Nonetheless, there "will absolutely be buyers" for the distressed retail, despite the concerns over job growth and consumer spending, Calkin believes. However, he says that retail assets in general will not command the pricing and cap rates of some other classes of distressed assets, such as multifamily and industrial. "Investors are being very careful, even with what appear to be large opportunities at regional malls or power centers," Calkin explains. "They're just very, very concerned about consumer demand and job growth, the politics driving it and lots of other considerations that give investors pause."

One reason that there will be buyers for retail distress, according to Pumper, is that, "Regardless of whether you're talking about retail or other asset classes, the deal flow has not met the appetite in either note-sales or REO." As more retail product comes to market, he adds, the best opportunities will most likely be for "private buyers who have local knowledge and on-the ground relationships and who can partner with institutional capital."

A significant portion of those opportunities could be in properties that were developed in the years 2006 to early 2008, according to Pumper. Many of those owners have such a high basis in the projects that they simply can't meet the debt service or don't have the capital to compete.

When one of these owners has to let go of a property, either via note sale, short sale or foreclosure, "It's an opportunity for another investor," Pumper says. "If a new investor can come in and get a basis at the current market value and provide tenant improvements and commissions, then that new owner can re-introduce the asset into the marketplace in a favorable scenario."

On the other hand, sometimes in the world of distress, the new owner is the old owner. Calkin says that when Voit conducted analyses of note sales, "We found that a fairly significant percentage, 30% to 35%, were investors or owners who had defaulted on a note, failed to work out an opportunity to renegotiate and then, when the note went to market, they were the high bidder and bought it back."

Calkin says the high percentage of investors who bought back their own notes, "really surprised us," and he's not sure if it's a trend or a statistical blip. However, he observes, part of the explanation is that "A lot of those who invest in retail have done it all their lives, and they want to stay in it."

Calkin and Pumper both emphasize that not all retail is created equal; the downturn has highlighted differences in quality and category that might not have been so apparent when the economy was booming. In addition, Calkin points out that the downturn has "created situations that we don't usually have to cope with in real estate." For example, he says, owners of small strip retail or community centers would not normally have to worry about their tenants moving into larger centers.

"A lot of the tenants who used to migrate to those smaller strip and community centers are finding that they have far better opportunities to occupy competitively priced space in larger regional malls or power centers, so the loser in that is the out-of-the-way center or the smaller community center," Calkin explains.

How those weaker centers will fare, and how much investor interest they will draw, is one of the questions remaining to be answered. One point most agree on is that job growth will have to improve in order for prospects to improve at those centers. "Everybody, everywhere is looking for job growth," Calkin says. "And that's the big unknown."

When special servicers and lenders are trying to make a decision about whether to extend a loan for a shopping center, for example, they are more likely to grant the extension if they believe job growth will improve. And, in markets where job growth is either static or heading in the wrong direction, "That typically will prompt a lender to pull the plug on a forbearance agreement," Calkin says.

Pumper, citing the same concerns about jobs, says, "Buyers will be looking for areas that outperform on job growth." But investors are also worried about what impact the drop-off on Wall Street, the downgrade of the US credit rating, the US budget deficit reduction and other factors will have going forward-including "whether we're going to double-dip, and if so, what implications will that have on REO." Along with flat employment growth, lately, have come reports of stagnant retail sales and falling consumer confidence. The US Census Bureau's latest report showed retail and food-service sales flat for August, while the Conference Board Consumer Confidence Index, which had improved slightly in July, dropped in August to its lowest point in two years. And yet, amid these concerns, "there's still plenty of capital looking for distress," Pumper adds. "There are a lot of funds that have been raised that have not deployed their capital to the extent that they would like to," he says. "They will be looking to buy."

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