The recovery may take longer elsewhere as a national unemployment rate of 9 percent and an oversupply of distressed properties reduce values. Las Vegas commercial-real estate transactions slumped 67 percent in the first quarter from a year earlier as the housing bust hurt the local economy, CoStar data show. Nevada had the highest U.S. unemployment rate, 13.2 percent, as of March, according to the Labor Department.

In cities such as Detroit and Cleveland, which have seen population declines in the past 60 years, the market is dominated by local buyers and not institutional investors who make more deals, said Ben Thypin, an analyst at Real Capital.

Secondary markets carry risk because building values and rental rates don't appreciate as fast as land-constrained coastal markets such as New York or San Francisco, Bach of Grubb & Ellis said.

"On balance investors would rather have supply constraints and barriers to entry than they would fast growth," he said. "A fast-growing market also means lots of construction and rental rates that don't go up very fast."

Loan Delinquencies

Loan delinquencies after a more than 40 percent plunge in property values since 2007 also may limit a rebound. About 5 percent of Dallas metropolitan-area loans that were packaged and sold in commercial mortgage-backed securities were 90 days late or more as of this month, the eighth-highest in the U.S. among the 25 largest metro regions, according to data compiled by Bloomberg. Houston was 13th.

Increasing availability of credit, including CMBS, is boosting demand in smaller markets. The amount of commercial and apartment-building mortgage origination volume surged 44 percent to $118.8 billion in 2010 from the previous year, according to an April 25 report by the Washington-based Mortgage Bankers Association.

Wall Street has sold $8.6 billion of bonds tied to property loans in 2011, compared with $11.5 billion in all of last year, according to data compiled by Bloomberg.

Helping Smaller Markets

"The return of the CMBS market certainly helps the secondary and tertiary markets," Thypin said. "They can do larger loans too, which most local banks can't do."

Deutsche Bank AG and UBS AG in February sold $2.2 billion of bonds backed by commercial mortgages on office, retail, hotel apartment, industrial and mobile-home properties around the U.S., including smaller markets such as Phoenix; Cincinnati; and Jacksonville and Lakeland, Florida.