GlobeSt.com: You mention in your report that there are unpredictable forces that affect the real estate market. That's clear, but forces aside, the traditional six-month lag time between the economy and the industry gives us time to strategize, no?

O'Hearn: Not really. There used to be a six- or 12-month lag, but those time frames have shortened. The old art of examining real estate cycles so you could predict direction is gone, and we have disengaged from the cycles theory. The forces affecting the industry today are so complex and diverse, and the changes taking place are happening so rapidly that you simply can't trust the cycles.

GlobeSt.com: Is it that they are too rapid or that they no longer exist?

O'Hearn: I'm saying that the real estate markets will come out of their doldrums at the same time as rest of economy.

GlobeSt.com: Sept. 11 is an obvious pressure, but what other forces are you referring to?

O'Hearn: In terms of other impacts, we see the impact of technology on the industry coupled with the volatility of the economic environment in which we operate. Both of these are changing how we perceive the marketplace and how quickly we respond to it.

GlobeSt.com: So when do you foresee a rebound?

O'Hearn: The second half of '02 for the economy, and with the narrowed gap, real estate will be close behind. We saw this rapid cycle last year, really, with the collapse of the market. I thought it would happen in the third quarter, and it really happened in the second. Every industry participant seemed to go overnight from being giddy about the market to having all of this time on their hands.

GlobeSt.com: And then there was Sept. 11, which some people are saying did not have the long-term impact it was expected to.

O'Hearn: The big asterisk with 9/11 is that there not be another incident on the scale of the WTC. The aftermath--in terms of brick-and-mortar dealmaking--is the uncertainty. After 9/11, researchers tell us that in some 78% of our markets corporate real estate directors put on hold deals of 100,000 sf or larger. They began to rethink their strategies. Now, one of the hottest debates you can enter into is whether to consolidate or diversify. That used to be an economic conversation. It's become a security issue now. But in terms of other impacts of 9/11, there was a lot of speculation that end-users would shy away from high-profile buildings. We're finding that's not the case.

GlobeSt.com: Are you saying that the uncertainty is dwindling?

O'Hearn: I'm saying that our evidence reveals that the uncertainty may have been exaggerated in terms of those high-profile buildings.

GlobeSt.com: You mentioned security post-Sept. 11. That certainly will be a long-term impact.

O'Hearn: But it will change. We're Americans and we're impatient. Just like we will tolerate delays in airport waits only so long, we'll grow impatient with long waits to get into our office buildings. What will change are the fundamental safeguards people will seek--evacuation plans and fire codes and such. We'll be tolerant of these inconveniences for a time, but in the long run, people will want to get through the lobby fast and still be secure. That will put the economic pressure on the owners to upgrade. Those are expensive things to do, and they will affect the revenue stream.

GlobeSt.com: In the great scheme of things--barring more outside forces--this recession will go down in history as relatively minor, don't you think?

O'Hearn: Given the industry's history of cycles, yes, but the operative word here is "relatively." If we go through anything less than a 24-month blip, yes, this recession will go down in history as relatively minor.