It’s no secret that for quite awhile commercial real-estate transactions, including distressed assets, have been at a standstill. But that could change in 2010, according to a paper released by AlixPartners LLP, the global business advisory firm; in fact, the firm finds that opportunities in CRE could be bigger in the months ahead than even in the heady days of the early 1990s.

“Of course, commercial real-estate fundamentals are still far from good,” said Dennis Yeskey, a senior advisor at AlixPartners and head of the firm’s CRE practice, “but I’ve never seen so much money sitting on the sidelines ready to pounce. For investors and lenders who are able to get their houses in order, from streamlining operating costs to managing capacities, this could finally be a turnaround year. In fact, opportunities out there today could be even bigger for commercial real estate than the early ‘90s were.”

The AlixPartners paper, entitled “Commercial Real Estate: What’s Ahead?,” identifies three factors that might point to an end to the current “gridlock” in CRE. They are:

- Banks moving to rebuild their tier-one capital reserves. With the current cheap cost of debt, lenders this year certainly hope to rebuild their tier-one capital reserves, according to Yeskey. If they are successful, they will increase reserves against their “bad” CRE loans while creating the ability to write-off those loans. This, in turn, will make it easier to perform real debt restructurings and to sell bad loans or underlying foreclosed real-estate assets to investors.

- Returning debt availability led by smaller loans. Even though over the next 18 months more than $1.5 trillion of debt maturities are coming due, the AlixPartners paper predicts that debt issuances will return, albeit slowly, to the real-estate capital markets. Principally, this debt will come from healthy banks (in the form of small loans), larger life insurers, selected new mezzanine investors, mortgage REITs, specialty finance companies and some offshore banks and sovereign wealth funds. Seller financing, along with more conservative underwriting, will also contributing to this trend, says Yeskey.

- Narrowing bid/ask spreads. Because of factors noted above, CRE sellers should be in a better position to lower their asking prices on distressed properties, according to the paper. Buyers, in turn, should be able to increase their offer prices, and thereby narrow the huge bid/ask gaps that exist today.

“We’ve all heard of the famous ‘wall of debt maturities’ out there about to hit so many industries in the next year or two,” continued Yeskey. “Well, that’s true in spades for commercial real estate. Whether real-estate investments are crushed by that wall, or whether they’re able to turn it into a foundation upon which to reach greater heights, depends on acting now, not later, to get in fighting shape.”