Besides the national credit crunch, commercial investors are facing the prospect of too few properties on the market. Siegel notes that owners are reluctant to sell buildings unless it becomes financially necessary or they are looking to move on to another project.

"They are paying the price because of the low bids that they're receiving on their property," he says. "The buyer is looking at every seller as a distress seller."

While predictions vary as to when the commercial market will return to an up cycle, Siegel believes a rebound is possible in mid-2009 if there are any positive economic developments, such as a resurgence of the US dollar. "Deal flow will start to pick up once the forest fire dies down," he says.

Aside from the national economy, respondents to the Grant Thornton survey express concern over earnings and operation results (21%), ability to access capital (19%) and tenant relationships (10%). Among other survey highlights, 69% believe local unemployment rates will rise in the coming year, 61% predict vacancy rates will rise in their market and 79% expect cap rates to increase nationwide.

The survey is based on 341 responses to surveys collected throughout March. Developers were the largest group, but respondents also included real estate investors and owners, asset managers, property managers and contractors.