NEW YORK CITY-Media-oriented retailers are the most likely chains to close stores in the coming year, shopping center and mall owners said here yesterday at the Deutsche Bank Securities 2006 Real Estate Outlook. Music and video retailers, including Blockbuster, were singled out by the speakers as candidates for shutting stores.

But expanding specialty restaurants, like Panera Bread and Starbuck's, as well as new concepts, such as Gap Inc.'s Forth & Towne and Chico's Soma will be quick to fill those spaces – and could pay higher rents, they said. "It's great real estate," says Hap Stein, chief executive officer of Regency Centers, of the spaces some stores could vacate. "Long term, we'll see increased rents and increased operating income."

Industry observers have also kept their eyes on what will happen as a result of the mergers between Federated and May department stores as well as Kmart and Sears. Landlords say they see opportunities in both scenarios.

General Growth Properties has 14 Federated department stores closing in its portfolio of about 200 regional centers, and that will give the REIT the ability to replace those with better-performing department stores, outdoor lifestyle centers and big-box retailers, said Robert Michaels, the company's chief operating officer. "We think that there's a lot of opportunity at these centers. There was no need for Federated and May, long term, to have as many stores as they did."

Kmart-Sears is a different matter. Though Federated has already announced 82 store closings, executives at the former have not revealed any such plans. "I don't think that we know," said Charles Lebovitz, chairman of CBL & Associates, when asked what will happen with the retailer. "I'm not sure that they know."

If parent company Sears Holding Corp. isn't able to turn around sales -- Kmart's year-over-year same-store sales crept up 1% in December, while Sears' plunged 11.9% -- there could be plenty of advantages if a sizable number of the company's 3,800 units close. In some cases, panelists say, almost any replacement tenant might fare better than Kmart. "When you drive by a Kmart, you wonder. 'Are those just the employees' cars?'" said Dennis Gershenson, president and chief executive officer of Ramco Gershenson Properties Trust.

The shopping center executives were optimistic overall because many major retailers continue to perform relatively well, are opening new stores at a rapid rate and bankruptcies are down from prior years. "For the moment, everything looks pretty good, but we're all in theory waiting for the consumer to not spend as much," said David Henry, vice chairman and chief investment officer of Kimco Realty Corp.