With cap rates remaining at historically low levels, retail remains a solid investment. Even during the crisis ears of 1990 through 1994, which saw flat shopping center sales in California, Santa Monica, CA-based Macerich Co. posted net operating income increases of 4%, said Thomas E. O'Hern, EVP and CFO. That trend continues "This is a very strong, resilient property type in the face of a slower economy."

The softness in ready-to-wear, however, has hurt lifestyle center leasing. Ironically, however, this comes at a time when mall anchors are more amenable to lifestyle tenants than ever before.

"The business is bifurcated. We are seeing some resistance to the lifestyle area from certain tenants," Hurwitz said. "There has been some softness in the lifestyle business and that will be there until ready-to-wear turns around."

Meanwhile, the weak dollar has helped US centers that appeal to tourists. Sterrett reported that its Chelsea Property Group outlet centers had particularly benefited from the influx of foreign tourists taking advantage of the weak US dollar. Michaels and Sterrett, too, reported that centers in cities such as Miami and Orlando, which have heavy tourism bases, also remain strong. However, projects in the Inland Empire of Southern California and in Michigan have struggled have been hit by the US economic slowdown.