Report author Josh Gelormini, vice president of research forJones Lang's capital markets team, predicts volume will continue tobe much lower into 2009. Though he notes potential for someacceleration in second half of the year, he says it won't besufficient to return transaction volume to previous levels.Furthermore, he says preliminary data suggests the drop-off in dealvolume will be more severe in Q2 than in Q1, as the US and Europeaneconomies worsen and Asian markets begin to suffer from the creditcrunch and global repricing of risk.

Earl Webb, the firm's CEO of capital markets, attributes thedecline partly to a pricing correction stemming from certaineffects of the credit crunch, including tighter lending standards,a substantially smaller and more narrowly focused conduit lendingmarket and sharply higher spreads. As a result, he says, leveragedbuyers must contend with a higher cost of capital, limiting howmuch they can pay for an asset. He says most sellers, on the otherhand, are reluctant to market properties at present because theyhad set their sights on the hefty sale prices obtained at the peakof the real estate cycle.