As part of the turnaround, Korpecz says it's time for corporations to start sharing the load with the now debt-ridden consumer by picking up their spending in preparation for the rebound -- and by doing so, possibly hasten its arrival. The problem with the scenario, says Korpecz, is "that new, new thing" that will generate the necessary demand has not shown up yet.

Meanwhile, Korpecz says the two crutches holding up the real estate market -- low interest rates and a flow of capital from the stock market -- are tenuous at best. First, the latest lowering of interest rates means the economy was worse than previously thought. Two, the longer the economy struggles, the less attractive real estate is going to look, which will shrink that flow of capital. Finally, it will shrink again when things start to rebound, as money flows back into the stock market.

Having said that, investment in real estate will still be higher than it's even been, says Korpecz, and as there are exceptions to all these problematic situations, investors still see opportunity in certain real estate sectors and, as always, in buildings well-occupied by credit tenants locked into long-term leases.

The Emerging Trends report's best investment bets for 2003 include: warehouses in major transportation hubs, as "values there hold better than for any other property type"; urban office buildings, ones in 24-hour markets without near-term leasing exposure; regional shopping centers, which can only be invested in through REITs these days, as they've bought them all up for their economies of scale; flex space in previously hot tech markets, but only at distressed prices.

As well, the report advises investors to: hold onto apartments, as more money can be had selling once occupancies and rental rates are on the rise again; borrow money, to leverage up returns on stabilized assets or to prudently enhance properties; prune some grocery-anchored retail--not all of them, just the ones where Wal-Mart is likely a future competitor; and, sell quality assets, because "it's an absolute sellers market," as there's tons of capital for any and all stabilized investments.

As far as the best markets for 2003, the top 10 stayed largely the same, though they've swapped ranking in some cases and generally are scarred by less return and more risk. Those markets include, in 2003 order, Washington D.C., New York, Los Angeles, San Diego, Chicago, Boston, Miami, San Francisco, Seattle and Philadelphia. The only top 10 city to drop out of the top 10 from 2002 to 2003 is Denver, which fell from 10th to 19th. Portland is listed as 11th for both 2002 and 2003.