Five commercial real estate pros talk about the impact the credit crisis is having on key sectors.

OVERALL MARKET

Bruce Mosler,

president and CEO

Cushman & Wakefield

``We were coming off of record high rents and record low vacancies around the country and record high demand. That is what has pushed real estate values up. Over a 10-year period, real estate was in fact the most powerful investment vehicle. And what drove all of this was the ability to leverage. In the capital market side we have seen the debt dry up. Banks are really clear that the day of the highly leveraged buyer commercially is gone, and banks have set new levels of debt-to-equity ratio. High-leveraged buyers will no longer be the players. The folks who can leave substantial equity in deals will be the future players. Why are the future players not playing? Because they have not seen the value proposition.

``Cap rates [expected annual return on the purchase price] have to come up for prime property someplace between 7 and 8 percent. Without being able to leverage property so highly, we're going to have that cap rate rise. If it rises, I would submit that it is a sustainable number, that people will be willing, wanting and able to lend to property where the debt-to-equity coverage is more in line and more balanced. And I think you'll see that process go through in the next six to nine months. I think we will see the beginning of a recovery in late '09.''

OFFICE

James W. Shindell,

chairman

Law firm Bilzin Sumberg's real estate practice group

'I think right now everybody is in a `hold and evaluate' mode. Nothing in the typical commercial process is moving forward. The opportunity players, the distressed property deals, may be getting closer to actually happening because the bid and the ask may be getting closer together on these properties and we may have sellers and lenders becoming more willing to incur a loss than they were just a month ago.''

INDUSTRIAL

Eric Swanson,

market officer -- South

Florida

Flagler Development Group

``More than anything is the fact the companies out there today have a difficult time getting loans, and therefore their businesses aren't expanding as quickly as they were. People become more careful, more conservative, and when that happens, then everything slows down. There hasn't been a lot of land for industrial for some time because Miami and Broward have got a fairly restricted supply of industrial space; there's only so much it's going to be impacted by the fact that credit is not where it was. I think Broward right now is probably more impacted in a negative way in industrial than Miami-Dade because the size of the market in Miami-Dade is just significantly larger.

``Buyers are no longer able to get the credit they need to pay the prices that sellers would want in the market today. [Sellers] are finding themselves with a smaller group of potential buyers. They have to be pretty much all-cash buyers or have specific credit resources that a lot of people don't have.''

MULTIFAMILY

Robert Given,

executive vice president of multihousing

investment sales

Downtown Miami office, CB Richard Ellis

``The multifamily sector was actually buoyed by the agencies Freddie Mac and Fannie Mae. We actually had those two agencies giving us debt in the 65 to 70 percent range. They were there until the most recent financial crisis. They're still there, but their underwriting standards are so tough that what ends up happening is you get lower leverage. You can still get the agencies to do the debt, but you'll get lower leverage, and it will be at a higher rate. And, on the equity side of the purchase equation, those return requirements have gone up.

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