"Vacancy rates are low and rents are growing in many major markets around the world," said Joshua Daitch, managing director of institutional real estate at Mesirow Financial. "Given the new debt realities, the markets are going 'back to basics' focusing on hands-on asset management to create value at the property level rather than relying on falling cap rates to make returns. This should favor value-added and opportunistic managers in 2008."

Subprime fears this past summer contributed to commercial mortgage backed securities issuances dropping from $40 billion in March to $8 billion in September. Meanwhile, lenders have become highly selective with credit approval and debt spreads pricing risk again. As a result, highly leveraged buyers are being forced out of the market and purchase prices are softening, according to Daitch.

"We are now seeing a return to normalcy where savvy buyers are seeking to grow cash flows as opposed to waiting for further cap rate compression," Daitch said. "Value-added and opportunistic managers are best poised to benefit from this trend because their focus on adding value at the property level. The dispersion of returns between top-quartile performers and median will widen as falling tide will leave many average managers, with recent high, momentum driven returns, wondering what happened."