As the year winds down, there is considerable disagreement among industry leaders about whether we are headed for a national recession, spurred by turmoil in the global capital markets and the spillover effect on the financing of real estate transactions in America and abroad.

Last week, in an address to the 40th annual New York University Conference on Capital Markets at the Waldorf-Astoria, the managing director and chief U.S. economist of Deutsche Bank Securities, Joseph LaVorgna, said: “The financial markets are undergoing a pounding in these times of the credit crisis. There is major stress in the financial markets with the residential housing market in a recession, yet I do not believe that the country is slated for a full recession.”

Joseph Ficalora, the chairman, president, and chief executive officer of a $30 billion multi-bank holding company, New York Community Bancorp, said, “We are in a recession, and the state of financing of commercial and multi-family residential apartments is the worst we have seen since the early 1990s, when financing was nearly extinct.”

Some experts predict the credit crisis and lack of cheap financing will have a powerful local impact and spur a sharp downturn in the New York City commercial real estate market. “With all of the layoffs in the financial markets in New York City, many companies will be reducing their office space requirements, resulting in a serious crisis in office leasing and a reduction in values of office buildings,” the chairman of the board and founder of the Lightstone Group, David Lichtenstein, said. “We see this as a liquidity crisis,” the president of the Prudential Mortgage Capital Company, David Twardock, said. “There is volatility in assets; spreads for lending have increased dramatically. Today is the Prudential’s best lending opportunity in more than 15 years.”

“People are too opportunistic,” the managing director of the fixed income, real estate finance, and securitization group at Credit Suisse, Adam Raboy, said. “There is a terrible credit crisis. The quality of loans sucks. It’s more difficult to get capital. This is not going to be a soft return to lending.”

The chairman of the national real estate practice of Greenberg Traurig LLP, Robert Ivanhoe, said: “The capital markets have been completely shut down for over four months. They are broke and show no sign of coming back to life in any meaningful way anytime soon.”

Mr. Ivanhoe said he thinks the crisis will eventually level off. “The pendulum has swung from one extreme to the other, though as in many market reactions to such jarring events, it will undoubtedly correct back somewhere in the middle,” he said. “The question is when, and the answer seems to be whenever there is some confidence on shoring up the bottom prices on the securities.”

“At the moment, balance sheet lenders, life companies, and perhaps Goldman Sachs, the only Wall Street firm that somehow saw this coming, can pick and choose to market the loans they want to make, and at spreads that look very rich compared to what was prevalent in the market only six months ago,” he added.

The managing director and head of commercial mortgage investing at MetLife, Mark Wilsmann, said: “Life companies are in business. Until recently, we were in the storage business, and we are selectively lending for commercial real estate.”

“There is a shift in sanity,” the senior managing director of global commercial mortgage-backed securities at Bear Stearns, Randy Reiff, said. “Commercial loans were not properly structured. Lenders are more defensive than offensive in providing any type of financing.”

“After years of getting battered by aggressive competition from CMBS, portfolio on balance-sheet lenders are finally having their day in the sun,” the managing director and president of ING Real Estate Finance-USA, David Mazujian, said. “That is, except for those without any liquidity or funding problems.”

“If you are looking for a real estate loan today, several portfolio lenders and life companies still have their doors open, though according to different parameters than existed only a few months ago,” he added. “Equity requirements have risen, recourse is back, and spreads have widened. Ultimately, risk has been repriced. Even those banks that were able to underwrite large tickets in the past do so today only with some amount of flex language.”

The executive vice president of Anglo Irish Bank, Paul Brophy, said: “The world is a very different place, with far fewer lenders who are willing and able to lend. As we know, the CMBS lenders would appear to be still very much out of the market, and their return, when it happens, will see a much tamed animal.”

“Our doors are open for business during these turbulent times and continue to serve our existing client base and strategically form new partnerships where appropriate,” Mr. Brophy said. “While deal activity in the market place has slowed considerably, we have definitely seen a very noticeable increase in the level of inquiries at Anglo as the field of debt providers has shrunk.”

“Looking forward, it would appear that we will see a general softening in values as leveraged returns reduce due to the scarcity of debt funding. However, for those seasoned players who are well-capitalized with strong banking relationships there will be opportunity as they compete with a much reduced and more rational competition,” Mr. Brophy said.

