LOS ANGELES-The room was filled to the brim with more than 6500 attendees at ULI’s Fall Meeting, where Hessam Nadji, managing director of research services, Marcus and Millichap, outlined progress in the commercial real estate markets in what was a generally optimistic assessment of the industry's prospects. Although Nadji started with the negative, pointing out that the economy is still in “stagnation status until elections are over,” he said that there have been significant improvements. “We have lived through major events. It’s no wonder we are dealing with what are dealing with,” Nadji said.

“The last two months were a big test of whether companies were going to panic and lay off, but we have passed a number of critical tests since the downgrade,” Nadji said, a sentiment echoed in his recent Streetsmart blog on GlobeSt.com. “If I had a magic wand, I would fix the short term and then take care of the long term and not try to do both at the same time.”

Nadji cited a number of positive developments that he said are sometimes overlooked in assessments of the US economy. Retail is the dark horse, he said. Retail sales, for example, have recovered from their “dramatic drop.” Retail is sitting on a relatively good footing, he said. “Retail has a tendency to reinvent itself so it is unwise to throw the baby out with the bath water for retail.”

According to Nadji, apartments are the only sector that is in a full-fledged recovery. Industrial is second to follow. And in terms of investment sales, “we have seen the market come back pretty rapidly,” he said.

He also pointed out that corporate profits are well ahead of where they were in 2006. “Capital spending by corporate America is key to sustainable recovery,” he said. In terms of jobs, Nadji expects employment growth to regain momentum in 2012—even if it is just catching up to the long-term average. “I don’t think there will be a job surge,” he said. A couple favorable factors behind his long-term economic and real estate outlook include demographics,” which he said is “a huge positive.”

In a panel following Nadji’s market overview, titled: “Industry Trends: Where are We Now and Where are We Going?” panelist Howard Roth of Ernst & Young, kicked off by asking panelists about the “pause in the market” that has been felt all around over the past 60 days. John Miller, senior managing director of Tishman Speyer, pointed out that starting in August, he noticed a significant slowdown in the pipeline in the leasing business. “You pick up the paper everyday and you are concerned with what is happening in Europe, lenders have become more conservative and there is question about job growth and there is some question with users,” he said. “That is reason for the pause we are seeing.”

Robert Hart, president of Kennedy Wilson Multifamily Management Group, pointed out that he has seen some pullback in the market as well, “but looking at the gateway city transactions, there has been no pullback at all,” he said. Hart pointed out that “we have started the beginning of the new cycle with cautious optimism and we have moved into a boarder-line rational/irrational exuberance in the apartment industry.” Like Nadji, Hart said that the apartment sector has been very attractive, particularly in the gateway cities.”

James Wohlleb, SVP of Union Bank, was bullish on the West coast. He said that when looking at Oregon, California and Washington for example, he is seeing some opportunities. “We really like the core San Francisco Bay area because of the tech job growth,” he said.

In regards to capital markets, Mark Gibson, executive managing director at HFF, explained that there is no lack of debt or equity capital now, or going forward for real estate. “Real estate at this moment looks extremely good as an asset class,” he said. “We are still at the bottom of pricing on some of these asset classes, but core pricing has exceeded 2007 levels.”