Regional malls reported the lowest vacancy rate at 2.3%. Community centers followed with 3.3%, neighborhood centers came in at 7.3%, and specialty centers saw a sharp increase from 1.6% to 7.5%, largely due to the new 400,000-sf Shoppes at Arbor Lakes lifestyle center in Maple Grove coming onto the market not fully leased.

But if the department stores anchoring the malls start to close, some of the regional malls may have to consider others types of users, such as office space, hotels or big box stores. Even Southdale, the venerable grandfather of regional malls in Edina, is looking at new types of tenants. "Southdale is talking about adding a large plastic surgery outpatient clinic in some of its undesired space," says Mike Sims, a retail broker with United Properties. Other concepts to bring in traffic may include laser surgery centers or even a home improvement retailer, he says.

The Twin Cities retail market absorbed 1.9 million sf in the second half of last year, after adding about 2.2 million sf in new space added to the market last year. Since 2000, the Twin Cities has absorbed more than eight million sf of retail space, according to United Properties. Retail landlords in the Twin Cities are faring better than their counterparts nationally, with a vacancy rate of 5% for all types of retail properties compared with the national rate of 6.8%.