Where is retail real estate headed in 2003? The biggest factor in the equation, of course, is the overall health of the economy. As 2002 drew to a close, rising unemployment, the possibility of war on Iraq and lackluster consumer and business spending clouded the economic outlook. Still, at some point a recovery will take hold. In anticipation, Shopping Center World surveyed major retail markets and identified a handful positioned to perform particularly well in a recovery.

Though the markets may share a common destiny, they will realize it in different ways. Miami-Fort Lauderdale, for example, has been hurt by a slowdown in tourism due to depressed Latin American economies and slow domestic travel. The loss of tourist dollars, surprisingly, has yet to result in high store vacancies or other signs of stress. One reason: the emergence of vibrant, upscale downtown neighborhoods in both Miami and Fort Lauderdale. When the tourists return, Miami could get a big boost.

The Washington, D.C., region has been practically recession-proof. Unlike Corporate America, Political America is not cutting back. In fact, the war on terrorism is creating jobs. And, despite huge retail development during the past decade in northern Virginia, the region still possesses a great deal of potential. Major retail projects are under way in the capital, where developers are bringing new stores — including big boxes such as Home Depot — into revitalized neighborhoods.

In Boston, there is a great deal of redevelopment aimed at stimulating housing in the city. And where residents go, retailers follow.

Developers are rushing to take advantage of the opportunity afforded by the “Big Dig” to build retail, residential and office projects on previously neglected harborside land. In the surrounding suburbs, a virtual renaissance in retail real estate is also afoot as developers upgrade and attract new tenants to grocery-anchored centers — another reflection of the Boston area's strong retail demographics. Despite the damage the area's economy suffered from the dot-com collapse, Boston appears well positioned to grow steadily in the coming years.

San Diego is in good shape for a recovery because it has already proven it can play a difficult hand with skill. In recent years, the city parlayed what could have proved a disaster — the closure and downsizing of more than half a dozen military bases — into an opportunity for rebirth. San Diego's downtown is experiencing a revitalization, even as new housing and retail developments continue to spread across the county. With its strong growth, healthy demographics and diversified economy, San Diego is tan, rested and ready for recovery.

At first blush Dallas-Ft. Worth would seem an odd choice. Vacancies are at over 11 percent, well above the national average, while prices are soft: Cap rates are higher than 10 percent. Nonetheless, the region continues to draw new citizens and residential development. In fact, vacancies still haven't really strayed from historic levels, indicating that retail construction is keeping pace nicely with residential growth.

St. Louis, in the middle of the nation, is also midway between the extremes in retailing. It has neither the prospect of rapid growth (and subsequent bust) that markets such as San Francisco have experienced, nor a big population increase that keeps south Florida retail real estate humming. What St. Louis does have is expanding suburbs and a revitalized downtown that is experiencing a cultural comeback. As a result, St. Louis is poised to make the most of a recovery.

Seattle is the poster child for 1990s excess. The local economy is now feeling the effects of the dot-com implosion as well as deep cuts by Boeing. The aerospace giant moved its headquarters to Chicago in 2001, and in 2002 it announced worldwide layoffs of 30,000 employees. Seattle, however, possesses two valuable traits: an affluent, highly educated population and natural barriers (not to mention an anti-sprawl political bias) that limit greenfield development. That makes Seattle retail real estate pricey — and productive.

With apologies to Tolstoy: All happy families may be alike, but each happy retail market is happy in its own way. Among these selections, no single pattern of success is detectable. Each market enjoys a combination of factors that give it the ability to thrive after this period of economic turmoil passes.