Yet analysts at the investment bank said malls proved their defensive qualities during the last consumer-led recession in the early 1990s, noting that it takes almost two years of slowing sales before malls face falling rents. Investors can get exposure to the sector by investing in real estate investment trusts that specialize in retail properties.
"Even with declining sales, malls enjoyed healthy leasing spreads, rent growth, and occupancy," UBS analysts wrote in a research note Monday. "We believe malls are better positioned today to weather slowing sales with higher occupancy levels, improved department stores, and a higher concentration of national public tenants."
REITs have lost ground in 2007 after outperforming the U.S. stock market for seven consecutive years. Specifically, mall REITs have faced negative sentiment as investors worry falling home prices and the credit crunch will sap consumer spending.