Citing studies from JP Morgan and Goldman Sachs, Azrack said the actual loss rate from CMBS markets could be as high as 7% or 8%."Not just default or foreclosure, but actual loss rates, which would be extraordinary," he said.

Despite the dire words and numbers, Azrack said there are reasons for optimism. They include a new White House administration, that he was hopeful would "come up with some clever solutions" that might positively impact the overall economy. But, he felt, the writing on the wall does not bode well for the industry's immediate future.

"Overall, the commercial property industry is going to take the licking that has already been absorbed by the stock and bond markets," said Stephen R. Blank, senior research fellow at ULI who compared the current storm to the industry wide depression of 1991 and 1992. "One saving grace is that development has been restrained, except for housing," he said.

Indeed, the fundamental belief in real estate as a solid long-term investment was reiterated. "We believe that real estate has inherent value," said Daniel S. Abrams, EVP at iStar Financial. "Where pretty much no matter what happens, you're going to realize some value from your investment."

But make no mistake, the panel was clear that the industry is facing multiple disadvantages. Mark Patterson, Global Head, Commercial Real Estate, Bank of America remarked that "we haven't seen the worst yet, that this time next year, we will be in the middle of a bad situation."

[The industry is] "in for a tough road," said David Reilly, president and CEO at Cornerstone Real Estate Advisors. "This will be the case well into 2009 if not 2010."

Reilly said that "we've all gotten burned by the tremendous 'creativity' that occurred throughout the financial sector." Patterson added that the situation had led to the current financing scenario where everything is moving to a deposit bank environment and that some of those banks have literally trillions of dollars sitting on the sidelines, but ready to put to work.

Panel participant P. Sheridan Schechner, managing director and US head-real estate investment banking at Barclays Capital said his bank has around $2.8 trillion to work with now. "We are open to make loans to customers, clients and others we have relationships with," said Schechner. The caveat, he noted, is that those loans would be in the $200 million to $500 million range and would be syndicated.

In addition to financing issues, the panel discussed related unexploded mines in the financial sector that it said could lead to sharp increases in unemployment. Some panel members later said the overall rate could reach around 9% over the next two years.

"Given the number of layoffs that are going to happen once the year end comes around, along with lower pay and bonuses, a lot of businesses are going to contract," said Patterson.

Reilly predicted that around 100,000 people could find themselves unemployed in New York City in 2009. He said that could then lead to another 200,000 to 300,000 unemployed as other businesses dependent on the financial industry begin to suffer.

Reilly also said that office vacancy rates in New York City could rise to around 12% over the next few years as new space comes online and that rents will decline. He predicted the worst time will be late 2009 into late 2010 but that a rebound might begin sometime in 2011.

"These problems started in New York City," pointed out Reilly. Which is why the rebound may arrive late here, he continued. "New York City and Wall Street have lost a little bit of their financial glimmer," he added. [And "it may take years to regain that confidence world wide."