"This has been a very interesting recession," says RBC Financial Group managing director William Jandristis. "Retail has not been affected by it."

Consumer confidence has been buoyed, Jandristis says, with mortgage rates at historic lows and home-equity loans available at prime rates. However, consumer confidence has declined this month and in September, he notes.

"That's something we have to start watching," Jandristis says.

Economists already have raised the fear of housing bubbles, Jandristis adds. Even before considering the number of consumers who may have bought more house than they can handle, mortgage delinquencies are on the rise, and September retail sales slumped more than expected. He also wonders, what happens if the Federal Reserve Board finally begins increasing rates? And if government becomes a bigger borrower, inflation could re-emerge on the radar screen, he adds.

"How much more juice can we get out of mortgage refinancing? Not a lot," Jandristis says. "How much more juice can we get out of home equity loans? Not a lot."

Meanwhile, owners of retail assets have to keep adjusting in a sector where change is the only constant, says Michael E. McCarty, president of Indianapolis-based Simon Property Group's community shopping center division. Developers must be careful not to overpay for land, assuming they found the best location to begin with, he says. Owners of existing properties must use chemist-like care to refine their tenant mix, he adds. And even landing a prize anchor tenant is no guarantee for success, he notes.

For instance, some successful Wal-Marts have closed only because they needed larger quarters, McCarty reports. Besides devoting 80% of gross leasable area to anchors, Simon's strategy includes putting smaller shops next door. "At some point, we know we'll have to blow them out," he adds.

McCarty's company, the largest shopping center owner in the US, is opting for open-air centers for new developments rather than enclosed malls. "In the new developments we do, we focus on restaurants," McCarty adds, noting there are 27 at Simon's 1-million-sf Waterford Lakes Town Center in Orlando. "They affect the pace. They set a tone. They set a mix."

Instant Insights /

Ever-Changing Retail Sector Could Skid, CREW Told

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