"The lack of transactions in New York City has created a lot of confusion," says Fasulo, adding Manhattan lacks comparables. But, he says, given how consistently London and New York have moved together over the past decade, "I think it's fair to use comparables in London."

Drilling down a bit, the RCA report says among London office trades, average cap rates have moved around 7.5%, up 300 basis points from the height of the market. The report says that stabilized building sales in Manhattan will need to occur before the acquisition yield picture clears and pricing benchmarks can be established that will reassure investors.

"Based on the bids I've seen behind the scenes, that is exactly where the New York market is too, 7.5% to 8% cap rate," says Fasulo.

Noting how psychologies have changed over the past two years, Fasulo says just 24 months ago, "everyone wanted vacancy, because they were convinced they could rent at a higher rent, and increase the income at their property." However, "that thought process completely flipped."

These days, "investors are looking at vacant space as a significant negative factor. As a result, they are basically reducing the amount they're willing to pay for assets with any type of vacancy. They do not want the risk involved with vacant space right now," or Fasulo says in matter of fact like fashion, "in the near future."

As for Manhattan investors following London's proactive lead, "I guess it depends on your view of the future," he says. "If you think the world is going to end, you might as well put your money in gold bars and go to sleep," a nap Faulo is clearly going to avoid taking.

Instead, he predicts a coming inflationary environment, one in which he wonders where an investor can find long term income that pays 8% a year, and is inflation protected. "What's interesting about this downturn?" he asks. "The fact that we have 900 clients and not one have I heard say, 'hey, we're just throwing in the towel, we're giving up on real estate as an asset class'," says Fasulo who added back in the early 1990's, "that was the mindset after the first real estate depression." He says that even the people who've suffered tremendous losses, haven't given up on the sector at all.

And, while London may be leading in transaction activity, "Manhattan is going to be on everyone's radar as one of the primary markets investors will want exposure to," says Fasulo. "There is some evidence, based on what I've seen, as far as bidding activity, to support that. Some of the big office properties that are for sale right now, we've heard of 30 or 40 bids for some of those assets," says Fasulo. "We haven't seen that since the boom times."