While things are looking up, Hanson was quick to note that only in five of the last 75 years has occupancy been lower than is projected for this year. And only in eight years out of the past 36 have room starts been as low as they are estimated for 2003.

Steve Coyle of Citigroup Alternative Investments agreed that development is lagging. In fact, Coyle predicts that for the office sector, "2004 construction completions will be at 1997 levels." This, however, is not nearly as gloomy as earlier predictions, which called for new construction to hit the all-time low levels experienced in the early '90s, he said.

Coyle also pointed out that for the office segment, "We won't see a recovery until we will job growth, not GDP growth. While GDP growth is great, we need companies to hire more people to occupy space."

For the first quarter of this year, he estimates that vacancies averaged 16.7%. "Vacancies are still increasing, but slower and they still remain below peak levels." As for rents, he warns that many of today's leases were signed in 1998-2000, and when those deals roll in the coming months, landlords will be facing a tough situation because "rents are currently below 1998 levels. They're off more than 20% from their peak in 2000."

In the industrial market, Coyle offered similar predictions to his office forecasts. He anticipates vacancies in Q4 2004 will hit a peak of 12%, than improve gradually. Industrial construction completions, he stated, are also tied to job growth and, like the office sector, development is currently at 1997 levels.

As for retail, Doug Casey of Clarion Partners, said shopping center sales are actually growing by 4.9% per year this decade. And sales growth will generate more than 100 million sf of new centers annually.

Casey also isolated the hot retail markets to keep an eye on, pointing out that baby boomers are a driving force in future retail demand. "More than 40% of the nation's population lives in three states: California, Florida and Texas," he explained, adding that retail development is following suit in these areas.

He added that in urban locations, cities along the edges/coasts of the country are experiencing the greatest population gains. Phoenix, Atlanta and Dallas are seeing the greatest influx of people, followed by Houston, Washington, DC and Las Vegas.