It's no secret that the U.S. commercial real estate market is down–down by a lot in most regions–from the peaks reached in 2006 and 2007. But considering the fundamentals, the current cycle looks a lot better than past downturns, according to Susan Smith, manager of the real estate services group at PricewaterhouseCoopers. New construction, on a whole, has been restrained and cash flow assumptions on the part of real estate investors are more realistic. "The market is poised to rebound once the economy turns around," says Smith. "Investors are finding comfort from the notion that the fundamentals are still much better than they were during the last downturn in the mid-1990s."

That doesn't disguise the fact that commercial sales are looking grim, compared with the recent past, a fact that is supported by the just published PricewaterhouseCoopers Korpacz Real Estate survey. Office space, for example, took an 80 percent hit in the 12-month period from April 2007 to April 2008, compared with a huge 182 percent gain in the same period from 2006 to 2007, according to Real Capital Analytics, whose data is sourced in the survey. Industrial property sales fell more than 67 percent by the first quarter of 2008, compared with a 43 percent rise in the prior period. Smith, who is the survey's editor-in-chief, points to the ongoing credit crunch, tepid tenant demand and declining rent growth. "We are definitely in a downturn," says Smith.

Meanwhile, foreign investors are taking advantage of the weak dollar to scoop up U.S. assets, with high-quality properties in top-performing markets faring the best. Middle Eastern and Australian investment now outstrips that made by German investors, who had been big buyers before the downturn. Moreover, there is a steady flow of new buyers from all over Europe.