"It will be interesting to watch their decision-making because there is so much overlap and duplication between the two companies," says Stephen Stephanou, executive vice president of Madison HGCD, a retail real estate brokerage firm in New York City. Prior to joining Madison HGCD, Stephanou was counsel and group vice president of real estate for Federated.

"Both stores have been targeting the same consumers for years," says Stephanou. "And there has already been so much consolidation; both May and Federated have been acquiring regional players for the last 20 years."

Some sources say the industry's past massive consolidation means the decisions as to which stores to keep and which to close will be that much harder. "In Southern California, the stores are a hodgepodge in size and location, since there have been several previous rounds of department store mergers," says Jack Kyser, an executive with the Los Angeles County Economic Development Corp. "In downtown Los Angeles, there is a large Macy's and a smaller Rob-May. Obviously, one would be closed as a result of the merger."

Meanwhile, retail REITs, which own or control some 60% to 70% of shopping centers in the country, are making similar calculations. Affected REITs are no doubt in talks with Federated and May to find out specific details, says Mahoney. "I would guess they are making plans to figure out ways of controlling another building if a particular location is going to consolidate the stores," he says.

But one organization taking a sanguine view of events is the Mills Corp., a self-managed REIT based in Arlington, VA that owns, develops, leases, manages and markets 38 retail and entertainment destinations totaling approximately 47 million sf. According to Mills investor relations director Noam Saxonhouse, only four properties in its portfolio have overlap between Federated and May. And even in those cases, he thinks the company is just fine: "The malls that have the overlap are generally pretty strong malls and given the strength of the properties I believe it is unlikely they would close those boxes," he says.