Leading voices in the real estate industry say they hope that the arrival of spring will inspire a change in the glum perspective of owners, investors, and lenders on the state of the commercial real estate market.

“The national economy is the strongest business and financial market the world has ever seen, and New York City is the nation’s strongest business and financial market,” a managing member and co-founder of Murray Hill Properties, Norman Sturner, said. “Do not underestimate our strength and eventual recovery.”

And while sales prices are lower nationally and across New York City, foreign buyers are still a strong force on the market, the chairman of the Witkoff Group, Steven Witkoff, said. “In terms of sales prices, yes, they are down,” he said. “But the United States is on sale, and New York is on the top of every foreigner’s list. Personally, I wish prices in this town were cheaper, because I would be significantly more active. The fact is, not only are the foreigners a natural floor in our marketplace, but in addition, every time a property comes down in price, it gets snapped up by a savvy New Yorker.”

“In some cases, sellers have become realistic insofar as prices had gotten out of hand to realistic returns and replacement values,” Mr. Sturner said. “It is easy to drop your price by 10% to 20% if last year you were increasing your prices by 25% to 50%. I cannot guess if there will be further price declines, but I can surmise that smart, well-capitalized owners will not throw good properties onto fire-sale auctions.”

For worried sellers, the chairman of Massey Knakal Realty Services, Robert Knakal, offered reassurance: “Sellers are concerned about market conditions, as they should be, but prices are remaining very sticky, particularly for income-producing properties under $50 million. There is no doubt that the delta between the middle of the bell curve [of all offers received] and the selling price is growing, but prices are relatively unchanged for core assets.”

Mr. Knakal added: “In fringe areas, prices are off of their peak, but not significantly. Demand is still exceeding supply, and there is plenty of debt available, although more equity is required. More equity should mean downward pressure on prices, as equity is more expensive than debt, but thus far this has not occurred.”

“For those sellers who have reason to dispose of their properties, we have consistently seen price adjustments as they move towards the market,” the director of the national multi-housing group at the brokerage firm Marcus & Millichap, Peter Von Der Ahe, said. “However, for prime, well-located, multifamily assets, the need for an adjustment in pricing has been minimal, while those on the fringe for any category have needed to adjust by as much as 15%.”

“Sellers have had to adjust,” he added. “We just signed a contract on Friday on two rent-stabilized buildings in Morningside Heights for approximately $4.5 million, where the seller had to hold a second mortgage to retain the agreed-upon pricing, as the buyer’s bank came in 15% short of expectations.”

The president of Mack-Cali Realty Corp., Mitchell Hersh, said he believes that prices have declined by 10% to 15% and that he expects an even greater decline, especially outside New York City. He also said he expects the market to return to normalcy in about a year.

“This credit crisis is now the worst credit crisis that we’ve experienced in decades, including the real estate collapse of the 1980s,” the president of Beck Street Capital, Kevin Comer, said. “It is likely that there is more pain to come. The market hasn’t yet reached the inflection point of maximum pessimism, although we are getting there. Unfortunately, finding the bottom usually entails some measure of panic selling, which we haven’t yet seen in the public markets, and certainly nothing close to it in the New York City direct real estate markets. As with previous cycles heading into troughs, while painful at the time, they present some of the best buying opportunities, and this cycle will be no different.”

The chairman of Intervest National Bank, Lowell Dansker, said: “The clouds on the horizon of yesterday are definitely here today. Currently we are in the midst of a vicious cycle, and it remains to be seen when it will end and where the bottom will be. Somewhere near the ‘bottom,’ investment dollars will flow back into the sector.” “It is unrealistic to think that the capital markets will return to what they were,” the senior executive vice president and chief credit officer at Emigrant Savings Bank, Patricia Goldstein, said. “Commercial debt obligations are gone along with subprime, which were fueling a lot of the financial engineering.”

She added: “There is a crisis, because a good borrower with stabilized properties with large loans cannot roll them over. The insurance companies and banks cannot replace the collateralized mortgage-backed securities. All of this needs to get solved. Prices will come down and have come down because of financing costs and lower leverage.”

The head of real estate for Bank of Scotland, John Gunther Mohr, said: “The hardest task we face as senior lenders is to separate the longer-term economic trends affecting commercial real estate values from the credit crisis roiling all the finance markets. The challenge is to create lending structures that will survive the cyclical downturn in real estate values and are priced high enough to meet the internal hurdles of risk-adjusted returns and relative value in a market where pricing is being driven upwards daily by the crisis. Borrowers are therefore faced with more conservative lending structures at pricing far higher and much more volatile than historic standards.”

Even in these difficult times, properties have been sold and continue to be in contract for sale. Earlier this month, a private America-based real estate investment company that is part of Eyal Ofer family, Global Holdings, closed on the purchase of a majority of the office space at the former headquarters of the Altria Group at 120 Park Ave. Global paid approximately $525 million for the 643,000-square-foot office building, and the transaction provided Altria with a pre-tax gain of approximately $440 million.

