While Retail Traffic's annual Top Owners and Managers survey revealed that the amount of space held by the 100 largest retail property owners in the country at the end of 2008 remained largely identical to 2007, at 2.1 billion square feet, there was noticeable movement in individual firms' portfolios. While some changes were minor—for example, CBL & Associates Properties Inc., which was previously at No. 7, switched places with the Macerich Co., which was previously at No. 6, others reflected significant changes in overall strategy. (Retail Traffic's figures are as of Dec. 31, 2008 for firms.)

A number of owners, including Colonial Properties Trust and WP Realty, Inc., divested of large portions of their retail holdings in 2008, moving down the rankings list. Others, including Benderson Development and Cole Real Estate Investments, continued to beef up their retail portfolios notwithstanding the difficult economic climate.

Colonial Properties Trust, a Birmingham, Ala.-based diversified REIT, moved down nine spots in the rankings, from No. 37 to No. 46. The firm, which in 2007 owned 12.1 million square feet of retail space, has been trying to reposition itself as primarily a multi-family operator, says Royal Shepard, a REIT industry analyst with Standard & Poor's Equity Research Services. As a result, its retail GLA dropped by more than 26 percent to the 8.9 million square feet in owned at the end of 2008.

Colonial's decision to concentrate on the multi-family sector "was a good move at the time," according to Shepard, who maintains a "sell" rating on the REIT's stock. In today's climate, however, "both sectors are suffering," he notes.

WP Realty, a Bryn Mawr, Pa.-based owner and developer of grocery-anchored shopping center moved seven spots down, from No. 43 to No. 50, as a result of multiple dispositions. The firm sold at least six retail centers in the past year, including South Brunswick Square in N.J., San Souci Plaza in California, Md., Lordens Plaza in Milford, N.H. and a portfolio of three properties in New York state. WP Realty's GLA went from 9 million square feet as of Dec. 31 2007 to 8 million square feet at the end of 2008, a decrease of approximately 11 percent.

The company has been selling older, stabilized assets, which continue to garner attractive bids, according to a spokesperson for WP Realty.

The difficult market environment has caused many firms to narrow the focus of their investment strategies. For example, Madison Marquette, a Washington, D.C.-based owner and developer of retail and mixed-use projects, has been selling properties that do not fit within its Madison Marquette Retail Enhancement Fund. The fund focuses on redeveloping assets in major metro centers where Madison Marquette already has a presence, including Washington, D.C., Philadelphia, San Francisco and Seattle, among others.

"What we've done over the past two years is really clean up our portfolio," says Kurt Ivey, senior vice president of marketing and corporate communications with the firm.

Madison Marquette took the No.41 spot in the Top Owners rankings this year, with GLA of 10.5 million square feet.

Some firms, however, continue to add to their retail holdings, whether through new development or acquisition sprees. For example, Phoenix-based Cole Real Estate Investments, which invests in multiple types of commercial real estate, moved up 20 spots in the rankings this year, from No. 57 to No. 37. The firm's retail GLA grew 192 percent, from 5 million square feet to 14.6 million square feet. Last December alone, the firm acquired 12 retail properties totaling 323,655 square feet.

Meanwhile, Benderson Development, a University Park, Fla.-based developer, jumped up five places, from No. 17 to No. 13. The firm's GLA increased 40 percent, from 25 million square feet in 2008 to 35 million square feet in at the end of 2008.

In spite of a projected drop in incomes from retail properties—next year, average retail rents on a national basis will likely fall 8 percent, to $17.80 per square foot, according to Property & Portfolio Research (PPR), a Boston-based real estate research firm,—increasing one's retail holdings might still make sense if done right. Depending on the target internal rate of return, a property purchased today at a cap rate in the 9 percent to 10 percent range could still offer enough of a cushion to the buyer to make up for a decline in rental income over the coming months, says Suzanne Mulvee, senior real estate economist with PPR.

"If the discounts are steep enough, then a buyer may be able to get comfortable with the expected downturn in income and [an acquisition] could be attractive," she notes.