industry seemed to be going through Chapter 11. A lot of screens closed, but some better product came out as a result. Today, theater attendance is doing quite well. The shakeup we're seeing in retail right now is simply the price of change.

GlobeSt.com: Which will mean empty stores. What's good for retail may not be good for real estate, right?

Alexander: There will be some pain, but this is the continuation of a trend, a snapshot of the consolidation we're seeing in the larger industry. The only way to survive it is to have in place the resources--and the size--to weather a few bumps.

GlobeSt.com: Like Weingarten?

Alexander: If you're a big, financially stable company like Weingarten, then you have a diversification of tenants and properties that renders these issues a minor annoyance. We have seven Kmarts--less than 1% of our revenue. The largest tenant in our portfolio is Kroger's, which represents less than 4% of our revenue.

GlobeSt.com: So what does the future hold for the retail segment of the real estate market?

Alexander: At some level, we'll see a continuation of store closings and underperformance. Right now, there are something like 10,000 shopping centers in the US--between 100,000 and 400,000 sf. By most counts, about 10% or less is owned by REITs. So as time goes forward, a larger share will end up in REIT or other institutional ownership.