Boston is one of 20 major cities in the nation that are expected to see Class A rents increase by 5 percent, according to a new commercial real estate study.

While concerns persist that the economic expansion will slow in 2007, commercial real estate continues to ride the momentum of five consecutive years of investment gains and solid market fundamentals, according to a study by Coldwell Banker Commercial and the National Real Estate Investor.

“In virtually every market in the country and in every product type, we are moving from recovery to a period of expansion,” says Richard W. Davidson, president and chief operating officer of Coldwell Banker Commercial.

The study included the opinions of 294 industry professionals and was conducted in the fourth quarter of 2006 as the economy grew at a pace of 3.5 percent. If housing and automobile data was eliminated from the calculations, the gross domestic product – one of the ways to measure the size of the economy – rose by 5.8 percent.

Five central business districts – Seattle, San Francisco, Miami, New York’s Midtown and San Jose, Calif. – should post double-digit gains in Class A asking rents in 2007, according to the survey. Meanwhile, 20 other major U.S. cities – including Boston – will enjoy rate increases of at least 5 percent, the survey said.

Still, employers are cautious in hiring as they consider the possibility of a slowdown in 2007, according to Kenneth Mayland, president of Ohio-based ClearView Economics. The triggers that would halt expansion – excessive inflation, inventories, and personal and company debt – have not yet been tripped, he noted.

Against that backdrop, the survey asked developers, owners, managers and corporate real estate professionals to answer key questions facing them. Among those questions: How will corporations balance portfolios with market conditions? What will be the greatest influences on site selection in the coming year?

The findings include:

• Corporate respondents said they plan to be involved in more transactions in 2007 than in 2006. Nearly 71 percent of respondents plan to purchase real estate in 2007, up from 49 percent in 2006. Similarly, 63 percent plan to sell commercial real estate this year, up from 40 percent in 2006. Moreover, 55 percent of corporate respondents plan to develop commercial real estate in the next 12 months, up from 36 percent last year.

• Approximately three-fourths of the corporate and developer respondents expect their real estate portfolios to increase in 2007. The median portfolio size of corporate respondents is 475,580 square feet.

• Both groups of respondents who plan acquisition, leasing, development and disposition activity in 2007 say those efforts will be divided fairly evenly among the multifamily, office and retail sectors.

• In the process of site selection, corporate respondents say their top four influences are occupancy costs (69 percent), the local economy (67 percent), cost of land (57 percent) and population growth (47 percent).

• About 57 percent of developer respondents say over half of their new development activity is speculative versus build-to-suit. Furthermore, 27 percent said all of their new development is speculative.

Strong market fundamentals and capital flow are giving the market continued momentum, according to Coldwell Banker Commercial’s Davidson, but cap-rate compression has pushed some investors from buying and into the development arena.

Spot overbuilding is a possibility in 2007, but it is less of a concern than in the past because capital sources are much smarter and more sophisticated, he noted. “A significantly larger percentage of investors have a more guarded approach to the market today,” said Davidson. “I believe this dynamic will soften the future cycles of our industry.”

Although still in relatively good health, the retail sector saw an increase in vacancy rates last year compared with improving fundamentals for all other product sectors.

“Of all the product types, retail is the most vulnerable,” noted Davidson. “Delivery of retail space in 2007 and 2008 is projected to be strong and could have a negative impact on rent growth and overall returns.”

In the wake of the housing slide, retail starts dropped 2 percent to 300 million square feet in 2006 and will drop to 278 million square feet in 2007, according to a report from McGraw-Hill Construction. That space is expected to come online over the next two years.

In contrast to the lukewarm retail sector, hotels were the darling of the investment party in 2006. In the survey, 29 percent of corporate respondents and 11 percent of developers said they plan activity in the hospitality sector over the next 12 months.

“The hospitality industry continues to improve,” Davidson says. “Limited-service hotels especially have done very well. Revenue per available room growth is up across the board and the future fundamentals for this sector look good.”

Overall, 59 percent of the 2007 survey respondents plan to increase holdings in secondary markets, while a majority of the corporate respondents and nearly half of the developer group said they’ll increase their primary market holdings.

“Sticker shock and cap rates in primary markets have pushed many investors into secondary markets,” says James Costello, vice president and senior economist with Boston-based Torto Wheaton Research.

Nearly three-fourths or 73 percent of developer respondents said that real estate fundamentals, such as rental and occupancy rates, weigh heaviest in their decisions to develop, acquire or dispose of property, the survey found. Other frequently cited factors include market fundamentals (61percent), interest rates (52 percent), availability of capital (50 percent) and the national economy (31 percent). Job growth landed near the bottom of the list at 22 percent.

Tenant creditworthiness was cited by 23 percent of respondents.

“I am surprised by this response, as the creditworthiness of a tenant is a key component in underwriting asset value,” said Davidson. “I think this speaks to the amount of capital in the market today and the appetite for investment.”

Nearly 70 percent of corporate respondents listed occupancy costs and the local economy as the top influences in site selection. Those concerns outweighed commuter times and tax incentives.

As corporations look for ways to streamline costs, sale-leasebacks are one strategy to free up cash and get real estate off their books, the survey found. One-third of all respondents have entered into a sale-leaseback transaction, and 14 percent of corporate respondents and 12 percent of developers expect their use of sale-leasebacks to increase in the next three years.