Other trends becoming apparent for the year, though, are morepositive. These include growing levels of equity and mezz financingstepping in to fill the void left by the CMBS markets' seizure, andnew buying opportunities that range from distressed loans toemerging markets.

To avoid stalled development opportunities, or worse,overextendeddevelopers are seeking out preferred equity, mezzfinancing or JV partners, or a combination of the three, says AdamPetriella, senior director of Finance & Investments in Marcus& Millichap's Los Angeles office.

Supply of such capital is responding to the growing demand, hesays. "There are more sources of equity and mezz financing todayout there, compared to a year ago. Some are banks seeking tocapture new business by lending off of their balance sheets, andsome are non-regulated funds chasing yield that understand realestate."