Positive signs are visible when looking at the level of distress in the Midwest. Most of the region's markets don't have the breadth of troubled loans and properties seen in other large markets across the country. A notable exception is Chicago, though the city is starting to gain back some swagger with more office deals. However, distress will continue to grow in the Midwest, experts agree. Though the region has fewer foreclosures now, the number will increase in 2011, and troubled properties will take longer to fix than in the rest of the country, says Brett Thompson, a principal with Ernst & Young in Chicago. Investors, and tenants, are quicker to return to properties on the coasts and in warmer climates, whereas the Midwest tends to follow recovery trends by a year or two, he says.

Up until now, Thompson says there's been just a trickle of distress in the Midwest, because lenders are being strategic (read: realistic) about the chances of getting an asset off the books. "There's been no flood of Midwest distress," Thompson says. "But delinquencies hit record levels in the fourth quarter, and we're starting to see more activity."

As of February 2011, the Midwest had about 1,643 assets in distress, valued at more than $20.3 billion, says New York City-based Real Capital Analytics. The Chicago market alone took almost a third of this amount, with 520 troubled loans valued at about $8.1 billion. The Windy City area had another $4.2 billion of distressed loans under restructuring or extensions, or resolved.