Analysts at Milwaukee-based Robert W. Baird & Co., in astudy that examines all categories of REITs, say they continue tolike "out-of-favor suburban office names" that nonetheless hold thepotential for significant earnings improvements once the capitalmarkets stabilize.

One reason for the Baird analysts' preference for suburbanmarkets is their view of suburban versus CBD markets. "Contrary topopular opinion concerning the supply-constrained nature of CBDoffice markets, it appears these markets may in fact have moresupply as a percentage of inventory than suburban markets,"according to their report.

The Baird report cites Corporate Office Properties Trust ofColumbia, MD, which owns suburban holdings like InterQuest BusinessPark in suburban Denver; along with Indianapolis-based Duke RealtyCorp. and Los Angeles-based Kilroy Realty among the office REITsthat it expects to outperform the market. Comparing office REITs toREITs in other property sectors, the Baird analysts say that theyexpect healthcare, student housing and storage REITs to be the bestperformers among the property classes, but they expect that allother categories of REITs--including office--will offer stablereturns despite the economic and real estate downturns.