Top execs find market high is infectious.

Cautious optimism--which defined the U.S. commercial real estate market for much of the last decade--of exuberance, according to respondents of a national survey conducted by global law firm DLA Piper US LLP.

The survey, measuring the attitudes and perspectives of 274 top executives within the commercial real estate industry, reveals that abundant capital flows from both private equity funds and traditional lending sources have spurred an insatiable demand for real estate assets as 78% of respondents describe their 12-month outlook for the U.S. commercial real estate industry as "bullish," up from 43% in 2005.

When asked the primary reason for their confidence, 48% cited the continued growth of the U.S. economy.

Building upon the momentum generated by the historic number of transactions that occurred in 2006, culminating with the blockbuster $39 billion acquisition of publicly traded Equity Office Properties by private equity firm Blackstone Group, nine out of 10 respondents expect that the public-to-private M&A trend will continue in the coming year.

When asked the reasons for this continued trend, respondents cited a confluence of key factors driving the record number of public-to-private deals, led by private equity funds willing to pay a premium for real estate assets, cheap rates in the debt market and the public markets undervaluing REITs.

"The growing influence of private equity capital in the real estate markets is unmistakable, yet the overwhelming spike in optimism throughout the industry is surprising at a time when some industry experts fear that pricing may have peaked and there is also new evidence of a slowdown in the U.S. economy," said Jay Epstien, chair of DLA Piper's U.S. Real Estate practice group.

"It is also interesting to note that the majority of executives believe the public-to-private consolidation trend, which has been dominated by many of the largest players in the industry, will create an abundance of opportunities for the smaller players, not just the large investors."

According to DLA Piper, the survey captured a number of other surprising conclusions throughout the industry, including:

* Despite the greatest cap rate compression in the history of the U.S. commercial real estate industry, 10% of respondents believe cap rates will dip further into historic lows while 72% do not expect any significant changes.

* Perhaps as a direct consequence of the slowdown in the single-family residential housing market and the subprime lending situation, multifamily continues to be the most attractive real estate investment opportunity in the coming year as 26% of survey respondents chose multifamily over other investment options.

* Lower than expected investor interest in Eastern Europe and Russia at a time when many U.S. investors are active in those markets.

In addition to the raw data captured, survey respondents shared some interesting perspectives when asked to reveal their thoughts on the impact of the public-to-private M&A trend.

One respondent aptly described this trend by saying, "No deal is too big." Another respondent added, "It will serve to increase activity in the near term as any public company is now fair game to be taken private."

The survey coincides with DLA Piper's 2007 Global Real Estate Summit held in Chicago on May 1 and attended by many of the executives included in the survey.