Considering the beating commercial real estate took in the financial crisis and economic downturn of 2008-09, you won’t find many analysts getting cocky about a rebound, especially outside of big markets.

There is reason for optimism, however. Much of it stems from encouraging data in 2010. Sales picked up substantially. In many areas prices improved, as did vacancy rates.

Of course, many improvements were due to easy comparisons vs. 2009, so dreary for commercial real estate it left little place to go but up.

“The outlook in terms of sales and liquidity is much better now than it was a year or two ago,” said Matthew Anderson, managing director at real estate data provider Trepp. “But it’s not that hard to be better — you’re coming off a very low base.”

Rebound Ride

Sales of commercial properties more than doubled last year to $134.1 billion, according to Real Capital Analytics, which tracks deal sizes above $2.5 million. Sales topped $27.4 billion in December, the most active month since 2007.

Ben Thypin, market analysis director at the research firm, acknowledges that “things are better,” given the robust rise in sales volume.

But, he said, “pricing has not really increased on the same scale. And a lot of the deals we see now are taking place in primary markets, with high-quality properties.”

The rebound has yet to spread beyond that, though Real Capital’s report shows positive trends in 2010:

• Property portfolio sales rose nearly threefold from 2009.

• Average deal size increased to $18 million vs. $11 million in 2009.

• Strong gains in deal counts and sizes were seen in the office, hotel and apartment sectors.

Similar glad tidings are being reported by other market researchers.

In a 2011 real estate financing outlook, real estate services firm Jones Lang LaSalle noted an ongoing recovery in the market for commercial mortgage-backed securities.

Last year, new CMBS issuance in the U.S. rose fivefold from a stalled 2009 to $10.9 billion. This year it is seen topping $40 billion.

“The CMBS market has really come back strong,” said Tom Fish, co-head of JLL’s real estate investment banking group. “Demand has begun to exceed supply.”

One thing helping CMBS is that defaulted-loan recovery rates are “exceptionally high” vs. expectations in the slump, Real Capital says.

Building owners have reason to be pleased as sales and lending patterns inch back toward normal, at least in some markets. It’s easier to refinance and maybe profit at sale.

A report by Wells Fargo Securities highlights a 19% rise last year in sale prices of commercial properties in the National Council of Real Estate Investment Fiduciaries database. It was the second-largest yearly gain in the series, which tracks buys by nonprofit institutional investors.

This likely shows demand for marquee properties in top spots, Wells says. But distressed properties and too-high vacancies remain as loan delinquencies keep rising.

Can Tenants Haggle?

In many areas, tenants have an upper hand negotiating rents. But this varies by sector, and leverage declines as fundamentals improve.

“Core portfolio fundamentals (for shopping centers) continue to show positive signs, with improvements in shop leasing, evidence of lower move-outs, and positive absorption,” Citibank analyst Michael Bilerman said in a recent report.

Office and industrial markets lack that strength, especially outside New York, Washington and Boston.

“The office sector is still flat to down,” said Trepp’s Anderson.

Apartment rents, already rising, are forecast to gain steam.

Real estate investment trusts show signs of recovery, but they too have far to go. IBD’s Finance-Property REIT group hit a 2 1/2-year high Feb. 18. But it ranks 163rd of 197 groups tracked. Up 25% from a year ago vs. the S&P 500′s 18%, it lags year-to-date.

Part of REITs’ rise, Anderson says, is a correction from too much punishment by Wall Street when the group bottomed in 2009.

“To some extent, investors overdid it on the way down,” he said. “Now there is greater recognition among investors that REITs won’t be crushed by debt. They feature relatively low leverage and their balance sheets aren’t overly stretched.”

The largest REIT in IBD’s group is shopping center giant Simon Property Group (SPG). This week, Simon shares neared a $109 high notched in 2007, then slipped below $105. A year ago they undercut $80.

Analysts polled by Thomson Reuters expect Simon to post double-digit earnings growth over the next three quarters. It hasn’t had such a run in years. Other retail REITs are forecast to see gains as well.

What of the commercial real estate market as a whole? Anderson expects growth to be “quite muted.”

“From 2000 to 2008 you saw the market grow by over 9% annually in dollar amounts outstanding,” he said. “We expect the next decade to be pretty flat. It will probably resemble the 1990s, when growth was a little under 1% per year.”