Pacific Investment Management Co. (Pimco) released their analysis of the commercial real estate market this week, saying that unemployment and property price uncertainty will continue to put a damper on recovery.

A Wall Street Journal article outlined the key findings:

–Capital has returned to commercial real estate. “But optimism should be tempered, because national price indices are misleading when transactions are limited and fail to reflect the significant uncertainty around property valuations,” the report said.

–The transfer of commercial real estate risk out of the banking system may take longer than previous cycles, and as a result, prices won’t return to 2007 levels only toward the end of this decade.

–Macroeconomic factors such as unemployment will affect the outlook for rents, vacancies and capitalization rates.

Pimco suggests there are opportunities for patient investors as the deleveraging continues. Some of the options include dispositions of the assets of banks taken over by the Federal Deposit Insurance Corp., restructuring of large commercial loans and buying discounted subordinate positions in commercial mortgage-backed securities.

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