"Investors feel that they've turned the corner and they can seethe light at the end of the tunnel—it's just that the tunnel isvery long," says Smith, director of PwC's real estate advisorypractice and editor of the survey. "It'll take a while to reachthat light, but at least they can see it." The pessimistic tone ofvoice that Smith heard when conducting interviews for the fourthquarter 2009 survey is "gone" now.

As an illustration of investors' greater optimism—as well as oneof the reasons for that positive attitude—respondents in 19 of the30 markets say they expect cap rates to hold steady for the nextsix months. In the survey for Q4 '09, just two markets offered sucha forecast; previously, the cap rates had been on the rise.

Smith says investors are realizing that the economy has beenshowing signs of improvement. "You can see that in some of therecent jobs numbers and retail sales figures," she says. "Some ofthe residential markets have really bottomed in terms of pricedeclines and value declines. All of that is finally tricklingthrough the commercial real estate investors."