Despite market uncertainty, long-term opportunities still exist in the Bay Area, panelists at Bisnow’s San Francisco Capital Markets event told roughly 150 industry pros last week at Parc 55 Hotel. Overall, speakers were a cautious lot.

Stockbridge Capital’s Steve Steppe (above right with panel moderator, Allen Matkins partner Gary McKitterick) shared his conservative market outlook by stressing the dual headwinds of low growth and excess leverage. The falling price of oil, which presaged the collapsing Houston office space market, could have significant ramifications elsewhere, he said.

He said many tech darlings with questionable cash flows could falter in the coming months, leading to a broader contraction in the Bay Area. He advised lenders and portfolio managers to deleverage to ensure they could survive the downturn.

International investors could offer the market a lifeline during these tough times. Since internationals are motivated by a desire to own dollar-denominated assets rather than search for returns, he said, the adverse economics of a downward-trending market might not deter foreign investors.

Steve said the long-term prospects for greater San Francisco are promising. The educated workforce in the region continues to attract talent-hungry firms and that demand will remain through the cycle, he predicted.

Macroeconomic turbulence has made it much harder to rely on capital markets for cheap financing, said Jay Paul Co managing director Preston O’Connell (above center with his wife, Casan, and Don Moses of Arena). Preston drew specific attention to volatility in the CMBS market, which is forcing dealers to cut back on issuing new loans.

While the highest-rated and most creditworthy tranches (AAA) of new loan originations have fared better, riskier portions of the debt (rated B and below) are under stress. In light of this mini credit crunch, he advised real estate players to tighten their belts to preserve cash and pay back loans.

As for foreign investors, Preston said he’s seen interest from Korean pension funds looking to establish themselves in gateway markets such as San Francisco.

Gerding Edlen managing partner Brent Gaulke echoed similar sentiments. (We snapped Brent, above left, with Matthew Corley of Wells Fargo and Glumac's Steve Straus at the start of the event) He said developers in San Francisco can no longer bank on rent growth to drive profitability. The city's chronic housing shortage, however, still presents a growth opportunity. He hoped regulatory clarity and streamlining from City Hall would empower builders to grow the housing stock.

One of his concerns is the state of the tech sector. Brent said there's room for optimism. While unicorns (valued at $1B or more) might contract or fold, incumbents such as Apple and Google could use this opportunity to pick up talent and office space from shrinking startups.