That was one of the many questions posed by panel moderator David T. Houston, Jr, president of Colliers Houston & Co. of Teaneck, NJ. The event was the annual forecast dinner of the New Jersey chapter of NAIOP, held at the Meadowlands Sheraton here last night.

Panelist Donald Eisen, executive managing director of Cushman & Wakefield of NJ, East Rutherford, concurred adding, "the vacancy rate for offices has changed little in the last several years. It's a market of migration, renewals and companies trading up." One solution suggested by Eisen: "Recycle office buildings. Convert the sites to other uses."

As far as retail, one of the state's hottest sectors, Michael Fascitelli of Vornado Realty Trust noted that, "mall space is at the lowest vacancy rate ever. Retail looks great over the next year." But Fascitelli, president of the Paramus, NJ-based company, expressed concern: "People are spending above their means and retail is overtaxed. If the economy goes down, we're in trouble."

Residential has also been hot, especially on the investment sales side, but panelists voiced concerns for that sector as well. Said David Lichtenstein, chairman and principal of the Lakewood, NJ-based Lightstone Group, "some of the prices people are paying are dumb. The cap rates are dumb. We sold a building at a four cap rate," he added, noting that his firm sold another building for two-and-a-half times what they paid for it just two years later.

"Just when you think New Jersey buyers are stupid, they get stupider," he asserted, equating the potential for a housing bubble with the Internet bubble of a few years ago. He predicted a bust within a few years, fueled by higher interest rates and "people who bought at four caps. A lot of buyers today will be sorry tomorrow."

For investment sales in general, "we are in uncharted waters regarding interest rates and a flat yield curve," said Charles Klatskin, chairman/CEO of Binswanger/Klatskin, Teterboro, NJ. "Everyone I know wants to buy a piece of real estate, and that's a sign of a bubble."

As far as the industrial market, Klatskin, a specialist in that genre, predicted that higher oil prices will mean rents of as high as $12 a foot in a market dominated by warehousing/distribution product. "In two years, rents will skyrocket, and nobody will believe it." Translation: Higher rents will mean higher consumer costs.

What are some of the better opportunities that exist in the market, both from a development and investment standpoint?

Eisen focused on "underutilized properties and 'dirty' sites," because there are "no new sites in New Jersey." That's a reference, of course, to the state's small geographic size, population density and state-supported growth controls.

Fascitelli concurred, voicing optimism for redevelopment projects. He noted that his company last year acquired the struggling 1.5 million-sf Bergen Mall in Paramus, NJ from Simon Property Group, and is about to launch a massive makeover.

And while Lichtenstein reiterated his concerns over the potential problems for investors in residential, "the best opportunity is the condo market," he said. For both the retail and industrial sectors, meanwhile, he voiced potential for what he termed "tertiary sites."