"We're sitting on the sidelines in the equity business, and I think that is the most telling sign" of how Apollo views current market conditions, Mack said. He noted that out of $3.2 trillion of debt outstanding in commercial real estate, 10% is mezzanine and 25% of the mezz debt, or approximately $77.5 billion, will mature each year.

Mack, who's responsible for new investments and investment management at Apollo, aligned himself with those who believe "things are going to get worse before they get better." He added, however, that this presents many opportunities for lenders to make prudent loans with equally prudent spreads.

The uncertainty in the market has led to mixed signals in a variety of areas, among them the question of whether the US is headed toward a recession. Mack said he believes it is, but added that he doesn't think the effects of a recession will translate into substantial increases in the Manhattan office vacancy rate. The last time major financial institutions gave up a lot of space in Manhattan, in the downturn of the late 1980s and early 1990s, they soon came to regret it, he said.