"The flight to quality has already happened," Peter Korpacz, director of the global strategic real-estate research group at PricewaterhouseCoopers tells GlobeSt.com. "What is pushing activity now is institutions like pension funds that need to pay dividends and use low-risk investments to do so. Overall, there are a lot of institutional-type players out there looking for the best assets and all are going after the same top-grade properties.

"There are 10 to 15 buyers looking at each one of these properties. It's gotten so competitive that you're seeing pre-emptive strikes, where investors are knocking on doors to try and buy properties before they hit market." According a recently released PricewaterhouseCoopers investor survey, some of the best performing class A properties during Q1 2002 include Houston, Manhattan, Midtown & Midtown South, Washington, DC and Seattle.

"A competitive market for high-end properties to me is the beginning of a recovery," says Korpacz." "As the demand starts to spread out as the economy returns, the industry will begin to come back as a whole. The only issue is whether this continued economic slump is going to be a long-term trend or a short-term bubble."

The Korpacz-authored report indicates that investors are increasing their exposure in industrial properties, particularly in the warehouse asset class. Similarly, although major apartment markets are experiencing dips in rental rates and increases both in vacancy rates and concessions, some of the better performing markets include Southeast Florida--especially Miami and Fort Lauderdale--as well as Orange County, Philadelphia and Washington, DC.