Like economists near and far, Hall forewarns commercial real estate will take much longer to recover than the other sectors. "It's going to be a very long and difficult downturn for commercial real estate. This is not a short blip. It's not going to be over in six to 12 months," he emphasizes. "The real estate cycle is going to be longer than the recession itself."

Hall Financial Group has de-leveraged and downsized debt, which its chairman strongly advises all to do in order to weather the long haul ahead. Second, Hall advises management to "be realistic" about overall business and "not treat the future like they did in 2006 and 2007." Third, lower overhead. And finally, accept the fact that cap rates are up and are going to stay up.

Hall predicts a lot of assets will be traded once fair values emerge from the ashes of the financial debacle. He estimates values will drop 25% on average, which could erase an owner's entire equity if an asset is highly leveraged.

Hall says the inevitable erosion of values is why it's so critical to de-leverage to weather the storm. "As lenders have the ability to squeeze borrowers for pay-downs, they're going to do that. And, that's going to be the process for 18 months," he says.

"Real estate is a local business. Each area will be different," Hall says. "In the mid-1980s, Dallas was one of the worst areas in the country and today it's one of the best." Developers didn't overbuild this time and property values didn't run up as high as other areas of the country.

But, the future will hold less demand for space amid layoffs and rising unemployment. The rapidly changing times require "a fresh look at liquidity and cash flow and evaluations of markets. Many people aren't good at that," Hall says. "It takes an optimist to be a successful real estate owner and developer. In good times, that's how you get the deal. In a challenging environment like this, being optimistic can be detrimental. In this environment, it takes a realist to survive."