Simon Says: Beware Mall Operators

So far, the widely touted recession in the US has yet to notch up even one quarter of economic decline. Retail hasn't grown much, but neither is it shrinking to any great extent. Retail developers and REITs are likely to have asymmetric vulnerabilities depending on the location of their assets.

No matter what the story, Simon and all other shopping center developers fortunes are directly tied to retail rents and rents are directly tied to sales. Depending on the region, retail and food sales are down 10% to 30% and an unprecidented number of independent retailers and restarantuers are simply closing their doors. "You can't get blood from a stone," my Mom used to say, and you can't get...