Hoping for a quick turnaround in the retail real estate sector? Don't bet on it. That's at least the opinion of more than 700 commercial real estate experts surveyed for the Urban Land Institute and PricewaterhouseCoopers' annual Emerging Trends in Real Estate report.

“We've all got to pray for retail,” said Jonathan Miller, a consultant with the Urban Land Institute and the report's principal author during a presentation of the report's findings. “It's had a great run. But it's in for a tough time.… Class-B and -C malls will lose stores as chains consolidate into better malls. It's going to be ugly.”

In judging prospects for property types in 2009, respondents ranked retail only above for-sale housing. On a scale of 1 to 9 with 9 being excellent and 1 being abysmal, retail came in with a 4.26 rating as an investment option and a 3.95 rating as a development option. Among 11 subsectors, regional malls ranked last (3.89 investment, 3.11 development), power centers ranked tenth (4.06 investment, 3.50 development) and neighborhood and community centers ranked sixth (4.67 investment, 4.08 development).

Respondents expect power center cap rates to rise 66 basis points from July 2008 (6.91 percent) to December 2009 (7.57 percent), regional mall cap rates to rise 59 basis points during the same time period (6.19 percent to 6.77 percent) and neighborhood and community center cap rates to rise 52 basis points (7.01 percent to 7.54 percent).

Across the board, the report found that experts expect the commercial real estate industry to experience a rough — and lengthy — correction. “If our report appears bleak, it is because the people we spoke to were uniformly concerned and uniformly worried about the economy, the liquidity crisis and the impact on the real estate business,” said Stephen Blank, one of the principal researchers and advisers with the Urban Land Institute on the report.

The downturn could rival what the industry experienced in the early 1990s even though most sectors avoided overbuilding — the fatal flaw that exacerbated the previous downturn. Experts expect the sector to bottom in 2009, bounce along the bottom in 2010 and begin to recover in 2011. That comes as a jarring revision to previous estimates that said the worst stretch for commercial real estate would be the first six months in 2008.

“Commercial real estate is just starting to correct,” Miller said. “It's the last sector that is going to have problems.”