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It’s time to play catch-up on some of this week’s interesting stories.

David Stejkowski linked and commented on a Bloomberg story that predicted a 10 percent to 15 percent drop in commercial real estate prices.

It echoes a lot of what we’ve been hearing lately. After years of record-setting volumes, the pace of deals is slowing. Cap rates are rising primarily on lower-quality assets. All this is happening despite fundamentals remaining strong across the board. And a lot of this is being driven by the debt markets. A new, higher cost of borrowing is being reflected in the hesitancy of buyers to pay the same prices they were paying last year (or even a few months ago).

But is this Armageddon for commercial real estate?

Here is a choice section from the Bloomberg piece:

“People aren’t willing to do deals right now,” said Howard Michaels, the New York-based chairman of Carlton Advisory Services Inc., which has arranged financing for real estate purchases including the Lipstick Building in midtown Manhattan. “The expectation is that prices will come down.”

Investors in July bought the fewest commercial properties since August 2006 and apartment building acquisitions were down 50 percent from June, data compiled by industry consultants at New York-based Real Capital Analytics Inc. show. Archstone-Smith Trust in August postponed its $13.5 billion sale to a group led by Tishman Speyer Properties LP until October. Mission West Properties Inc., the owner of commercial buildings in Silicon Valley, said on Aug. 13 that the company’s $1.8 billion sale may fail after a bank withdrew funding.

“There are so many deals falling apart,” said David Lichtenstein, chief executive officer of Lakewood, New Jersey- based Lightstone Group, an owner of more than 20,000 apartments and 30 million square feet of office and retail space. “People who can get out are getting out.”

That makes things sound extremely dire. David Stejkowski has a more tempered view of the whole thing, which makes a lot of sense. Here’s what he had to say:

What do I think will happen? There will be deals, even though some sellers will not want to sell, if for no other reason out of necessity or from banks who take back properties, etc. There are always deals to be had for one reason or another, albeit not at the insane breakneck pace we’ve seen. Smart investors will buy at the right price, finance with traditional loans for the time being and take a hit with higher short term borrowing costs, waiting for rates to decline before refinancing into the most restrictive (but lower-cost) CMBS market. There will probably be fewer portfolio deals and more single-asset transactions. And we can all start acting normally again. And the sky, while at least partly cloudy, will not have fallen.