WASHINGTON -- Industry executives and developers are saying thecommercial real estate cycle may have reached its peak and ascale-back could come in 2007.

The finding comes from a survey from the Urban Land Institute, aplanning and research group and PricewaterhouseCoopers. More than600 developers, investors, brokers, consultants and lenders weresurveyed this summer for the "Emerging Trends in Real Estate 2007"report.

Commercial real estate is starting to return to anincome-producing investment versus an appreciating asset class, thesurvey found. Still, high construction expenses are one of thereasons that commercial real estate cash flow will continue togrow. The main difference between the commercial real estate marketand the residential market has been supply and demand being linkedto rents and vacancies, not rising interest rates that have led toa cooled housing market. Those surveyed said a pullback in 2007will result in higher capitalization rates by as much as a 0.7percentage point in certain property types.

Seattle was deemed the best market to invest in right now due toan expected rise in office rents and the prediction that it will bebest potential of any American city to benefit from growth in Asia.Other cities listed as "global pathways" were New York, SanFrancisco, Los Angeles and Washington. Philadelphia and Chicagoreceived low investment marks because of economic problems andtheir inability to compete with other cities like New York andWashington, the survey showed.