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NEW YORK CITY-The industry's future is on the forefront of real estate practitioner's minds, as seen at yesterday's RealShare Structured Finance. The roughly 150 attendees and speakers continued to bring up the possibility of the bubble bursting and looked for proof in the capital market--proof that is not as evident as some may think. Michael Desiato, group publisher and editorial director for Real Estate Media, introduced the conference that went on to analyze every part of the capital market.

While capital is still chasing property at an enormous rate, as evident from the recent Stuyvesant Town Peter Cooper Village sale, and fundamentals are steady; most find a real estate bust as an unavoidable part of the cycle.

The market's fundamentals are still stable according to speakers on the State of the Real Estate, Finance and the Capital Markets panel, and the market could be classified as 'overheated' with the number of investors still vying for property. "When you have 40 or 50 guys bidding, there is always someone out there who will do something we consider crazy," said Randy Reiff, senior managing director and co-head of Global CMBS at Bear Sterans & Co. "But eventually the music stops and someone is left without a chair."

That pause will be a correction to the market, according to Bill Green, managing director real estate capital markets for Wachovia Securities. He couldn't pin-point when the switch would be pulled, but said, "I'm surprised it's taken so long to happen. But I'd take another year like this one."

For some a significant market correction is an event to look forward to, according to Kent Daiber, senior managing director with CWCapital LLC. He commented that the whispered conversations have industry insiders saying they "want that change to clear some people out of the market."

Richard Katzenstein, senior managing director, MMA Realty Capital Inc. stressed the importance of proceeding cautiously, when cycles are no longer predictable. "It used to be cycles happen every seven years, every 10 years," he said. "Now everyone is in euphoria with the market but they are all cautious. Every time somebody does a deal you have to take a breath and digest it as opposed to when [the market] is running and gunning it." Katzenstein suggested a short-term vantage point could be the most beneficial--looking at the market only in terms of the next 60 to 90 days. Dennis O'Leary agreed; "I see the market as somewhat volatile, we need to really digest a deal."

John Bralower, managing director with the Carlton Group, added he does not believe the market will truly burst; citing the cooling condo market as the model for the market's deflation. As market's began to lose their appeal, financing of products began to become more difficult to obtain and developers looked to other locations. "The condo correction has not been so dramatic," Bralower said.

From condos, lenders are now turning their attention to the tightening apartment market, according to panelists on the Capital Sources Power Panel. This asset class, which was barely a consideration months ago, has begun to look better due to an excess of condo projects coming online and the flattening housing market.

But despite the impending market correction, capital is still after investments in the United States and investors are looking toward global market places. "The opportunities offshore are quiet significant," said Theodore Gamble, managing director of the Prescott Group LLC. "You can't be serious about what you do if you are not taking this into account." China, Japan and India are front and center on the radar screens. "If you are not investing in Asia you are missing out on the simplest move of all time," Green said. The US is still considered a safe investment; and Europe is no longer attractive to investors. Green compared Europe to the Midwest, with little population growth and activity.

RealShare conferences are produced by Real Estate Media, publisher of GlobeSt.com and Real Estate Forum.

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