For example, "what we're seeing in the housing market for thefirst time in decades is deflation," Hersh told interviewer MichaelG. Desiato, VP of Real Estate Media Division of ALM, and theevent's more than 650 attendees. "The excess inventory and creationof subset markets have created a loss of value in housing. Thatsubset is facing the inability to move product and is competingwith national homebuilders and public companies, and that's puttingpressure on the industry.

"And we're losing employment in the financial services," addedHersh, which creates a need for the Federal Reserve "to stimulatethe economy. The question remains whether they can ward offinflation while simultaneously protecting the financial markets.The jury is out. When a deflationary environment exists, it changespsychology."

For Mack-Cali, which made a strategic decision to pull out ofmarkets outside of the Northeast several years ago, Hersh explainedthe company's vision is, "to expand our presence from Washington,DC to Boston." And the firm is focusing on urban areas: "Isubscribe to the notion that the wealth, intellectual and humancapital that exists, and the macro-economic environment thataffords diversity of opportunities in the Northeast isunparalleled. I prefer not to invest in markets with low barriersto entry."

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