CHICAGO-Peter Haack Jr., an FVP and financial advisor with Morgan Stanley Smith Barney, recently published a white paper in which he interviewed 20 local commercial real estate titans about the pitfalls of the industry today, and what to do about it. The takeaway is that companies need to be more aggressive in finding creative business strategies to deal with this “new normal.”

Among the leaders Haack interviewed during the second half of 2010 were Jack McKinney, president of JF McKinney & Associates; Ira Schulman, managing principal of Walton Street Capital; David Tropp, SVP with CB Richard Ellis; Jim Dieter, EVP of industrial brokerage for Cushman & Wakefield and Earl Webb, president of US operations for Avison Young. The paper is titled “The Hangover: Recovering From the Damaging Effects of the Real Estate Crisis.”

In the paper, Haack, an owner of local property himself, asked the experts what has changed, and how to respond to those changes. A few different pictures emerged, he tells GlobeSt.com. “How the market is doing really depended on who you asked,” Haack says. “People in the shopping center market were more of doom and gloom, while participants in multifamily were favorable.”

This attitude is to be expected in a city region that is seeing a 7% to 10% decline in home prices, and lower job growth than is needed to sustain recovery, he says, and the downturn brought about everyone’s comparison to the famous “cycles.” Kevin Forrest, general manager of Northmarq Capital, replied to the study that “Every seven years, we tend to get a real disaster year in real estate, this one just seems much worse. We just need to be prepared to ride this out over the long term. It’s not the first time we have had tough times, nor will it be the last,” Forrest said.

However, others, including Haack, said it’s becoming more evident that this cycle may reset at a much lower scale, that there might be a new “normal.” Just sitting back and waiting isn’t going to pay off with many companies, Haack says. “It’s clear that firms need to be more creative, to do more things to grow business and service clients. For example, I’ve talked with leasing agents, they are doing a lot more due diligence on deals, to find out if a landlord has the money to do build-outs, for example. It’s a lot more about servicing the client today.”

It’s anyone’s guess what the right thing to do is, but sitting on hands and waiting is out, Haack says. Some firms are hiring new brokerage teams, while others are working at retaining staff. Diversifying is popular to stretch risk, and some companies are mining the distressed market, but there are also firms that are concentrating solely on quality properties in certain markets, to keep costs down, risk low and focus on a strict return.

Alan Lev, president and CEO of Belgravia Group Ltd., said in his contribution that he is avoiding what everyone else is chasing. “We are looking for (distressed properties) that have construction work to do still, or some other problem to solve,” he said.

Even brokers and owners themselves are looking for ways to diversify their holdings. Where CRE was rife with executives that put all their eggs in one basket, now the same executives are looking for other cash enhancers besides property. “In the go-go days every penny went for a new deal. Now it’s about how can we protect this wealth. Maybe this is what we should have been doing all along,” Haack says.