Retail real estate executives are generally an optimistic bunch. Up until now, many have been holding on to a view that the industry had seen the worst of the crisis and was ready for a rebound. But that was not the view of executives at last month's ICSC Western Division Conference in San Diego.

“It's not exactly a pretty world out there for institutional investors,” added Sarah Bernstein, principal of Los Angeles-based Pension Consulting Alliance during one of the conference's panels. “This might be a good time to slow down investments.”

Sacramento, Calif.-based CalPERS Investment Office's portfolio manager James Hurley noted that rates are declining, with investors seeking returns between 8 percent and 10 percent, adjusted for inflation.

“If you look at the debt markets, cap rates have no place to go but up,” Hurley said. Gerry Severson, vice chairman and president of Continental Properties' retail group in Scottsdale, Ariz., advised opportunistic buyers to arm themselves. “Get ready, we are going to see some things to take advantage of,” Severson said during a conference session.

During another session Los Angeles-based CBRE Investors executive vice president, Ethan Penner said new lenders for debt-ridden retail real estate, beyond life insurance companies and banks and commercial mortgage-backed securities, could step in with creative solutions to provide refinancing over the next decade. “I think you're going to see a new paradigm. They'll be meeting the needs for new and scarce capital,” said Penner.