"Be glad you're here instead of Phoenix," where there's a glut of unsold new housing inventory, Haughey told the audience. "It's going to go from great to good."

Although the New York City region's commercial real estate market is in better shape than the national average in terms of vacancy rates and rent increases, Haughey said the region's economic growth has slowed to average or below average due to layoffs in office-based industries such as financial services. The slowdown in growth will persist into 2009, weakening the appetite for private construction such as office buildings.

New project starts will be off by 15% to 20% through Q1 '09, following by an upturn of 6% to 10%, Haughey said. "It's going to be grim for the next nine months," he warned.