Debt Is Still Plentiful for Commercial Property Investment.

New York -- Vacancy rates in office markets nationwide continue to decline, while debt and equity capital continue to flow into the commercial real estate sector, according to a PricewaterhouseCoopers fourth-quarter 2005 real estate investor survey.

Last year, 75% of downtown office markets saw year-over-year declines in overall vacancies, compared to only 25% that saw such declines between 2002 and 2003, according to Peter Kopacz, director of PWC's global strategic real estate research practice.

As well, in the suburban office market sector, 80% of markets saw year-over-year vacancy declines for 2005, compared with only 29% between 2002 and 2003.

"As vacancy rates continue to edge down in each sector of the industry and with alternative investment options still being viewed dubiously by investors, capital continues to flow into each sector of the real estate industry from a range of sources - private, public, institutional and especially foreign investors," Mr. Korpacz said.

This quarterly survey of real estate industry professionals also found that as consumer spending continued strong in recent months, in spite of higher energy prices, many regional mall tenants are seeing "impressive" year-over-year gains in retail sales.

And the multifamily sector has benefited from high home prices, soaring construction costs and rising mortgage rates.

These factors have combined to increase demand for apartment properties in recent months. Another finding is that as industry fundamentals continue strong, many developers are looking at opportunities for new land development in each of the commercial property sectors. The survey also came up with different findings by sector.