Cycles Rule! Despite the widespread belief, born of the recent high-times, that commercial real estate was no longer cyclical--or only mildly so--respondents to last week's Quick Poll apparently weren't fooled. Some 75% of the 304 voters believe that the current slump will Teach Us That Cycles Always Rule. Another 23%, possibly taught caution by the lousy market, cautiously state that It's Too Early To Tell. Only 2% think that we'll come out of this recession-or-not Bulletproof. Richard Davidson, president and COO of Parsippany, NJ-based Coldwell Banker Commercial/Oncor International, has lived through a downturn or two, and he has his own thoughts on the subject. Here they are:

"If you look at cycles back to the early 1970s, we run on a 10-year cycle: five years of growth and expansion followed by two to five years of some sort of transition. What's different from what I have seen in other cycles is that you have the value side and the fundamental side, and they're not running together."The value cycle actually accelerated beyond the fundamentals cycle. As a result--and clearly it's a matter of availability and affordability of debt capital that has reduced the number of buyers--there's less competition for quality assets, which means lower pricing pretty much across the board.

"But, in terms of fundamentals, it's been a very interesting market. There was a lot of transparency in our industry as a result of securitized debt and the equity markets and the continued growth of institutional capital. If a project didn't make good financial or fundamental sense, it didn't get funded. It's not like the go-go days of the late 1980s.

"The key is that there was access to very affordable debt capital plus a tremendous amount of equity. The equity side continues, of course, and, even though values began their decline in the latter part of 2007, cash and low-leverage buyers saw real opportunity.

"My bet is that most respondents will say cycles will rule, and that it's still a cyclical business. That's how I cast my vote. But, because of the discipline that's being shown in the marketplace from a supply standpoint, we'll see a softening of cycles.

"We're not in the business of predicting the economy, so I wouldn't use the R word. But I think it will be relatively short -lived. Unless, of course, there's something looming within the economic picture that I don't understand that could have an impact on the commercial real estate sector."