Brave new world of investment sales.

The New York City investment sales market set records in 2006 and brokers haven't been bashful in forecasting more of the same for 2007.

While their expectations would have seemed outlandish even in recent years, such projections have become the norm in a market that has been flooded with an unprecedented amount of capital seeking a home in real estate investment.

"I think we're in store for more of the same in 2007," said Robert Knakal, chairman of Massey Knakal Realty Services, a leading investment sales brokerage in the city that primarily handles the sale of properties under $100 million. "Whenever I have conversations with the banks, it's always that they haven't invested as much as they want into real estate.

The fact that they are so eager to lend is what is helping drive the demand because capital is so prevalent. So I think that from a demand perspective, it's going to continue to be tremendous."

But a perennial concern among brokers threatens to toss a wrench in what would otherwise appear to be boom times.

Even amid a market in which a record shattering $30 billion of real estate was sold last year, there are fears that the supply of property for sale won't continue to accommodate the kind of transactional volume that firms who handle smaller deals rely on in place of brokering a fewer number of larger and more lucrative transactions.

The city's limited stock of available assets is far from a new phenomenon, but Knakal says that the relative scarcity could become a more pronounced impediment to growth in the brokerage industry because of an ongoing shift in the profile of real estate investors to a group with a preference for holding properties rather than selling.

Knakal, whose firm handles a higher volume of deals than any other brokerage in the city, says that most sales transactions, particularly in the boroughs, are just a few million dollars and are being sold by owners who have long held their property and only own that single asset.

In short, they are a group that basically isn't active in real estate investment. These owners are actually more consistent sellers because they often lack the sophistication or financial wherewithal to refrain from unloading properties in a depressed or struggling real estate markets and are also eager to capitalize on the value of their asset when values are high.

Not surprisingly then, the current appreciation of real estate values has fueled a large volume of transactions especially in the first half of 2006 according to data compiled by Massey Knakal.

But unlike in years past, when such sales would usually transfer a property from one amateur investor to the next, Knakal indicated that institutional investors have now stepped in to become prominent buyers of the small office properties, apartment buildings and warehouses that used to be the exclusive province of small-time real estate owners.

"You have pension funds that will invest now in a five story walk-up in the Bronx, it's incredible, that never would have happened even a few years ago," Knakal said.

The effects could have a profound impact on the brokerage community because institutional investors tend to hold onto properties for prescribed periods of time depending on the property type and the individual company's investment strategy. While the current market is strong, Knakal said that it isn't difficult to envision a future where more properties are owned by a vastly consolidated group of owners who sell their properties far more infrequently.

"It's really interesting to think where brokerage will be decades from now," Knakal said.

"Things are great now, but there is this consolidation that's going on among real estate owners, eventually, maybe a few decades from now, I think we're going to see less brokerage firms."