2006 Real Estate Investor Outlook Survey by Marcus & Millichap and National Real Estate Investor Cites Strong Investor Concern over Rising Interest Rates; Buoyed by Improving Fundamentals, Investor Demand to Remain Strong in 2006.

NEW YORK -- Marcus & Millichap Real Estate Investment Brokerage Co., the largest commercial real estate brokerage in the nation focusing exclusively on real estate investments, today announced the results of the 2006 Real Estate Investor Outlook, an exclusive annual survey conducted in partnership with National Real Estate Investor. As the largest survey of its kind, the 2006 Real Estate Investor Outlook reveals specific future investment trends across the retail, office, mixed-use, multi-family, and industrial sectors.

Commented Harvey Green, president and CEO of Marcus & Millichap, "We are in the ninth year of a rising real estate market. We have seen some compression of cap rates, obviously price escalation, and then a downward movement in interest rates. So, it continues to be a white-hot investment market."

While close to 70 percent of those surveyed responded that they plan to increase their commercial real estate investment in the next 12 months, a continuing theme of caution was revealed throughout the survey, with over 60 percent of the respondents citing rising interest rates and unforeseen shocks to the economy as their top concerns for 2006.

Among the study's other major findings:

--Investors with large commercial real estate holdings are likely to diversify across all property types, with the majority (58%) investing in apartments

--Within the next 12 months, 82% of the respondents expect an increase in effective rents and 73% expect an increase in overall property price

--More than half of the respondents (52%) plan to acquire properties specifically for redevelopment, renovation or expansion. Two thirds of developer respondents (67%) plan to acquire properties for this purpose

--The largest percentage of respondents (41%) predicts the economy will be stronger 12 months out

--Over one-third surveyed (36%) anticipate debt financing will be harder to secure 12 months out

--The majority of respondents believe that the 10-year treasury yield will need to reach 6.5% to adversely affect the real estate investment market

--Nearly half (45%) of respondents believe the housing market is experiencing a pricing bubble those who see a bubble expect the pricing correction to be modest (10-20%)

"As long as interest rates rise in an orderly, measured fashion, and this happens along with improvements in occupancies and rents, it is not going to create a major disruption in the investment market," added Hessam Nadji, managing director, research services for Marcus & Millichap.

"We might see a little flattening trend in 2006 with for sale properties staying on the market a little longer and prices moving 10 to 15 basis points here or there. But overall, I think the investment market in 2006 is going to be within 90 percent to 95 percent of where it is at today," concluded Mr. Green.

Data for the survey conducted by Marcus & Millichap Real Estate Investment Brokerage Co. and National Real Estate Investor was collected between August 4, 2005 and September 15, 2005. Cover letters and questionnaires were mailed to 10,000 public and private real estate investors - 5,000 Marcus & Millichap private and institutional clients and 5,000 domestic subscribers of National Real Estate Investor. The purpose of the study was to examine the current real estate investments among Marcus & Millichap clients and National Real Estate Investor subscribers and to investigate respondents' opinions regarding the trends in the industry for 2006. A total of 1,167 usable entries were tabulated.

Complete results of the comprehensive 2006 Real Estate Investor Outlook survey can be found online at www.marcusmillichap.com.

About National Real Estate Investor

National Real Estate Investor is the business magazine that follows the money in all classes of commercial real estate. It is the leading authority on trends in the real estate markets, providing top-level executives with in-depth analysis of important developments in the industry. Its audited readership represents a cross-section of disciplines: brokerage, construction, development, finance/investment, property management, corporate real estate, and real estate services. No other publication provides as much independent research on the topics that pertain to the office, industrial, retail, hotel and multifamily markets as National Real Estate Investor. Integral to this coverage are the weekly NREI Newsline e-newsletter and daily postings on the Web site, www.nreionline.com.

About Marcus & Millichap

With more than 950 investment professionals in offices nationwide, Encino, Calif.-based Marcus & Millichap is the largest commercial real estate brokerage in the nation focusing exclusively on real estate investments. Founded in 1971, the firm has perfected a powerful system for marketing properties that combines product specialization; local market expertise; the industry's most comprehensive research and analysis capabilities; state-of-the-art technology; and established relationships with the largest pool of qualified investors nationally. To learn more about the firm or to access research reports on markets nationwide, visit www.marcusmillichap.com.