According to Transwestern's 2007 year-end report, the office investment market chalked up $3.1 billion in total sales volume or $1.1 billion more than 2006's total sales. In fourth quarter 2007, investors spent $594 million, which averaged out to $195 per sf.

Researchers caution price appreciation should level off as new supply comes on line in the next 24 months. For the past couple years, Melinda Korth, an executive vice president in Phoenix for CB Richard Ellis, says "buyers were getting great loans and securing deals, meaning sellers realized they could push prices." As a result, she there were sharp spikes in asset prices. "If 2008 slows down from those levels, it won't be a catastrophe, but the way to bring things back into balance," Korth says.

Eric Wichterman, senior vice president with Grubb & Ellis/BRE Commercial LLC's Phoenix office, points out office most likely will weather an economic downturn better than other product types because deals weren't based on pure speculation. "People were optimistic in their assumptions when the cap rates dropped," he explains, "but it wasn't anything like the catastrophic irrationality we had in the housing markets."