The Urban Land Institute came to Philadelphia last week. Commercial real estate salespeople jammed a Union League meeting hall to hear what they knew too well. Highlights:

"We have to go back to the pre-bubble environment," warned economist Joel L. Naroff. "In the '80s we used to say 21/4 [percent GDP growth] was good." It's better than shrinking. But it means a long, slow recovery for jobs and offices.

The national building bubble burst before it ever reached Philadelphia, said David Campoli, regional manager for REIT Management and Research L.L.C., the biggest Center City landlord.

The upside, for owners of existing buildings: "There's very few tenants who are moving," Campoli said. Unless you count the ones who are shutting down.

"Less bad is the new good," said Center City District chief executive Paul Levy. He couldn't brag about downtown's growing office space - it has been flat for 25 years - so Levy cheered the fact that Center City's human population, of all ages, keeps rising - "92,000 residents, third after New York and Chicago," though that depends on where you draw the lines.

"Our market's off 80 or 85 percent" from its 2007 high of "two to three transactions a month," said Robert Fahey, top office broker for CB Richard Ellis. Deals collapsed, he said, "simply because there's been no consensus about pricing [which has been in] free fall."

But maybe a glimmer of hope: "In the last six or eight weeks," Fahey said, "we've closed six transactions."

Settling for less

Prices have also fallen for "mid-market" company mergers and acquisitions, according to the latest quarterly survey by GF Data Resources, of West Conshohocken, which checked 130 investment banks for "mid-market" deals worth $10 million to $250 million.

The typical sale-price-to-earnings ratio (before interest, tax, depreciation, amortization) was just 5.1X, the lowest since GF began keeping track six years ago.

The survey found just 13 deals, the third straight quarter at roughly the same low level, and less than half of last year's volume.

"If this were a movie, it would be He's Just Not That Into You," Andrew T. Greenberg, CEO of GF, told me. Sellers are "reconciling themselves to a valuation environment that is not likely to rebound" to 2007 levels for a couple of years.

"Sounds like doom and gloom," added GF partner B. Graeme Frazier IV. "But the closing of the gap between seller expectations and valuations could signal a return" to more deals, if not higher prices, next year.

Bank of Jersey?

Marlton accountant Brian Greenberg lost his bid this month to join the New Jersey General Assembly as a Republican from a Democratic district.

That hasn't stopped Greenberg from pushing a pet public policy: He wants New Jersey to start a bank, to pay off $40 billion in state debts on the cheap.

"Instead of interest payments going to private investors, the payments will effectively go to the residents of the state," Greenberg writes in the postelection edition of his monthly newsletter, The 5 Percent Solution. "The state would save over $6 billion a year in debt service."

Where does this work? North Dakota, he writes, has low unemployment, rising income, and "a budget surplus of $1.3 billion, the largest it has ever had."

Greenberg asked why that would be. I thought: High demand for grain worldwide.

But Greenberg says it's due to North Dakota's state bank. Banks are magic, he said, because they "do something nobody else can do: They can create credit on their books simply with accounting entries."

Greenberg's state bank would "provide a secondary market for real estate loans, which it buys from local banks." It could guarantee "entrepreneurial start-ups and student loans, the purchase of municipal bonds from public institutions, and a well-funded disaster-loan program."

"The state could earn billions yearly on these loans, while saving hefty sums for consumers. It could also refinance its own debts and those of its municipal governments at very low interest rates."

It's a provocative idea. Then again, most states used to own their own banks, and politicians couldn't stay away. Time to resume experiments?

Contact Joseph N. DiStefano

at 215-854-5194 or JoeD@phillynews.com.