Real estate is continuing its rebound, but the industry is changing and investors must adjust to a set of new realities.

"It's just not business as usual," according to Emerging Trends in Real Estate 1996, the annual forecast published by Equitable Real Estate Investment Management Inc., Atlanta, and Real Estate Research Corp., Chicago

The "do not disturb" sign once placed on real estate is down, as a once largely private endeavor becomes a very public one, with institutions and public markets crowding out entrepreneurs. Technology's impacts are wide and varied. And today's investing just will not fly on instinct.

Key indicators predict a possible third consecutive solid year for investors with double-digit returns, according to Emerging Trends, which is based on interviews and surveys conducted with more than 150 leading real estate experts and investors. This time around, the authoritative annual publication, now in its 17th year, finds positive currents and forces unmistakably at work in commercial real estate, such as strong returns and solid portfolio income levels, upward-trending rents, continued restraint in development, low interest rates and capital flows that are ample, yet disciplined.

Says Douglas A. Tibbetts, president of Equitable Real Estate, "The people who participate in our survey - and they're some of the industry's brightest and best - are saying in effect, `Proceed with caution, and we could have another good year."'

Kenneth P. Riggs, who heads Real Estate Research Corp., sees evidence that owners are going back to basics to nurse the recovery. "They know that breaking out the construction cranes would undermine the whole thing," Riggs says.

While Emerging Trends likes what it sees, what it sees calls for selectivity, restraint and comparatively modest expectations.

At this point, there is little in the cards that could pass for gourmet opportunities. In contrast, the publication sees a major part of Center Stage 1996 being taken over by what it aptly terms "lunch-bucket asset management" - concentration on building lease-up, shopping center remerchandising and hotel renovation - the sort of grind-it-out approach to business.

A distillation of the positions taken by the 150-plus domestic and foreign real estate, financial, pension investment and institutional players who participated in the new Equitable Real Estate/RERC survey yielded these words to the wise regarding a fast-changing marketplace:

"Buildings depreciate as easily as they appreciate; the life cycles of office properties have shortened and become vulnerable to on-charging computer technologies; value creation is more a matter of reworking existing product than building new; per-capita office space is shrinking as the corporate fraternity strives to do more with less; and historic dominance of less-than-super regional shopping malls may weaken as retailers consolidate and shopping networks gain."

Real estate investors are about to learn that "location location location" can no longer suffice, according to the publication. These days it takes more hard knowledge and less reliance on intuition. In this environment, basic buy-and-hold and the erstwhile automatic appreciation of buildings no longer hold water.

Obsolescence will rear its head, as building longevity becomes more and more a product of how well properties can accommodate the systems and technologies on which future tenants will insist.

But in spite of these scattered downers, Emerging Trends finds the real estate industry's overall mood healthy, buoyed by increasing confidence that the markets will not overheat and a degree of discipline that will enable potential investors to just walk away from overpriced and iffy deals.

In most sectors and markets, the word is that the window for really opportunistic (vulturistic?) investing is just about shut. A goodly amount of cash is available, as prices ratchet up and returns plummet.

In general, 1996 figures to be a solid, if unspectacular, year for acquisitions, with stable cash-on-cash returns and a good chance for appreciation over holding periods.

But, while the industry is trending upward overall, it is important to bear this fact in mind: Each category of product currently occupies its own position on the recovery scale at this point, with some out front and others lagging.

The most promising categories are industrial/warehouse, apartments and suburban office. Among industrials, stability of income, falling vacancy rates and tight supply are doing the trick.

Apartments score well in Emerging Trends, rating almost up there with industrials as acquisition opportunities because of their continuing excellent returns. But there is some evidence that this category may be about to begin cooling off.

Suburban office definitely finds survey participants on the bullish side as vacancies head down and rents go up. Prices are rising with investors flocking in, but plenty of product still trades below replacement cost.

There are also some good buys out there in CBD Class-A office properties, but only in the those few markets that show companion strength in residential - forming a rare combination that were designated "24-hour cities" last year. Tenants' growing interest in lower rents will lend a certain unaccustomed cachet to Class-B buildings, but it is still best to walk on by Class-C.

With strong value gains foreseen over the coming decade, hotels also loom as worthwhile investment candidates. Important pluses here include little near-future development and occupancies and room rates that are rising in lockstep. To quote Emerging Trends, "Great deals are still available in this sector."

While the yet-to-crest wave of expansions and startups in high-tech and bio-tech points to R&D assets as desirable buys, the consensus of survey participants is that retail is clearly on the risky side.

On the whole, annual mall sales have barely advanced for five straight years, and changing trends and demographics seem to have this key industry somewhat off balance and looking for formulas to get back on track. Sure, the dominant-regional super-centers still seem safe enough, but after that the crystal ball clouds up in an overdose of lower grade regional malls, power centers and outlet centers.

Owners (AKA: borrowers) should he in the driver's seat in 1996, what with low interest rates and a herd of eager lenders with money available at narrow spreads over Treasuries. Is this a prime time to increase risk-adjusted returns by leveraging acquisitions? It certainly looks that way.

The real estate picture takes on an even rosier tint when Emerging Trends looks at the investment prospects of major metropolitan markets, with solid gains reported coast-to-coast and almost wall-to-wall.

Twelve of the 16 cities surveyed show improved ratings, one holds steady and three decline. In the metro markets column, Atlanta moves from second place to first, bumping Washington down to sixth. At the bottom of the list sits Philadelphia, dropping a notch from 1995.

The 48-page Emerging Trends report, which is co-published by Equitable Real Estate and Real Estate Research Corp., is available at a cost of $25 per copy by writing to Emerging Trends, 787 Seventh Avenue, New York, NY 10019.

We here at National Real Estate Investor understand the concern of our readers over ham processing plants and where they stand. Well, it looks as though we can all relax. The new Plumrose USA Inc. facility, owned by Vestjyske Slagterier of Denmark and designed by The Stellar Group, will "incorporate the Danish tradition of high quality, low maintenance materials with the extensive use of stainless steel for wall panel, interior curbs, doors, guard posts, trench drains, piping conduit and devices."

Plumrose has begun operations at the ham slicing and packaging plant in Booneville, Miss. We think the above picture is such a brilliant display of the actual inner workings of ham processing, and we'd just like to say, "Good Job!" to the under-respected ham processors of the world.