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NEW YORK CITY-Some signs of life are beginning to assert themselves in the capital markets, which have been in a state of near-hibernation since at least the Wall Street meltdown of last September. However, it will take decisive–and effective–action by the Treasury Department to break the logjam. That was one of the key points driven home by panelists at Wednesday’s Dealmakers Forum presented by the New York Post and hosted by the Real Estate Board of New York.

“Our banks are taking the TARP funds and surviving” rather than using the federal relief to make loans, said Bruce Mosler, president and CEO of Cushman & Wakefield. He called on Treasury secretary Timothy Geithner to make decisions on mark to market and removing toxic assets from banks’ balance sheets.

Douglas Durst, CEO of the Durst Organization, proposed a different course of federal action than the approach that’s been favored–if not actually pursued–in Washington. Rather than buying bad assets from banks, Durst suggested, Treasury should buy “top-tier” ones and require banks to recycle the proceeds into loans. It’s a renewal of lending activity that Durst would like to be able to take advantage of: asked by moderator Lois Weiss what it would take for his company to start acquiring properties again, Durst responded, “Financing. We’re not going to buy with 100% equity.”

During the event’s second panel, a discussion of the challenges in obtaining debt, the Carlton Group’s Howard Michaels outlined a plan of his own. Michaels’ plan would impose a six-month amnesty period of relaxed mark-to-market rules, and would have Treasury provide TALF funds to the private sector, which would then buy toxic assets.

Whether or not it listens to either Durst’s or Michaels’ proposals, the Obama administration needs to take definitive action, panelists agreed. “Whatever they come up with has to work,” said REBNY president Steven Spinola from the audience following the second panel. “It can’t be a partial success.”

Both panels saw a pair of recent sales as harbingers of what’s to come. The reported $355-million purchase by CBRE Investors of 1540 Broadway, formerly owned by Macklowe Properties, may serve as a “bellwether” of pricing, said Douglas Harmon, senior managing director of Eastdil Secured, during the opening “State of Commercial Property in New York” panel. If the $355-million figure is accurate, it represents a price of $390 per square foot. There may be more sale-leasebacks like the New York Times Co.’s $225-million deal with W.P. Carey for the media company’s headquarters space at 620 Eighth Ave., agreed participants in the finance panel.

Michaels, CEO of the Carlton Group, saw a common thread among these two transactions and the possible $100-million sale of AIG headquarters at 70 Pine St.: “They’re only happening if the sellers are taking big losses and the buyers are getting great deals.” As for the remaining property in the Macklowe/Equity Office portfolio that was taken back by Deutsche Bank–Worldwide Plaza at 825 Eighth Ave.–Robert Freedman, executive chairman of FirstService Williams, said he’d now expect to see it go for “under $200 per square foot. That’s how harrowing it is.”

Notwithstanding the 1540 Broadway and 620 Eighth sales, Meridian Capital Ralph Herzka opined that the bid/ask gap is still too wide. “People are not being realistic and that’s why you’re not seeing sales,” he said. The financial well-being of owners looms increasingly large in both financing and leasing: Freedman said the operator is “the key driver” of perception in the capital stack, while Mary Ann Tighe, CEO of CB Richard Ellis’ New York tri-state region, said she’s never seen office tenants paying so much attention to the creditworthiness of the landlords.

Keynote speaker Larry Silverstein, president and CEO of Silverstein Properties Inc., sounded a positive note to conclude the forum, describing the transformation of Downtown and charting progress on the rebuilding of the World Trade Center. He noted that the Port Authority of New York and New Jersey’s Freedom Tower has already risen 100 feet above grade, and that SPI’s three towers are either under way or ready to go–a state of readiness which called for close collaboration among the three different world-class architects designing the individual SPI towers.

Silverstein acknowledged, however, the difference between building 7 World Trade Center, which was ready to receive tenants four years after shovels went into the ground, and the more convoluted progress on the actual WTC site. How soon the SPI towers can be completed, he said, “depends on how quickly government can function.”

Responding to an audience question, Silverstein said he has never considered delaying construction on WTC Towers 2 and 3 to wait for the office market to heat up again. At the present rate, they’re not likely to be completed for anywhere from five to eight years, by which time the economy will have recovered. “If the world hasn’t come back together by 2014, 2015, 2017, forget it–we should all go hibernate someplace,” he quipped.

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