Next up was Chris Thornberg, a principal at Beacon Economics, who pointed out that “At the beginning of last year, there was a lot of taste for risk, which dried up sharply towards the second half.” His prediction is that a taste for that risk will come back in 2012. “Industrial and hotel is where it’s at right now.”

According to moderator Farb, “There’s no doubt that the state of the commercial real estate markets around the country is better than it was a year ago and continues to show consistent improvement in terms of transaction volume, pricing and capital flows on both the equity and debt side. Even property fundamentals are slowly improving across all sectors.”

With that said, Farb, along with many other panelists throughout the day-long event, could not discount “we're still up against a slowly recovering, deleveraging economy, lots of capital chasing too few deals, and banks slowly starting to dispose of their nonperforming loans and REO.”

The optimistic Thornberg explained that instead of focusing on the numbers and on the levels out there—whether it is about anything from unemployment rates to the amount of loans coming due—people should focus on the trends. “And the trends are moving in the right direction now,” he said.

One is Thornberg’s favorite trend indicators is non-residential permits for alterations. “It is strongly indicative of a market that is seeing better times ahead,” he said.

Optimism is in the air, said Cohen. “The biggest issue we are facing is the expiration of the Bush tax cuts…the recovery is still fragile albeit gaining momentum…The ways in which we deal with the expiration of some of those tax cuts could be a moderate hindrance.”

When Farb asked panelists about interest rates and inflation, Cohen pointed out that “We are entering a cycle where we might see a cycle of inflation on food and energy although we may not think about it in terms of core inflation.”

Jay Leupp, managing director of Lazard Asset Management LLC, does not believe that we are at a period of imminent inflation. “We are two plus years or beyond where we have to really worry about it.”

When discussing the housing market, Farb pointed out that there are a lot of positive signs out there, noting that affordability continues to be near historical highs and investors are snapping up foreclosed properties at low prices and pushing sales volume up while keeping prices down.

According to Leupp, in high barrier-to-entry markets, “it’s a good time to buy a home.”

Cohen said that the housing sector will be a positive contributor for the first time in years to overall GDP. “We are to some degree, under-housed,” he said, adding that “We have not been adding housing for a number years.” What is inhibiting stronger purchases, he said, is that home prices are still falling and no one wants to catch a falling knife.

When asked if we are over the hump with respect to foreclosures, Thornberg said we are, and things will get better. Cohen said there will still be a big chunk of foreclosures ahead, but said that things are beginning to plateau. “It’s still like the pig and the python.”

When Farb asked about the deleveraging cycle we are in and the $1.7 trillion of debt coming due over the next couple of years, with respect to the affect it will have on the market, panelists general didn’t seem too concerned.

“Yes, there are still problems with some of the loans out there, but the FDIC is pursuing a very consistent policy, and as these loans come through, they are sitting down and working it out,” said Thornberg. “All the numbers in the banking industry show that this managed approach is working out these numbers is working…pretend and extend and slowly deal with it.”

The overall consensus, is that 2012 will better than 2011 and 2013 will be better than 2012, according to Thornberg.