DALLAS-As 2007 inches closer, local experts for the commercial markets are wholeheartedly convinced investors will continue to look favorably on Dallas/Fort Worth. At least one outsider, though, has a word of caution.

“It’s still a tricky market. You’ve got to get in and out of Dallas,” Casey Wold, senior managing director of New York City-based Tishman Speyer Properties, told the record-breaking crowd of 500 at yesterday’s general meeting of the Real Estate Council in the Westin Galleria in North Dallas. Joining Wold on the panel was Steve Van Amburgh, CEO of locally based Koll Development Co.; Mark Gibson, executive managing director for Holliday Fenoglio Fowler LP; and Donald Miller, chief real estate officer for Atlanta-based Wells Real Estate Funds. Hillwood Investments CEO Todd Platt was the moderator.

Despite Wold’s caution, Gibson stressed “the institutional market actually looks on Dallas very favorably.” So much so that coastal owners, both domestic and foreign, are shopping streets in Texas and other central US states. Although their expectations for returns might be lower due to market conditions, they still expect to see rent growth.

Rising construction costs, here and elsewhere, have a chokehold on growth. “It’s putting a lot more risk in our pockets,” Van Amburgh said. “The end result if rental rates aren’t rising, and construction prices and labor costs are, the one question is it worth it to build. The risks aren’t being spread around.”

The laundry list of concerns included cap rate compression, interest rate hikes and event-driven threats. Nonetheless, real estate allocations are rising, with billions stacked up in queues waiting to join in a pool. Gibson predicted the year will top out at $300 billion of capital transactions, up $25 billion from 2005 and $120 billion more than the year before. “The challenge is real estate has been priced to perfection,” he said.

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