This type of deal was indicative of most of the panelists' toneat the Seventh Annual commercial real estate event. Movers andshakers of CRE gathered within the towering majesty of theRoosevelt Hotel here to discuss and debate the future of New York'sreal estate market. Despite the downturn, the mood wasoptimistic.

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The conference began with keynote speaker Seth Pinsky from theNew York City Economic Development Corp. (NYCEDC), voicing hisopinion that Mayor Michael Bloomberg was the "best mayor this cityhas ever seen." Pinsky pointed out that currently, New York had thehighest bond rating in 80 years and that, by the end of the mayor'sterm, the boroughs will have "rezoned 20% of the city's land area."Listing some of these accomplishments, Pinsky rattled off a slew ofongoing projects including, the far Westside, the 11th Avenuesubway expansion, Willet'sPoint, Hunt's Point, theAtlanticYards project and the two new stadiums inthe Bronxand Queens.

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This positive point was carried over into the "New York PowerPanel: In the Midst of an Unparalleled Financial Crisis, EconomicDownturn and Presidential Election, What is 'New York's State ofMind?'" The panel was moderated by Anthony Malkin, president ofW&M Properties, with panel members Pinsky, James Orr, assistantVP/Microeconomic and Regional Studies Function for Federal ReserveBank of New York, and David Levison, chairman & CEO of L&LHolding Co. LLC. The following "Town Hall Meeting: Outlook forLeasing Investment & Development in the New York City Market"crossed at a nexus of similar issues troubling the real estatemarket. The town hall was moderated by Carl Schwartz, partner,chair, RE Department, member of the executive committee at Herrick,Feinstein LLP. The town hall panelists were Robert Freedman,president and CEO of GVA Williams; Norman Sturner, principal atMurray Hill Properties; Michael Cohen, research strategist Property& Portfolio Search; and Kenneth Siegel, international directorat Jones Lang LaSalle Americas Inc.

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[IMGCAP(2)]"The sky is not falling," began Sturner. "There'snothing inherently wrong with the economy in New York."Paraphrasing Dylan Thomas, he urged the CRE audience to "not goquietly" into the downturn, noting that it will take a "little bitof time" but that there was no speculative building and no lendingfor speculative building, so there would be no brand new emptybuildings in the city.

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"[New York hasn't] had a downturn," Orr agreed, separately inthe Power Panel. The economy has simply "lost momentum," hecontinued. Freedman expanded in the Town Hall some of the problemsthat will come to bear on the market. "The bloated cost ofconstruction affected the renewal versus relocate" costs forcompanies, he explained. The effect was that "tenants radicallyoverstated space requirements" and began "programming growth", butsoon that extra space will depress the market when it comes backinto play. Still, Freedman urged, "Don't anyone lose theircomposure."

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The panels often pointed to the previous downturns in 1987, 2001and 2004 when fundamentals were much worse and the economy hadrebounded from all of those. Malkin explained that because New Yorktended to have larger highs during boom periods, the lows wouldalso be lower on the downswings.

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"There will be cycles," Levinson pointed out. Whenever there isa downturn, he expounded upon the point, it always comes fromsomething unexpected. "If we anticipated it, we wouldn't have it."Levinson said the downturn had not stopped all deal-making, either,only unnecessary deals. "The only kind of transactions that getdone are the ones that must get done," he voiced, singling out"discretionary" projects as the kind of deals which get put onhold. Cohen's research backed up this notion, noting thatdeal-making was down, but there was an overall "flight to quality"for the deals that did come through.

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Sturner and Freedman offered their own advice to landlords."Keep your buildings full," Sturner implored. He explained thatvacancy rates were looking to jump from around 6% to around 10%, sokeeping tenants was optimal. Freedman felt it was a good time tohang onto property, as well, noting that some people will be"compelled" to do so, but that it was not the right market forselling. Cohen pointed to the numbers for more confirmation,explaining that despite the feel, New York has "one of the lowestvacancy rates in the US." The city has "pretty tight fundamentals,but it is a volatile market" which will result in a slower recoverytime.

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Pinsky zeroed in on opportunity, especially in the city. Orrconcurred, looking to international capital as a particularlylucrative area. New York City, he continued, is a "very attractiveenvironment for foreign investors."

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Levinson followed this point home. "There is very little moneyto be raised in the US," he explained, indicating the pool of moneyand players is much bigger now. The panels turned to the foreignmarkets and addressed the future of the industry.

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"There is not an inevitability for the US's domination of theworld," Pinsky said. "The way we've been living is notsustainable." The US, he continued, has trouble keeping foreigntalent in the country since 9/11, as well as difficulty raisingmoney domestically. The hope and the advantage was that Asia andthe Middle East give the US a "vote of confidence in our economy,in our city." Freedman agreed during the town hall discussion,saying the "smart money is going to migrate". Yet, Cohen issued anote about the unintended consequences of foreign money and thecurrent bailout proposal, pointing out that the US government didnot have $700 billion to lend. Wherever the money comes from, heexplained, that loan will prevent that--likely foreign--capitalfrom getting invested elsewhere.

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The presidential debates were not the only crowded house to beaffected by the bailouts. Both panels pointed to previoussituations where the government helped industries, such as theSavings and Loan crisis in the early 1980s. Orr stated simply, the"role of government is to create and maintain the kind ofconditions that allow industries to grow."

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Both the Power Panel and the Town Hall saw the downturnoptimistically, seeing no great revelation about the end of NewYork's real estate market. It comes down to one thing in realestate, as Levinson concluded, "There is opportunity for those whohave the courage and foresight." An audience member added his ownaddendum "and money."

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