By the end of December, CMBS issuance is expected to top $200 billion in 2006, a 20% increase from 2005 when issuance increased 80% from the year prior. While 2006 rose significantly less than 2005, the numbers were still positive, a trend Fitch expects to see in 2007. The company predicts another 20% increase next year.

Bach said 2007 issuance will be impacted by "the sectors ability to attract capital and increase competition for debt and equity products which should keep cap rates relatively low. Any upward pressure on cap rates is expected to be outpaced by continued improvement in property fundamentals, therefore property valuations are expected to remain relatively high which should translate into more property transactions and thus an increased need for financing."

Broken out by property type, Fitch's outlook for retail and industrial is stable. It's view of multifamily, hotel and office is improving. Of the property types that are considered improving, Bach said both multi-family and office will be driven by the country's increased employment rate. The hotel industry is benefiting from steady growth and business travel.