In particular, cap rates are forecast to range from 5.5% to 6%for a stabilized, class A office property. By comparison, cap rateswere estimated between 6.5% and 7.5% nine months ago, CBREsays.

Hand in hand with cap rate compression will be a gradual declinein vacancy and uptick in asking rents. Already, the report says,these factors have begun to settle down compared to the sharpdeclines experienced in '09. "As all of the market fundamentalsstabilize, it will make investors more confident," Sean White,senior research analyst at CBRE and lead author on the report,tells GlobeSt.com.

Financing is slowly opening up, albeit on more stringent termsthan before. Investors this year accept that the wide latitudelenders granted three years ago is gone, and are prepared to putmore equity into the deal, says White. Even so, the leverage ratiois on the rise, depending on the asset; it can go as high as 60%and may tick up further, although it's not likely to approach the80% or 90% levels seen at the current cycle's peak.