Hazel: Which asset classes?

Cruz: Multifamily, to start, is aggressively priced these days. In terms of multifamily class A deals in New Jersey, well-located waterfront towers, we’re seeing pricing in the 4s on the cap rate, which rivals the heyday. In industrial, you’re seeing pricing in the $50-per-square-foot range in the A market, also rivaling the top of the market. It’s very selective: It’s got to be the right asset in the right locations, whereas back in ’07 and ’06, it was a much wider field in terms of what qualified for right asset, right time, right location. Today, it’s much more selective, which is appropriate.

Hazel: What is still out of favor?

Cruz: Suburban office with either near-term rollover or significant lease-up is probably not being bid as aggressively as it was back in the day. That’s one of the last to bounce back. Office with near-term rollover risk is of concern because the fundamentals are still recovering. You still have a way to go in terms of a correction in leasing activity in a lot of the submarkets in New Jersey. Because of that you’re seeing less aggressive pricing in that type of asset class.

Hazel: What risks are people taking?

Cruz: During the downturn, to get debt on an asset it needed to be low LTV, and the credit had to be publicly rated and backed, locked and loaded. Today, while underwriting standards are still strict, you’re seeing some of the banks and life insurance companies going a little further out on the LTV scale. It’s 70% and upwards on the right deals. You’re also seeing the CMBS lenders and those groups taking more of an active role. We’ve all seen the highs and the lows of the CMBS market, and today the prediction is somewhere between $50 billion and $60 billion for 2011. It could be higher depending on how much steam the economy gathers.

Hazel: How is New Jersey doing relative to the rest of the country?

Cruz: Our proximity to New York puts us in a position for companies looking for leasing alternatives. In terms of the rest of the nation, our economy is very strong. Over the long haul, the educated workforce we have, the higher incomes, all that helps to drive the economic base here. We’re in a better position than most.

Hazel: Do you ever see us returning to 2007 activity levels?

Cruz: I don’t think we’ll get back to the very aggressive underwriting and aggressive debt that really wasn’t appropriate. There is pressure to put money to work and demand by a lot of institutional investors who are underweighted in a lot of asset classes. A lot of them had not been buyers for the past three or four years. They have these war chests to go out and buy.

I see measured activity. The deals will be underwritten in an aggressive but supportable manner. The lenders are in a similar boat. They have a lot of money, but they’re going to be smart about how they lend. I do see more opportunity: no one wanted to sell their assets in 2008 and 2009, because they were selling into a down market. Today, sellers are taking advantage of a lack of product and a sea of capital, and they’re taking advantage of a debt market that is getting stronger. Interest rates remain low for the time being. You’re seeing a perfect storm of deals. That combination is spurring a lot more people to call us and ask if this is the right time. So, 2011 and 2012 should be active years for investment.

Hazel: Do you sleep better than a couple of years ago?

Cruz: There are more deals out there. There’s activity. The calls I’m getting today say, “We’ve got money we’ve got to put to work. Is there anything out that hasn’t traded? Is there anything we can get preemptively?” When those calls start coming, you know that we’re in a different market.