I will start writing Emerging Trends 2009 soon, and the challenge this year is to calibrate just how negative I should go. Will next year be a bit better than 2008, worse, or really bad? I'm sure I'm not giving away the store by revealing everyone I've talked to sees at least some rough moments, and no one expects a sudden rebound. Most people are not very sanguine, to say the least and they have been growing increasingly pessimistic.

We've had some posters comment that the markets aren't that bad and real estate has been doing comparatively well. Occupancies have held up in many markets and development has been under control except in some condo markets and, of course, in single family housing. By the numbers, the economy may not be in a recession, they say. Yes, the transaction markets have been dormant, but that's because of the credit crisis, and once that clears up commercial real estate should be in decent shape. So why be negative, they argue?

Well, there are a host of reasons to consider, at least. Most mark-to-market investors haven't felt much pain yet. The dearth of transactions has delayed appraisal recognition of the value loss picture, and sellers continue to hold out for higher prices, while buyers wait for better deals that they know will be coming. For now, many lenders have been working with shaky borrowers to avoid defaults, limiting the number of motivated sellers. But at some point they will have to clean up their balance sheets. Consumers continue to pull back and more retailers show strain. Unemployment heads higher. If companies aren't belt-tightening, they're certainly not expanding. Interest rates are pressured upward by inflation, not a good thing for cap rates, especially if fundamentals can't pick up the slack. And those credit markets, which provide nourishment for real estate businesses, appear sicker than ever. Unless investors are prepared to buy with cash, the transaction markets will remain relatively gridlocked.