Panelists at the conference's culminating event, "Surviving the Credit Crunch—One Year Later," also made the point that the lending climate is constrained and will remain conservative for the foreseeable future. "The lack of lending activity right now is an admission by the big banks that their model has failed," said Jonathan Hornik, VP and general counsel at Kennedy Funding. He saw a return to "old-fashioned real estate underwriting" along with "a re-education of everybody's expectations with regard to real estate."

The upheaval on Wall Street, while tempered somewhat by the Treasury Department's proposed $700-billion rescue plan, was the 800-lb. gorilla in the room here as at many of the RealShare panel discussions. "The downturn is a very real situation," said David Soares, president and CEO of Berkshire Capital Financial. How long it will last remains to be seen, but in the meantime, Hornik noted that Wall Street's troubles will affect office space demand in suburban markets as well as in Manhattan. He added, however, "Trouble is opportunity."

It's a time of opportunity that should be approached with prudence, however. "If you're know what you're doing, you can make a lot of money," Soares said. "If you don't know what you're doing, go do something else."

At a panel discussing the effects of financial services job loss on the Downtown market, Bill Rudin observed that it's too early to have any clarity on what the Wall Street shakeout will ultimately mean. Rudin, president of Rudin Management, noted that the events of Sept. 14 and 15—the Lehman Brothers bankruptcy, the forced sale of Merrill Lynch and AIG's entry into federal receivership—seemed to spell unmitigated doom for commercial real estate as of Monday the 15th. By the following day, however, it was announced that Barclays would buy much of Lehman's assets, chief of which was its headquarters at 745 Seventh Ave.

With that said, however, moderator Sheldon Cohen, senior managing director of CB Richard Ellis' Downtown operations, noted that Lower Manhattan's three largest tenants are AIG, Goldman Sachs and Merrill Lynch. Among them, they occupy 13% of the market's office space, and while Goldman survived the Wall Street meltdown relatively unscathed albeit transformed, it will be vacating hundreds of thousands of sf in existing space when it moves into its new headquarters.

Rudin pointed out that the Downtown's tenant base has been diversifying in recent years, with the FIRE share of the pie shrinking as the media and healthcare sectors occupy more space. Even if the worst comes to pass and financial services gives back huge blocks of space, "We're not going back to 1991, when we were sitting around with 30% vacancy Downtown," he said. "It's not going to happen."

One reason, said panelist Steven Spinola, president of the Real Estate Board of New York, is that "Lower Manhattan is finally what we were looking at it to be—a 24-hour community." The neighborhood is now sustained by "a different kind of economy" than the pre-9/11 configuration, when there were relatively few residents and limited retail.

Rudin noted that 10 years ago, there wasn't even a question of retailers coming to Lower Manhattan, let alone the high-end shops cited by panelist Karen Bellantoni, EVP at Robert K. Futterman & Associates. Avi Schick, downstate COO and president of the Lower Manhattan Development Corp., said General Growth Properties' $1-billion commitment to renovate the South Street Seaport speaks volumes about Downtown's potential.

Schick said Lower Manhattan's overall story is a positive one, and the neighborhood is "well-positioned" to weather the current storm and then to make the most of it when the down period ends. A big part of Downtown's future is the World Trade Center complex, which made headlines this summer when Christopher Ward, executive director of the Port Authority of New York and New Jersey, said the original completion deadlines would not be met. The authority's revised timetable is due at month's end, and Schick told the RealShare audience that the original schedule was based on the assumption that "everything would emerge at the same time." Now, he said, the focus will be on setting priorities for completing components of the massive project, including the area's infrastructure.

In Midtown as well as Downtown, the Wall Street cataclysm may make an enormous impact on the office market, although how much is unknown. "There's a lot of fear right now and not a lot of reality," said Andrew Levin, SVP of leasing at Boston Properties, during the "Outlook for Office Leasing" panel. Added Howard Nottingham, executive managing director of Studley, "What concerns me is that we have changed the landscape inasmuch as all the big investment banks are gone. They were huge drivers of space."

Although major landlords haven't had to respond to pressures and cut rents yet, eventually they will, predicted Raymond Sanseverino, partner and chair of the New York real estate department at Loeb & Loeb. In secondary and tertiary locations, rents are coming down, he added.

Even before the current crisis hit, building owners were already "in deal-making mode," said Glenn Weiss, SVP and director of leasing at Vornado Realty Trust. He warned, "2009 could be an even tougher year. Some people that need to get that $100 rent to service their debt are going to be in trouble." Overall, however, Weiss predicted, "We're going to get through this okay." Although the market is "frozen" at the moment, "In our world, there's always such a thing as lease expirations, so that keeps the business going."