According to the report, the volume of investment transactions is likely to stabilize in 2007 following five consecutive years of gains, but it will stabilize at a high level. If interest rates and cap rates remain well-behaved in 2007, as expected, then the income component of the total return equation will once again eclipse the appreciation component, and real estate will return to its historic role as a solid income-producing investment with a small appreciation kicker

We’re not seeing the kind of “diversity” of opinion in the outlook for U.S. commercial real estate in 2007 that we are seeing in residential real estate. Most everyone is rosy about commercial.

Dallas/Fort Worth, Phoenix and Houston also make the list by virtue of surging population and employment growth, healthy expected rent growth in 2007 and still reasonable cap rates.