There were 30 respondents including pension funds, advisory firms, life insurance companies and real estate investment trusts. Respondents of this quarter's survey expect more institutional commercial real estate companies to be acquired for their real estate assets and price increases resulting from the acquisitions. Survey respondents viewed investment conditions similar as last quarter for the most part with a slight decrease in perceived conditions for suburban office and an increase in perceived investment conditions for industrial warehouse space. Industrial "has always been stable and less volatile," Riggs says.

Some survey respondents believe there will be further cap rate compression for office in the near future. The required going-in capitalization rates declined for office space in both central business districts and office and retail power center properties while remained steady for industrial, apartments, regional malls and neighborhood retail. For hotels, both the required going-in capitalization rate and the required terminal capitalization rates increased from last quarter, according to the survey.

Last year, was "one of the strongest price and transaction volume markets that I have ever seen in my lifetime," Riggs says. "The outlook for 2007 has continued to be very strong, driven by the fundamentals." However, he does not expect a repeat of last year. "2007 is a time, for lack of a better term, to be more reflective, to digest what has happened in 2006 and make sure that we are not getting too far ahead of the marketplace where capital is outpacing the fundamentals," he says.