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NEW YORK CITY-With three months’ experience traversing the post-meltdown landscape, it’s now possible to survey that landscape more discerningly and to start drawing a map for the best route over rocky terrain. The uncertain state of the current market “actually sets the stage for a great cycle coming out of this,” said Hessam Nadji, managing director of research services for Marcus & Millichap Real Estate Investment Services.

Answers to how long the down cycle could last, how the commercial real estate market will gradually emerge from it and keys to survival in the meantime were all on the agenda in an hour-long webinar featuring Nadji and three other CRE experts. Titled “The US Economy Part II–What Can We Do to Survive?,” the Dec. 17 discussion was moderated by John Salustri, editorial director of Incisive Media’s real estate group. Part I of that discussion occurred in July–a pre-meltdown, pre-TARP era in which, as Salustri put it, “there was no real sense of the pain that would follow.”

Although the current down cycle–finally acknowledged officially as a recession earlier this month–may seem unprecedented, it does have historical antecedents. Raymond Torto, chief economist for CB Richard Ellis, likened it to the 1957 recession in its sharpness, suddenness and, potentially, its depth. Nadji said he sees elements of that cycle as well as the 1981-82 downturn, although he doesn’t think the unemployment rate will reach the heights of either of those recessions. “We’re in the worst of it now,” he said.

If this is indeed the trough of the recession, a major challenge the CRE market faces in emerging from it is the financing drought. “The securitization mechanism is there, but the market is almost totally shut down,” observed Howard Roth, global and Americas real estate leader for Ernst & Young. It’s important to note that this paralysis is global, he added. “I think people underestimated how much securitization would bind the world together.”

However, an online poll of webinar attendees revealed that 89.5% see this as a time of opportunity. The key to making the most of those opportunities? Getting paid, Torto said. Nadji said it’s essential to look at each asset on a case-by-case basis and decide early on what the best strategy is for that particular asset. He also advised the audience not to expect a bell to go off, announcing a sudden flood of distressed assets priced at 40 cents on the dollar.

The followup to the Dec. 17 seminar is slated for next June, and by that time the Obama administration “will have laid down its first set of bets,” said Ed Friedman, senior economist at Moodys.com. How well those bets pay off will be one topic of discussion at that forthcoming webinar, and Torto expressed the hope that by that time, “the bubble of risk aversion” will have dissipated. Listen to a replay of the Dec. 17 event, available through March 18, 2008, here.

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