The Urban Land Institute's annual Spring Conference began its second day in New York with more than 5,000 real estate professionals converging to compare notes on the economy and commercial property.

This year's Spring Conference, the biggest in the history of the nonprofit research and education organization that focuses on land use and development, included discussions of when demand will pick up, the future of office use and how to tap lower prices.

Rising interest rates and myriad macroeconomic pressures have made it tough to place bets on if and when the commercial real estate market would bottom out, but for some investors, this could be the year things finally begin to turn around, panelists said during a capital markets session.

As prices fall to a level they can no longer ignore, professionals across a wide spectrum of investment firms say there is a growing pool of opportunities that will begin to open capital markets that have largely been arrested by the challenged financing climate. While there is still plenty of ground to regain before the industry can recover some of its pre-pandemic momentum, panelists point to growing optimism that 2024 could be the start of a new demand cycle.

"I think we're closer to the bottom than we were before," Standard Real Estate Investments CEO Robert Jue said. "I also like the opportunity of getting involved before everyone else as opposed to after, because as a small guy, it's a good time. I'm on the side of starting to get more deals done for 2024 and thriving in 2025."

With many expecting an influx of distressed properties to hit the market, small to large investment firms are keeping a close eye on a chance to dive back in — as long as the elements for each deal line up in just the right way.

For Bakari Adams, a managing director and head of Starwood Impact Investors at Starwood Capital Group, the decision to finance a deal partly hinges on the specifics of the market.

"It all depends on the asset class," he said. "If you're looking at multifamily now, some of it is trending in the right direction, but in other areas, not so much. For as large as Starwood is, we're nimble and can make decisions very fast. We have the flexible capital to invest where we think we'll get the best return, and if something doesn't make sense in one market, it might in another."

Expecting the national office market to make a full recovery soon? Some at the conference aren't betting on it.

The effects of pandemic-era triggers such as flexible work schedules, reduced spatial needs and a flight to high-quality properties aren't expected to subside soon. Rather, participants said, they could be embedded into the market landscape for decades to come, making it especially challenging for stakeholders to compare it to any previous downturn.

"This is a systematic, not cyclical, shift," said Chris Aiken, the head of acquisitions for MetLife Investment Management’s real estate division. "Work from home didn't really exist when we last had a downturn, and now you have a consumer behavior that is very different from what we've seen before. That won't go away and is likely around on a permanent basis."

Those shifts have fueled record-high vacancy rates, stalled leasing momentum and sparked an offloading of office space across the country, creating a new problem for some landlords, lenders, city officials and other stakeholders: what to do with the unwanted space.

Public subsidies or other financial assistance programs will be crucial to deal with the influx of empty spaces, said Dwight Stephenson, a principal at Chicago-based Blue Vista Capital Management.

"This rationalization of space will play out over the next decade, not the next 12 to 24 months," he said. "It's similar to what retail went through two decades ago, but it could play out slower for office because of the sheer amount of capital tied up in these assets. That will have huge implications, and I don't think anyone has figured out the answer over what to do with all of it. At some point, decisions will need to be made and there will be tough times for office product in general."

It may be a down market, but rather than write off commercial real estate for the year, some investors and economists agree that the current environment could be a good time to take advantage of an influx of opportunities.

Despite the gloom-and-doom narrative, professionals said the outlook has been exaggerated, and there can be opportunities to take advantage of low pricing or distressed deals.

"In every environment, there are ways to invest, and the trick is to figure out where," said Paula Campbell Roberts, KKR's chief investment strategist for its Global Wealth business. "We haven't seen many acquisitions because of the availability of capital and higher borrowing costs, but more deals will begin to happen."

While the office market still presents plenty of challenges — the effects of flexible work and record-high vacancy rates — the sector and others such as retail and industrial have some bright spots for buyers looking for a chance to get back into the investment scene.

"It has been tough sledding, so to speak, but it isn't all that bad," said Mark Grinis, EY Americas real estate, hospitality and construction leader. "Delinquencies are about half of what they were in the Great Recession, and for those waiting for that big flood of distress, there will be a lot coming onto the market, but I'm hesitant to call it a flood. There will certainly be some distress, but also plenty of opportunities."