"The big question is," says Fish, "'What do the capital markets think of Houston?' The answer is there is still plenty of interest in Houston real estate." He conceded that it's difficult to get a Downtown office deal done right now, but the market "does not pose a threat to the investors who currently hold those loans. Their exposure is diversified with other loans in other markets and the loans are at very conservative debt levels."

Fish also says there is strong interest coming from equity or participating debt providers. "The long term fundamentals from all our product sectors are sound," he said, "and we look terrific compared to other markets both in terms of growth potential and price per pound." The closing table caveat is passing a more conservative underwriting test.

Fish believes capital market is bigger and more liquid than ever, meaning money should continue to flow. Institutional investors are increasingly looking for CMBS loans "especially now that regulations for reserve requirements from depositary institutions have eased," he concluded.

That doesn't mean that underwriting standards won't tighten even further. They will, he says, until "we see default rates settle and the economy stabilize. Expect loan spreads to widen if these current trends continue.