Even in these difficult times, the last year was a remarkable one for New York City real estate, and certain assets are still going under contract for sale. One of the most active players in 2007 is a German-based fund manager, the Paramount Group. Last month, Paramount and New York-based Sherwood Equities entered into a contract to purchase the office building at 440 Ninth Ave. The seller is SL Green Realty Corp., which will receive $160 million, or about $472 a square foot for the 18-story, 339,000-square-foot office building.

Earlier this week, a joint venture of SL Green and a Canadian-based real estate fund manager and subsidiary of the Caisse de dépôt et placement du Québec, SITQ, entered into an agreement to acquire Citigroup’s two downtown Manhattan office buildings at 388 and 390 Greenwich St. for $1.57 billion, or $598 a square foot.

The buildings, which are adjacent and contain more than 2.6 million square feet of space, will be occupied by a financial services tenant under the terms of a 13-year triple net lease that provides for annual rent increases.

Paramount has entered into a contract to acquire the 30-story, 729,000-square-foot office building at 31 W. 52nd St. The seller is a partnership of Deutsche Bank, RREEF, and Hines. The property fetched close to $595 million, or $812 a square foot, according to real estate sources.

In June, Deutsche Bank sold its headquarters building at 60 Wall St. and entered into a 15-year leaseback of the building. The purchaser was the Paramount Group, which paid $1.18 billion, the highest ever price for an office building in Lower Manhattan.

In July, the Paramount Group sold its office building at 32 Old Slip in Lower Manhattan for about $870 million. According to Commercial Mortgage Alert, the group is in contract to sell the 47-story, 1 million-square-foot tower at 1177 Sixth Ave. The purchaser is reportedly a joint venture of Silverstein Properties and California State Teachers’ Retirement Fund. They will pay about $1 billion, or $1,000 a square foot, for the tower.

Based on today’s credit client, industry leaders expect the purchaser to obtain $700 million in mortgage financing. Earlier in the year, a purchaser might have received close to $900 million in financing, and the property might have traded for close to $1.2 billion, or $1,020 a square foot.

Another active investor is Global Holdings, a private American real estate investment company owned by the Israeli magnate Eyal Ofer. Global Holdings is part of an investment group that includes Zeckendorf Development and Goldman Sachs’s Whitehall Street Real Estate Funds in the highly successful condominium development at 15 Central Park West. Earlier this year, Global Holdings and William and Arthur Zeckendorf paid $160 million for the 242,000-square-foot development site at 10 U.N. Plaza, on First Avenue between 46th and 47th Streets. The joint venture plans to construct a luxury condominium on the site.

Last month, Global Holdings entered into a contract to purchase the 643,000-square-foot tower at 120 Park Ave. The company is paying about $525 million, or about $850 a square foot, to the Altria Group, where the company once maintained its New York City headquarters. According to Commercial Mortgage Alert, Eurohypo and HSBC will provide Global with a floating rate loan of about $315 million, or 60% of the purchase price.

Perhaps one of the most active purchasers this year is Broadway Partners. Last month, a joint venture of Broadway Partners and Investcorp closed on the purchase of 280 Park Ave. They paid about $1.28 billion for the 1.18 million square-foot complex, made up of two buildings. The seller was Dubai-based Istithmar, which purchased the buildings in June 2006 for $1.2 billion from Boston Properties.

In March, Istithmar sold the 1.2 million-square-foot building at 230 Park Ave. to a joint venture of Monday Properties and the Whitehall Street Real Estate Funds, which paid $1.15 billion, or $948 a square foot.

In June, Broadway Partners sold the 254,000-square-foot office condominium tower at 660 Madison Ave., on the top portion of the building that houses Barneys New York. The purchaser, Gruppo Zunino, paid $375 million, or $1,471 a square foot, the second highest recorded price a square foot for an office building in America.

In order to survive in these turbulent times, investors must be willing to accept the fact that the rules for financing have changed. The days of interest-only financing, with limited or no amortization, or little or no equity, are a thing of the past. Expect to see a new balance between sheet lenders and insurance companies emerging, in the months ahead and fewer inexperienced, undercapitalized investors purchasing commercial assets.

Mr. Stoler, a contributing editor to The New York Sun, is a television and radio broadcaster and a senior principal at a real estate investment fund. He can be reached at mstoler@newyorkrealestatetv.com.

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Correction: “Market Turmoil Alters Financing Landscape” is how the headline for this column should read. The headline was incorrectly worded in an earlier version of the column.