NEW YORK - Most of the U.S. commercial real estate industry is expected to remain in recession through 2011 with an industry-wide recovery not expected to begin until 2012, according to a quarterly survey commissioned by PricewaterhouseCoopers.

The apartment sector is expected lead the industry from recession with a recovery expected to start sometime next year and continue through 2012, said the third-quarter Korpacz Real Estate Investor Survey released on Tuesday. About 115 real estate investors were surveyed.

Investors expect the industrial and office sectors to begin to recover in 2011 but not dominate the sector until 2012. Washington D.C., San Francisco, Philadelphia and Long Island are the office markets expected to recover ahead of the overall national market.

In the warehouse sector, West Coast cities are expected to lead the recovery charge, including the cities of Oakland, Portland, Salt Lake City and Orange County, investors said.

But they do not expect the retail real estate sector to show even a slight recovery until 2012, according to the survey of investors in 28 markets. The Oakland-East Bay, Fort Lauderdale, Nashville and Houston markets are expected to recover first, according to the survey.

Overall, investors expect the U.S. commercial real estate market to continue to deteriorate throughout this year and the next, the survey said. They see rents and occupancy rates falling in the first year of new property investment.

The outlook for first-year cash flow is an important factor in prices offered for new properties.

In the national suburban office market, investors said they expect market rent to drop by as much as 20 percent in the coming months, the survey said. Central business district office rents are expected to be off 10 percent.

Investors also expect national power centers, developments anchored by major chain stores, and warehouse rents to decline by 10 percent.

Investors expect the biggest near-term market commercial rent declines to be in Manhattan and San Francisco -- as much as 20 percent. Those poor outlooks are followed by a 15 percent drop for Phoenix and 10 percent for Boston, Chicago, Denver, Los Angeles and San Diego.

U.S. commercial real estate sales remain at a near stand-still, as equity investors remain on the sidelines waiting to capitalize on forced sales and more motivated selling on the part of distressed owners, the survey said.

Despite falling cash flows and a drought of available financing for sales, owners are still hanging onto their properties as banks extend fixed-rate loans and floating rate loans remain manageable.

Investors seem surprised at the lack of quality buying opportunities given the problems in the financial markets and the continued weakening of the industry's fundamentals, said Susan Smith, director of the real estate advisory practice at PricewaterhouseCoopers, and editor-in-chief of the survey. (Reporting by Ilaina Jonas; Editing by Tim Dobbyn)