The great flood, at least in real estate terms, has not repeated history. Unlike in the previous distressed down cycle of the early 1990s, banks haven't dumped assets, in part due to government Intervention.

Now, said panelists at the Real Share Chicago event last month, those in pursuit of problem properties are evaluating longer lead times and complicated workouts, or are now on the sidelines, waiting to see if the dam will ever burst.

The general consensus from the speakers at the event, attended by about 300 brokers, developers, owners and lenders, is that the extend-and-pretend trend may go on for years. "I think the $1.4 trillion worth of loans coming due will be this decade's Y2K," said panelist Bruce Cohen, board chairman and CEO of Wrightwood Capital. "And talk about

distress ... the entire real estate industry's been in distress the past 18 months. The question is, will there be a great opportunity for others?"

The distressed sites that are available, said the speakers, are more likely to

be in smaller packets or singular deals than in large portfolios. However, these properties are out there for people who are looking hard enough, said Jennifer Pierson, managing director of the private clients group for CB Richard Ellis. "I prefer to work directly with the special servicers, as a third party, they're the most removed from the 'punch to the gut: They make the most robust sellers," she said

For the most part, the panelists agreed that the CMBS market is on its way back, and it is joined by a diverse field of capital, all with pockets full. It may not be enough, however, said Earl Webb, president of US operations for Avison Young. "If you've got $1.4 trillion coming due, but only about $600 million to $700 million to cover it, where's the rest going to come from?" he asked. "You are seeing an enhanced public market, with new REITs forming. Conduits are coming back. And even lenders like Bank of America are starting to show they can work with borrowers." That isn't to say things have gotten easier. "There's definitely more complexity with this era of workouts," said Donald Shapiro, president and CEO of Foresite Realty Partners LLC. "The banks and courts can't keep up." Finally, many panelists also agree that it may have been a better idea for the government just to allow the collapse, forcing the assets off the balance sheets and returning pricing normality to the market much faster. "What really defined this past decade was the speed at which deals could be done," said Webb. "For this next cycle, it's going to have to be won by intellectual capital, how to solve complicated problems. It won't be an easy 10 years."

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