SO, HOW'S YOUR CONFIDENCE LEVEL?

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More than 460 respondents to last week's poll representeda spectrum of confidence levels. Interesting, however, is the factthat in this optimistic-by-nature industry, the minority (16%)state that their "Guns Are Blazing." A dire 25% think the next fewmonths will be "Bad. Real Bad." The majority however (59%, infact), do mix equal parts of optimism and bad news, even as therecession clouds gather, sticking in large part to "CautiousOptimism." Commentator Ray Torto, who is principal and chiefstrategist at Boston-based CB Richard Ellis Torto Wheaton, countshimself among the latter. Here's why:

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"Everyone's debating if there's going to be a recession. Ourview is that there won't be but that's not the right question.

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"The question is how slow the growth is going to be in 2008 andinto 2009. It's going to be slow and we've been telling our clientsthat for more than a year. It makes no difference if the growth ispoint-one or minus-point-one. It's still crappy, and it comes downto making sure your confidence level is in line with thisreality.

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The 16% in your poll? I know those guys. A lot of them are ourinstitutional clients who are equity buyers and are predominantlycash or low-leverage buyers who--to quote many of them--keep theirpowder dry. They go for properties with less competition.

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"And I know the 25%, too. They either bought during the flurryof late '06 or the first half of '07 at prices that were a littletoo high and they knew it. They expected things to just go straightup and now they have a valuation issue. Or they took short-termdebt and thought they could bridge to long-term, and then the worldchanged. The poll makes a lot of sense because there are those twoextremes.

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"Then there are the big chunk of people in the middle who have adiversified portfolio and have to make sure they bring home somereturn. They're cautiously optimistic because they know prices willtake a bit of a hit. Without debt it's going to be a buyer'smarket, but they also understand that--as I tell our clients--whilecommercial real estate has the same last name as residential realestate, they're not related at all. While fundamentals arestalling, they're not getting worse. One man's chaos is anotherman's opportunity."

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John Salustri

John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.