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(Read more on the debt and equity markets.)

NEW YORK CITY-The past year was split down the middle by the debt crisis, with New York City’s real estate market facing very different challenges before and after that crisis emerged. So said panelists at yesterday’s Real Estate Board of New York members’ luncheon, where Mary Ann Tighe, CEO of the New York Tristate region for CB Richard Ellis, moderated the discussion, which drew about 600 attendees.

In the first two quarters of 2007, the challenge was to compete for properties, noted David Levinson, chairman and CEO of L&L Holdings. In the third and fourth quarters, the challenges have all stemmed from the debt crisis–a theme taken up in a variety of ways by Levinson’s colleagues on the Rebny panel, “Negotiating in an Uncertain Market.”

For example, Daniel Tishman, chairman of CEO of Tishman Construction Corp., said ’07 marked the first year in which he was not sure whether to define his outlook as representing either a half-full glass or a half-empty one. He added, however, that the smartest real estate organizations are able to take periods of uncertainty in stride. “If you’re in it for the long haul, it’s fairly easy to even out the peaks and troughs,” Tishman said.

On the residential side, Diane Ramirez, president of Halstead Property, said the credit turmoil has brought about two challenges: “perception versus reality” and “fear.” The perception, she said, is that New York will soon succumb to the dismal housing market seen elsewhere in the US, while the reality is that Q4 ’07 has seen slightly more new residential deals here than Q4 ’06.

Ramirez equated fear with the “unknowns” that could negatively impact housing sales, such as the specter of smaller year-end bonuses on Wall Street. The worst-case scenario for the bonuses, she said, is that they’ll be down 10% to 15% over last year’s all-time high, meaning that ’07 will be the second-best year ever for bonuses. “That doesn’t sound so bad to me,” she commented.

Noting that “New York has never been in a better place,” Barry Gosin, chairman of Newmark Knight Frank, called the debt crisis “an incredible opportunity” to re-rationalize the terms on which properties are acquired. He noted, however, that left unchecked the crisis could severely curtail corporate profits along with home ownership throughout the country. Gosin called on President Bush and Federal Reserve chairman Ben Bernanke to “correct this” with an injection of cash and other measures, as Bernanke’s predecessor, Alan Greenspan, and then-Treasury Secretary Robert Rubin did in September 1998. By the second quarter of 2008, Gosin said, drawing a laugh from the capacity crowd, “even this administration” will have figured out what to do about the debt crisis.

One challenge to owners and developers that’s likely to persist is rising construction costs. “Construction pricing, with very few exceptions, never goes down,” said Tishman. One reason is that even if the debt crisis stalls some projects from going forward, “There’s still a staggering amount of construction on the books,” he said. Another factor is competition for materials: last year, for example, China purchased 55% of all cement produced worldwide.

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