What’s the status of the nation’s commercial real estate industry for 2012?

Improving, but still littered with pitfalls and a minefield of uncertainty, according to real estate guru Chuck DiRocco, director of real estate development for multinational professional services firm PwC, headquartered in London.

DiRocco keynoted the Urban Land Institute Colorado Chapter’s “Emerging Trends in Real Estate” event in Denver on Jan. 12. His presentation, titled “Facing a Long Grind,” outlined the long road of recovery ahead for American real estate markets.

DiRocco’s tagline for the nation’s real estate industry: “If you haven’t figured it out by now, this time is different.” The obstacles he cites to industry recovery include high unemployment, changing age demographics, large personal and government debt loads, the sagging housing market, an unprecedented construction slowdown, government disarray (aggravated by the vagaries of a presidential election year) and global financial chaos. DiRocco was speaking one day before Standard & Poors downgraded the credit ratings of France, Italy and Portugal, among others.

DiRocco cautions real estate investors that today’s commercial market “isn’t the place to double your money…it’s a long, long wait.” Investors, he says, must continue to recalibrate their expectations for returns in these calamitous times. He recommends staying in control, avoiding feeding frenzies in the core real estate markets and understanding that there are “no screaming buys. But where else can you get a stable, single-digit return on your money?”

DiRocco’s regional real estate markets to watch for this year include Washington, D.C., Austin and San Francisco at the top end, followed by New York, Boston, Seattle and San Jose. The top 10 is rounded out by Houston, Los Angeles and San Diego. More “walkable” cities with 24-hour conveniences will do better, and he ranks Denver sixth on that list nationally, just behind Portland. Denver isn’t yet what he calls a “24-hour city,” but “you’re getting there,” he said.

However, DiRocco said, cities with healthy or blossoming energy and tech markets will excel, with Denver ranked 11th on that list, just ahead of Dallas. Salt Lake City is in a second tier of improving markets. “Most (metro) markets have stopped deteriorating,” DiRocco said. “But most haven’t really improved yet either.”

He pointed out that more than 70% of the respondents to the 2012 “Emerging Trends in Real Estate” survey rated the prospects for  profitability in commercial real estate this year as “fair to good,” with only about 15% rating the coming market as “poor.”

Still, DiRocco’s parting advice to event attendees was to be cautious. “It’s not the time to be all in—(real estate) investors should maintain plenty of liquidity,” he said.