Cushman & Wakefield has been retained to sell the 25-story, 209,783-square-foot office building at 211 E. 43rd St. The building, which is between Second and Third avenues, has nearly 60% of its leases expiring by year-end 2010, offering a purchaser a great opportunity to increase the rents in the property. The building is less than two blocks from Grand Central Terminal, and the property is subject to a ground lease that expires on June 30, 2085.

A few blocks from Grand Central is the 23-story, 275,000-square-foot office building at 475 Fifth Ave., at 41st Street. Last year, a joint venture of Westbrook Partners and the Moinian Group paid approximately $160 million for the building. The joint venture has retained an investment banker to sell the property, which possibly can be delivered vacant. Industry leaders believe that the property might be sold to a hotel developer. This spring, a joint venture of Westbrook Partners, Stellar Development & Management, and the Witkoff Group is expected to close on the purchase of the 17-story, 156,614-square-foot office building at 405 Park Ave. for $180 million. The joint venture entered into the contract prior to the present credit crunch and is paying approximately $1,200 a square foot.

A Monte Carlo-based investment company, M1 Real Estate, and GVA Williams recently closed on the purchase of the 10-story, 129,753-square-foot Argonaut Building at 1770 Broadway, near 57th Street. It purchased the building, which was built in 1909, from the Hearst Corporation and plans to spend close to $50 million to renovate the property.

This spring, the Clarett Group will close on the purchase of the 24-story, 253,873-square-foot office building at 180 Madison Ave. It is paying Sitt Asset Management approximately $150 million for the building.

The first bids are expected this week for the 16-story, 1.6 million-square-foot office building at 450 W. 33rd St. Less than a year ago, Broadway Partners paid $664 million for an 85% stake in the building. Last year, the United Nations entered into a lease at the Albano Building, which is owned by Extell Development, at 305 E. 46th St. The world body will lease the entire 180,000-square-foot building for approximately $50 a square foot. According to the trade, the owner of the building is putting it on the market for $140 million.

In Lower Manhattan, the American Stock Exchange is planning to sell its 15-story, 415,000-square-foot headquarters at 86 Trinity Pl., which was built in 1921. In addition, one of the largest owners of class-A office buildings, RFR Realty, has retained an investment bank to sell its 42-story, 525,000-square-foot office building at 17 State St.

“Portfolio lenders like us are open for business,” Mr. Dansker, of Intervest, said. “Underwriting loans in a declining value market requires that the borrowers have more at risk, hence lower loan-to-value ratios. This turmoil in the marketplace creates opportunities for buyers with deep pockets and clean histories. Financing of real estate will continue, albeit at a slower pace.”

Mr. Knakal said: “We must remember that banks are in business to lend money. If they do not lend, they are out of business. On March 18, the Fed will cut rates again by 50 or 75 basis points, which will either lower mortgage rates or increase margins to the point where lenders have tremendous motivation to lend. Lowering rates will keep the U.S. dollar weak, which will keep hotel occupancy levels healthy and will keep those foreign dollars pouring into the market.

“As with any cyclical market, ours must go through its natural progression, which will get more challenging before it corrects. We don’t expect to see anything close to the conditions experienced in the early 1990s, as our current fundamentals are significantly better. How long this process takes will follow the trend of employment, which we will be watching closely.”

Mr. Witkoff said: “I don’t doubt that certain lenders made mistakes in 2006–07. But many others did not, and there is still liquidity out there for those who have preserved their reputation and have long-term relationships with portfolio lenders.”

He added: “I talked to the head of real estate lending at a major bank last week, and his comment to me was that this is one of the greatest mending environments his bank has ever seen. Wide spreads, better loan to values, and the same borrowers who have always paid him off in the past. Those who have lived through this since the early ’80s get it.”

A principal at Palisades Financial, Mark Zurlini, said: “Back in the early ’90s, when the economy was faltering, banks would pull back and assess their portfolios. Lending would cease during this re-evaluation period. Then at the end of each quarter they would decide what reserves would be taken, as well as what loans would be slated for sale. I would sense this is happening now, finally.”

Unfortunately, I do not have a crystal ball and cannot predict the future. Nevertheless, I concur with the president of SJP Residential, Allan Goldman, who said: “Normalcy in the market will slowly return by the end of the year, when lending institutions recognize the world is not coming to an end. That doesn’t mean prices will return to ’06 or early ’07, but it will at least trade, because sellers and buyers should begin to be on the same page in understanding the world is as it is today, not yesterday.”

Mr. Stoler, a contributing editor of The New York Sun, is a television and radio broadcaster and a senior principal at a real estate investment fund. He can be reached at mstoler@newyorkrealestate.com.