Answers to how long the down cycle could last, how thecommercial real estate market will gradually emerge from it andkeys to survival in the meantime were all on the agenda in anhour-long webinar featuring Nadji and three other CRE experts.Titled "The US Economy Part II--What Can We Do to Survive?," theDec. 17 discussion was moderated by John Salustri, editorialdirector of Incisive Media's real estate group. Part I of thatdiscussion occurred in July--a pre-meltdown, pre-TARP era in which,as Salustri put it, "there was no real sense of the pain that wouldfollow."

Although the current down cycle--finally acknowledged officiallyas a recession earlier thismonth--may seem unprecedented, it does have historicalantecedents. Raymond Torto, chief economist for CB Richard Ellis,likened it to the 1957 recession in its sharpness, suddenness and,potentially, its depth. Nadji said he sees elements of that cycleas well as the 1981-82 downturn, although he doesn't think theunemployment rate will reach the heights of either of thoserecessions. "We're in the worst of it now," he said.

If this is indeed the trough of the recession, a major challengethe CRE market faces in emerging from it is the financing drought."The securitization mechanism is there, but the market is almosttotally shut down," observed Howard Roth, global and Americas realestate leader for Ernst & Young. It's important to note thatthis paralysis is global, he added. "I think people underestimatedhow much securitization would bind the world together."

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.