With the U.S. unemployment rate now projected by Moody’s to peak at 10.1% by the end of 2009 and credit still hard for investors to secure, there was little to cheer about during a quarterly media briefing Wednesday on the capital markets conducted by real estate research firm Reis.

In short, vacancies in commercial real estate are likely to increase over the next 18 to 24 months with positive rent growth absent from the scene until 2012, or even later. “Investors will have to think longer about hold periods,” Reis director of research Victor Calanog concluded, “and give up aspirations of a quick flip at triple the price in two to four years.”

Reis forecasts that the national office vacancy rate will reach 18% by year-end, the highest level since 1992, when overbuilding in the sector was rampant. The national office vacancy hit 16.3% in the first quarter, up from 15.5% in the previous quarter.

Meanwhile, transaction volume measured across property types dropped 40.2% in the first quarter compared with the fourth quarter of 2008, and fell 74.2% year-over-year.

In contrast to the 40.2% drop in transaction volume across all property types, office fared a bit better. By dollar volume, the value of the deals fell by just 7% in the first quarter. However, when excluding distressed sales — the John Hancock Tower in Boston, the former Bertelsmann building at 1540 Broadway and The New York Times headquarters and 10 Universal City Plaza in San Fernando Valley, Calif. — dollar volume actually dropped by 48%, not 7%.

The drop-off in deal volume is much more pronounced in central business districts, where transactions occurred in just 11 of the 79 markets. In contrast, 40 out of 79 markets in non-CBD locations recorded office property deals.

In short, investors have less tolerance in the current market to pay for relatively more expensive properties, said Calanog. For instance, 2008 transaction data shows that CBD office properties traded for $366 per sq. ft. while non-CBD properties changed hands for $193 per sq. ft.

On a positive note, the price per square foot in the office sector increased 4.8% year-over-year, with three out of five regions registering positive growth, according to Reis. “It would be unwise to extrapolate these results across time and call a recovery, given continuing uncertainty in financial markets and near-term expectations of performance declines in the office sector,” said Calanog

The national apartment vacancy rate is less alarming, but is still projected to peak at 8%, a level not seen since the late 1980s, according to Reis. The average capitalization rate, or initial return to the investor based on the purchase price, for multifamily hit 7.6% at the end of the first quarter nationally. That average includes deals with cap rates ranging from 10.8% to approximately 5% for gateway cities such as New York and San Francisco.

While the decline in transaction volume in the apartment sector across all regions is in line with the office sector’s 60% to 80% drop, Calanog noted that the apartment sector likely will recover sooner than the office sector. “With multifamily properties transacting at even lower prices this quarter, and possible recovery by 2010,” he says, “investors willing to take the risk may want to use the remainder of 2009 to look for opportunities.”

In the retail sector, the news was grim for sellers. Reis projects that the average vacancy rate for neighborhood and community centers will rise to 10.8% by year’s end, 11.8% in 2010 and more than 12% in 2012.

In the first quarter, retail property cap rates ranged from 4.1% to 11.5% with Midwest neighborhood centers yielding an average cap rate of 9.9% Nationally prices fell 20% in the first quarter from $208 to $167 per sq. ft.

“The Southwest is the only region that registered positive growth [in sales prices],” said Calanog, “but once again we need to take this with a grain of salt.” The caveat is that only 64 retail properties changed hands in all of 2008 in the Southwest, and only nine traded in the first quarter of this year. By dollar volume, the decline in deals was more than 70% year-over-year.

With the dearth of transactions, the federal government has introduced new programs such as the Term Asset-Backed Securities Loan Facility, or TALF, to ease liquidity and stimulate investment in commercial mortgage-backed securities.

“Firms may either benefit from TALF via debt financing, or they might actually be able to raise money through equity offerings,” said Calanog. “But will they use that money to invest in income-generating assets, or will they pay down debt? If it’s the latter, then is deleveraging more about lack of faith in the recovery of credit markets in the near-term?”