CHICAGO-The commercial real estate market barbell, with a goodamount of capital chasing either trophy or traumatized properties(but not much activity in the middle), will level off, according topanelists at the Real Share Chicago conference held this morning atthe Renaissance Chicago Hotel. However, as opposed to the quickfire sale, followed by recovery, in the early 1990s, the relaxedrules for banks and a wide bid-ask spread will push the barbellflat only over a prolonged period, likely 10 years, the speakerssaid.

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Most of the presenters, which included titans of local propertybrokerage, development and financing, said they are positive thatrock bottom will be reached this year and an upswing will start inmid-2011. “I’m optimistic,” said Jim Dieter, EVP of US industrialbrokerage for Cushman & Wakefield. “The fundamentals arestrong. Manufacturing has increased, housing is up, the carindustry is on fire. We will persevere.”

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That outlook was tempered by observations about two fundamentalsthat must be met, said the panelists. More jobs must be created –that is, more jobs than just matching population growth – a trendthat no one can yet predict. Also, surprisingly, many in theindustry are relieved by current global instability, as it ishelping to keep interest rates low. “An increase in rates coulddestroy the euphoria we are feeling right now,” said Earl Webb,president of US operations for Avison Young.

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Capital that was held for all of 2009 has started to flow, toalmost a flood during the second quarter, agreed most of thespeakers. Good properties are getting offers, though deals aretougher, requiring much more creative thinking than in years past.Brian McAuliffe, managing director and head of acquisitions forRreef, said it’s the most diverse capital field he’s seen in 25years. “It’s very competitive. Historically, you see peaks, withinstitutional capital leading for a while, then public, etc.There’s every kind of capital out there now.”

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The next step is to let the market work itself out, withoutfurther government intervention, agreed many of the speakers. “Wejust have to tell Pres. Obama that they have to get with it. You’rekilling us, here,” said Lynn Reich, president of the Society ofIndustrial & Office Realtors, to a round of hearty applausefrom the roughly 300 attendees.

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