Steve Roth, the chairman of Vornado Realty Trust, said in a letter to shareholders released yesterday that "the eye of the storm has clearly passed, recovery is now almost certain, it's just a question of how strong and how long."

"There is a lot to learn from the last cycle," he said: "It lasted 18 years from peak to peak, 1988 - 2006. In 1991, the door to the capital markets creaked open and Kimco went public, followed by a flood of real estate IPOs which continued for the next decade. The parallel to the current cycle is almost exact - in 2009 and 2010, a scant two years after the bust, REITS were re-equitized by the capital markets. Using the past cycle as a guide, I believe we have a few years of fragile recovery and then many years of sustained growth ahead of us."

Mr. Roth said he believed that "the previous peak in commercial real estate values will be exceeded," and he suggested that New York City "upzone Park Avenue as an economic incentive to tear down old buildings and replace them with new-builds which may be, say, half again the size." "Park Avenue, the major corporate corridor of New York, comprises about 40 million square feet from Grand Central to 59th Street and buildings there are on average about 45 years old (which is about the average age of the entire New York office stock)." He said his suggestion was intended "to keep regenerating New York." "They do this in London, quite successfully." He added.

Mr. Roth remarked that "Analyst Michael Billerman recently noted that the anticipated avalanche of 'distressed sellers' has yet to materialize, thereby creating a class of "distressed buyers.'"

"Today, lenders are not selling at panic distressed prices. This is very different than the 1990s - who can forget the RTC, etc. Sellers, and sellers who were lenders (and not natural holders) will flood to market as prices rise. Assets will soon trade a plenty (just look at the volumes flooding into special servicing) but in controlled processes at clearing, but not distressed prices," according to Mr. Roth.

"The Great Recession and the debacle in residential real estate notwithstanding," he continued, "commercial real estate is nowhere near as distressed today as in the 1990s. Then, commercial real estate from coast-to-coast was grossly over built; year after year see-through office buildings stayed see-through. That is not the case today - over leveraged yes, over built no."

To support some of his optimism, Mr. Roth said observed that "Experts had predicted that more than 350,000 jobs would be lost in New York in this cycle."

"In fact," he said, "actual job loss was 186,000 versus 341,000 in the early 2000s recession and 443,000 in the early 1990s recession. Further, and I believe a precursor to an aggressive real estate recovery in New York, the financial services industry is enjoying record activity and profits and is now adding jobs."

Mr. Roth also gave a "thumbs up" to "green" buildings:

"Years ago when the first green shoots of sustainability started to sprout (pardon the pun), I was skeptical. To say the first wave of solar panels, etc., were uneconomic would be an understatement. Time marched on, and the green movement progressed. Our Company's thinking also progressed. It became clear to us that the societal good was enormous and, as if that weren't enough, I came to believe that in the not too distant future our customers, the largest tenants in the nation, would favor green buildings. The economics are now obvious, especially for long-term owners like us, that sustainable practices save money for us and for our tenants. The real estate industry quickly adopted standards for new green, ground-up development. Today, virtually all new major construction is built to LEED gold or platinum standards.... Today, our office buildings consume 35% less energy than the national average."