The question is, will those ripples build into waves with thepotential to overturn the office and industrial sectors? So far,evidence points to the affirmative. Commercial investors arestarting to pay a steep penalty for the collapse of the residentialsector. We are seeing the beginnings of a negative trend on pricingfor larger transactions because the CMBS market is functionallyfrozen. Lenders are tightening their standards and loweringloan-to-value ratios, which translates to lower sums that borrowerscan use to finance transactions.

But, according to a recent IOREBA member survey, heavy dealvolume in small and mid-size transactions continues, with buyersoutnumbering sellers. However, as these buyers become unable tostretch to make aggressive offers, sellers looking to dispose ofassets of all sizes may need to accept less. With less capitalavailable on the marketplace, both buyers and sellers will facesome significant headwinds going into 2008.

While there are storm clouds on the horizon with respect to theeconomy as a whole, the fact remains that the present market forcommercial properties is fundamentally strong. In fact, the besttime for owners to sell might be right now. We have seen cap ratescompress to levels that were unimaginable only five years ago, soproperties purchased recently can still leave sellers with asubstantial capital gain.