Sherlock said things are pretty tough right now and that there are only a small pool of people that can transact right now. "The CMBS market is gone," said Sherlock. "It takes a lot of capital to get a deal done in today's marketplace. It is hard to get financing and if you can get it, you are fortunate."

Sherlock believes that one key issue in the market is that people don't want to sell into a market when they don't have a sense of pricing. "I don't feel that things will be better in a year," he said. "I think the sales are going to be forced sales or distressed sells. It's hard to say what value is." He added that if there was a revaluation, there would be some level of balance. "It is a messy situation and I think it is going to take time to get through it."

Walter agreed with Sherlock that CMBS isn't even an option, but that, to a certain extent, banks are still active. "There are a lot of hurdles, but at the same time, there are some good opportunities to buy out there." He added that his company, for example, is currently involved in many transactions in Orange County, and that there are still tenants being signed in the area.

Vargas explained that today's market is a perfect study in Darwinism. "It is survival of the fittest." From a leasing standpoint, Vargas said, tenants are going to want to make a short-term decision, however, "one thing is for sure…If you make a long-term decision today, it will be better than three, or four months from now." He added that there are always opportunities in Orange County and that users are always going to want to be in the area.

Corea urged investors to still invest in 2009 because "for one thing, you aren't going to be able to pick the exact bottom." He continued that in the long run, it is better to stay active in the market. "You will attract capital and have a track record that is reputable."

Johnson doesn't see a lot of borrowers out there these days. "The market is frozen," he said. Maybe we need a whole total reset."

In the "Will Office Leasing, Investment and Development Rebound in 2009?" panel, moderator Kurt Strasmann, EVP and regional managing director at Grubb & Ellis Co., asked panelists about deal structure on leases, and the general consensus was that it is a great time to be a tenant. "I'm seeing concessions I have never seen before," said panelist Jeff Manley, senior managing principal of Cresa Partners. Manley was joined by Steve Economos, SVP of NAI Capital, Peter Johnston, SVP of Maguire Properties, and Jeff Moore, senior managing director of CB Richard Ellis.

"Termination rights are being given," Manley continued. "Most landlords we are seeing are trying to stabilize cash flow. Rents are starting to soften and I think there will be a continuation of that for the next six to nine months." Manley further predicted that rents will go up in the next two to three years. "If tenants are reasonably confident in their business and their headcount and what it is going to be, I am recommending for them to position themselves to be not in a rising market when their lease expires," he said. "If there is certainty in the firm's business, I am advising to be aggressive to lock in today because you are not going to see these rents at the lowest point they are here in Orange County."

As far as job growth, Moore said we are in for a tough year ahead. "Obviously absorption affects vacancy and rents so that negative absorption we have been having is a result of negative job growth. But I don't think 2009 will be the same blood bath as 2008." Moore pointed to some industry sectors as having some positives in the year ahead, most notably the gaming, bio-sciences, and education sectors among others.

As far as predictions for 2009 and when things will start picking up, all panelists agreed that that was the million dollar question. And although each did not have a crystal ball, they all agreed that it will be a rough year, but that things will pick up as optimism comes back to the market. All panelists say that cap rates will creep up in 2009, which will make it a challenge to buy, and although you can't time the bottom, recovery should begin in 2010 if job growth returns.

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Panelists See Light at the End of the Tunnel

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