Relative to all that, we're in good shape. We're not in the middle of any projects, we were buttoned down and locked up and very liquid when this thing started. We've been shopping aggressively for opportunities. We've found two, but frankly, given the amount of work we've done and what we're prepared to do, we're disappointed that we haven't been able to find more. There's just not a lot out there. We still think it may change, but we've given up predicting.

Ryan Nelson: Compared to six months ago, the number of transactions has improved, but it's still sparse. One positive is that on development deals, the one- to two-year bridge loans are reaching maturity, so you're seeing a little bit of movement and banks being motivated. You have a lot of mezzanine players trading down in the capital stack to secure their positions, but as far as third-party trades where we can come in and do a new deal, they're pretty far and few between.

I keep going to panel discussions and hearing people saying that "$300 billion in loans are coming to maturity in the next year." It seems like they've been saying that for two years and it still hasn't gotten there yet. Maybe the sheer volume will push transactions to happen.

A big part of the problem is the slow pace of banks moving to foreclose. What's holding them back?

Nelson: We talk to banks daily and usually, it's that their positions are so far under water and the pricing correction was so drastic. So many of these pierces are impaired, and it's not 90 cents on the dollar; it's 60, 50, 40 cents. Their thought is, why sell? If you were an equity seller, you wouldn't sell at those prices. You would wait until the economy picks up and ride it out.

They don't want to own property, and there are enough guys out there like us that would love to help them with those assets. But when you want to underwrite to a 20 or 25 IRR and they can borrow money from the government below 1%, the numbers don't work.

Katz: This isn't going to be over in a year. It's going to take a while. What's interesting is that when New York comes back, as we know it eventually will, it be in the aftermath of a lot of things not getting built. Not only that, but the financing will be very reluctant, even after the economy comes back. You'll see high spreads, low loan-to-values, lots of hair and pimples on the financing. It's not going to be pretty for a long time.

The long view is rosy, if you're taking it 10 years at a time. But people don't live in a 10-year perspective; they look at it from a vantage point of one or two years. I'm optimistic about the long view, not the short view.

What are you seeing in your own properties?

Nelson: The small-tenant market has been gangbusters, and across all industry types. It's a lot of start-ups from people formerly at places like Lehman. At 370 Lexington, we've gone from 85% occupancy at the beginning of the year to 94%. Other buildings are seeing this too.

Our strong position is that we have a lot of capital to invest. Cash is king; it opens a lot more doors than trying to talk to banks and having them have to finance 95% of what we want to buy from them.

Katz: A lot of the people that would be competing with us are putting out fires right now. They were very active in the last three or four years, and now they're dealing with a lot of problems. We're lucky enough not to be distracted by that.

Right now we're looking in Manhattan for anything that looks like a smart, long-term investment. We're not traders by nature.