Retail landlords need a "reality check"

By Emily Chasan and Phil Wahba

NEW YORK (Reuters) - U.S. mall operators have to work with their tenants and make concessions if they want to avoid more store closings to avoid feeding a cycle of vacancies, a retail real estate expert said on Wednesday.

"It's inevitable there will be a consolidation of the shopping center market," Nina Kampler, executive vice president at Hilco Real Estate, told the Reuters Global Retail Summit on Wednesday.

"I think that with a reality check across the board, landlords would be more compromising and landlords (would be) understanding that they have to help to keep this industry viable."

The economic crisis has swept away a number of U.S. retailers such as electronics chains Sharper Image and Circuit City, jewelry and housewares chain Fortunoff, and department store Mervyn's.

But now it is hitting retail landlords such as: Simon Property Group Inc (SPG.N), Developers Diversified Realty Corp (DDR.N) and bankrupt General Growth Properties (GGWPQ.PK).

Kampler, who works with companies trying to dispose of troubled retail locations, expects more retail bankruptcies in the coming months, as consumers continue to file for personal bankruptcy. She forecast the 2009 holiday season would be even bleaker than last year's as shoppers cut back on purchases.

That could lead to an uptick in store closures, which would squeeze landlords further, Kampler said.

Retail tenants often include co-tenant or adjacency clauses in their leases, which require the landlords to keep a certain number of stores in the mall to be occupied.