Land sold for commercial development accounted for 22.9% of real estate investment nationally in first quarter 1998, an indication that the market will remain strong throughout the next few years, according to transaction data compiled by the Commercial Investment Real Estate Institute (CIREI) and Landauer Associates, Inc.

The first quarter land sales data, released in the organizations' CCIM/Landauer Investment Trends Quarterly, slightly eclipses fourth quarter 1997 figures, when land accounted for 22.1% of all transactions.

"This trend is a clear indication that there is robust commercial development yet to come in 1998 and 1999, especially on smaller land parcels," said CIREI President Dewey Struble, CCIM. "While construction starts are significantly below the speculative peaks of the 1980s, the market remains highly competitive, and land prices continue to rise."

The CCIM/Landauer survey, which is based on a broad-based national sampling of $4.529 billion in first quarter transactions involving the six major commercial property types, revealed that the average price per acre for raw land was $70,602, compared to $64,359 during fourth quarter 1997.

Of the land transactions analyzed in the survey, developers and owner/users demonstrated the most activity, with 30% and 22% of transactions, respectively. Real Estate Investment Trusts (REITs) continued to be the major investors, spending an average of $12.13 million per transaction. From a regional perspective, the Southeast remained the most active area of the country with 39% of national land deals.

"It remains to be seen whether the enthusiastic buying and selling of land is well-founded," said Hugh Kelly, executive managing director of Landauer Associates, an international consulting firm. "Certainly, there will be niches in the market that will require additional development. But with overheated construction already occurring in some metro economies, investors should take care."

Other highlights of the CCIM/Landauer Investment Trends Quarterly for first quarter 1998 include:

-The intense capital flow and focus on larger properties kept capitalization rates down. The average cap rate was 9.8%, marking the second consecutive quarter under 10%.

-Investors showed renewed confidence in shopping centers, which captured 17.2% of first quarter deals and 15.1% of dollar volume.

-Offices remained the top property type, accounting for 40% of first quarter sales volume.

-REITs supplied approximately 34% of the total investment volume, despite the fact that stock prices for the trusts dropped 3.7%.

-The hotel boom of 1997 showed signs of fading amid warnings that construction is outstripping demand. Hotel transactions accounted for 6.8% of national deals.

The CCIM/Landauer Investment Trends Quarterly survey is compiled from a broad-based sampling of $4.529 billion in commercial real estate transactions throughout the United States, the majority of which have been reported by Certified Commercial Investment Members (CCIMs). The complete 36-page study, including graphs, is available through R.J. Sirois (312-321-4494 or rsirois@cirei.com) or Edward Bury (312-321-4481 or ebury@cirei.com) at the Commercial Investment Real Estate Institute.