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DALLAS-They’ve weathered the worst of times and the best. And in the eyes of many seasoned pros in Dallas/Fort Worth, the current shift in the capital markets is an overdue correction.

“The cheap CDO money is gone for the foreseeable future,” Jody Thornton, executive managing director in Dallas for Holliday Fenoglio Fowler LP, told the crowd at RealShare Dallas 2007. “And, I think that’s a good thing for our market.” Thornton’s keynote address drove home the point that capital is still available, its cost is about the same as last year and the changed lending environment is a welcome return to product, location and sponsorship being the real dealmakers.

“And, it’s about time,” Thornton said. “This problem is caused by the debt market and not the real estate market in general. I think this was a much needed economic correction.” Given the state of flux, he didn’t offer predictions, but did say that the first quarter “looks promising” because the issues will have had six to eight months to work through the system.

The capital markets played a large role in yesterday’s information-driven sessions at the Inter-Continental Hotel Dallas in Addison. Whether optimistic or pessimistic, the underlying perception was that the inherent and longstanding “can-do attitude” of Dallas/Fort Worth will carry the commercial markets through the latest storm.

Most panelists expect it will be late 2008 before the worst is behind them. But, it doesn’t mean deals won’t get done–if they’re willing to stay flexible, work hard and be patient. Product type, though, rules the mindset, with industrial and multifamily brokers as the market’s high-rollers–for now.

“I maintain every stage of the cycle benefits someone,” said Bob Edge, vice chairman of Cushman & Wakefield of Texas Inc. “You just need to adapt to different ways of solving the problem. If the market cools, which it could, then clients will have a different set of problems, but they open up new opportunities.” And none of his veteran peers, recognized “pillars of the industry,” disagreed. The panel of local icons also included Steve Van Amburgh, CEO of locally based Koll Development Co., Terry Darrow, senior development officer for Chicago-based First Industrial Realty Trust and Robert Grunnah, president of the investment and land division of Henry S. Miller Commercial in Dallas, with Ran Holman senior vice president of CB Richard Ellis as the moderator.

The viewpoints in Dallas/Fort Worth are like those in many other parts of the US. Yes, investment sales volume is expected to slow, but on the other hand, there’s plenty of allocated but unspent money in buyers’ tills, according to Thornton. Year to date, $250 billion has been raised by this year’s 400 new funds. “I can assure you that most of that money has not been deployed or spent yet,” he said. And when it does go into play, 75% most likely will be aimed at value-add deals based on trading patterns for the past year, he added. It’s also a recognized fact that Dallas/Fort Worth’s price per pound is considerably less than the other top-tier cities.

The industry thrives on risk, whether broker, developer or owner. “The risk-reward factor is much safer in Dallas,” said Chad Carpenter, CEO of San Diego-based Equastone, whose company has deployed $1 billion in two years, mostly in Texas. He said his team’s research shows Dallas will have net positive absorption in its office market for the next five years. Although third-quarter numbers support his team’s findings, others pointed out that absorption is down from last year.

“One of the good things about Dallas is it’s volatile,” Bill Cawley, chairman and CEO of locally based GVA Cawley, told Carpenter during the “Fact or Fiction” segment. “And, I think a steady market is kind of boring.”

By and large, the pros say they’ve adopted a “wait and see” attitude as to the impact that the market correction will have on Dallas/Fort Worth. “It’s way too early to tell the way this market is going to go. It’s not that the sky is falling, but I’d err on the side of caution for six months,” said Grunnah, who like the others have been down this road before.

“If this trend continues, we’re going to see a shift. And if the market does soften, our thought is it won’t be that deep for Dallas and it won’t be that long,” Edge concluded. The RealShare conference series is produced by Real Estate Media, which also publishes GlobeSt.com and Real Estate Forum.

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