The rumblings are beginning … a few encouraging developments here, a few positive signs there; it seems the commercial real estate industry is primed for a comeback. Things are moving slowly, but the patient is off life support — although a long way from healthy. But after a near-death experience, expectations are tempered and there exists an appreciation of the little things, such as improving capital markets and revitalized transaction activity. While a number of risks remain, the best industry news in 2010 and heading into 2011 is “the worst is behind us.”

During the prior market run-up, operating partners in real estate joint ventures enjoyed a great deal of leverage in document negotiations. The imbalance was partially due to the number of equity investors seeking quality operating partners. With the market reversal, the leverage pendulum in negotiations between equity investors and operating partners in real estate development joint ventures has swung in the investors’ favor. With a diminished availability of capital, competition among operating partners for equity investors has increased. While the bargaining positions of the parties still vary based on factors such as the reputation of the operating partner, the desirability of the real estate, the anticipated duration of the venture and the relationship — or lack thereof — between the operating partner and the investor, in general, the shift in the economic climate has given investors the upper hand when negotiating the terms of joint venture agreements. The following is a discussion of terms investors may wish to consider in their negotiations with operating partners.

Like many of you, I am often asked a cycle-trend question: “Are we at the bottom yet?” My reply is always the same: “That depends on which bottom you are referring to.”

The fact is that there is a wide range of key indicators to observe — occupancy or rents or values or changes in these values, or even distress as a percent of sales. The answer can vary even more when the question is asked about the performance of specific markets, as some geographic markets may be well past their bottom and on the ascent, while others are still far from it. It is easy to play the spin game during such times as the sporadic recovery of late 2010.