While economists note that retail spending is declining,recession is not the likely outcome, says Morgan Stanley DeanWitter & Co. analyst Matt Ostrower. Historically, this type ofdecline has affected REIT returns for malls. But malls are notlikely to feel the pinch this early in the game. Department stores,however, are a different story.

"Over the past several years specialty stores are picking upmarket share at a faster rate than the discount sector," says RickSokolov, president and COO, Simon Property Group. "Departmentstores have had a flat to declining market share. We have beenencouraged about this Christmas in that department stores seem morefocused on market share and are more promotional earlier in theseason. That could have an impact on their margins."

The department story industry is in a bit of upheaval now withfive companies having new CEOs, says Anthony Deering, chairman andCEO of the Rouse Co. Nordstrom's is going through a complete changeand strategy and trying to play catch-up with its competitors.