Phones in Dallas are not quite ringing like they did a few months past, Connie Gore, GlobeSt.com's Southwest bureau chief, reports. But Mike Berry, president of Dallas-based Hillwood Properties, tells her that the current market has hit just a short-term bump in the road. Dallas-Ft. Worth, he says, is going to benefit in the end. "I hate to sound like Dallas-Ft. Worth is recession-proof, but North Texas is a strong market when people are trying to streamline just as it's a good market when they're trying to grow and expand." He admits that the current stock market might slow up the rate at which companies expand, but the deals will continue.

Tom D. Cook, vice president of development in the Orlando office of Carter & Associates/Oncor, tells Southeast bureau chief Alex Finkelstein that "it stands to reason more managers will slow down or cancel expansion opportunities until things get on a more even plain." But Cook feels if that happens, "it may be due to the overall economy, not just the stock market."

He says his colleagues in Atlanta "are seeing more fallout there than in Orlando" when it comes to expanding business space.

Whether it's driven by the economy in general or Wall Street in particular, the effect of a slide will be the same, Neil D. Freeman, president of Chicago-based Aries Capital, tells Midwest bureau chief Mark Ruda. "Everything in the economy is inter-related; if you lay off people, you cut expenses," he says, and less space needed for employees means less expenditures on real estate. Locally, Motorola is on a payroll-cutting binge, but so far the pink slips have yet to result in a sale of a building or sublease space. Besides needing less space, companies electing to cut business travel will affect hotel vacancy rates, adds Freeman, whose company's efforts to arrange commercial mortgage financing includes those on hotels.

Although real estate may appear to be an attractive investment alternative to equities, the Aries executive adds a reminder about asset allocation practiced by institutional investors, such as pension funds. A drop in the stock market may cause real estate to be over-allocated in a portfolio even if its value remains constant.

That being said, Freeman acknowledges the relative heath of the industry --especially compared to situations a decade ago. "It's the first downturn where real estate hasn't been overbuilt or over-hyped," Freeman says. "The reason is the lending community hasn't believed the numbers at the peak, and we're expecting a downturn at some point. You won't see the wholesale defaults. Values may drop 5% or 10%, but not the 20%, 30% or 40% they did in the early '90s. Real estate may be a bit more favored by those afraid of the stock market."

CB RIchard Ellis investment sales specialist Lou Lauman agrees with the real estate-as-safe-haven theory. "At other times in the past when we've had a slowdown in the overall general economy, real estate has historically been overbuilt and therefore has not represented a particularly attractive investment option for people who want to move money out of the stock market," Lauman tells Northwest bureau chief Brian Miller. "What we have in our economy today is significantly different; commercial real estate is very healthy. It continues to be an owner's market, and the vacancies continue to remain relatively low."

In other words, we are not overbuilt this time around, which means real estate represents a viable investment alternative to the stock market. "You combine good fundamental real estate market conditions with very low interest rates--commercial mortgages are running 7.25% to 7.5% today--and the net result is continuing low cap rates and steady investor demand," says Lauman. "As things stand now, it represents a safe and profitable haven from the stock market."