On the other hand, fixed-rate borrowers should not feel anyimpact, he adds. "The impact for fixed-rate borrowers has takenplace over the last 12 to 13 months as rates have increased withthe expectation that the Fed would begin to tighten," Gabrielexplains.

The industry insider doesn't expect a significant impactnow--but that depends on how quickly rates increase versus theimprovement of fundamentals. "As job growth continues and theeconomy continues to improve occupancy rates should continue toimprove and we should see a return of rental-rate growth and theelimination or reduction of concessions with respect certainly tooffice leasing," Gabriel says. "To the extent that those benefitsappear sooner, or more rapidly, than rates increase I think therecould be a positive impact, generally speaking, on the market. Ifrates move up faster than the fundamentals improve I think you canhave a negative impact on price."

Not that Gabriel predicts this will happen in the near future."In the four- to six-month time frame in an election year I don'tsee much changing of a significant nature on the interest ratefront," he adds. "I think the allocations for real estate, whichare made near the end of the prior year, are out there and are outthere to be spent. So for the balance of the year I think we'll seea fairly firm market from a pricing perspective."