The recession has taken its toll on commercial real estate and the exchange traded funds (ETFs) that track the sector. Lately, though, there’s been some debate about whether it’s time to get in or if investors should wait it out awhile longer.

Of the commercial real estate sector, it appears that office buildings and factory space have been the hardest hit.  Vacancy rates for office space is at 15.9%, the highest level in the past four years, while rents have fallen 6.7%, the sharpest decline in seven years, reports Katie Benner of Fortune Magazine. The sector has rebounded slightly from last year, however, it appears that relief will not be in sight until consumer spending increases and business traveling increases.

For investors who continue to be bearish on real estate, a potential play could be short funds, such as the ProShares UltraShort Real Estate ETF (SRS).  On the flip side, says Benner, REITs should begin to bounce back because they have a lot of cash on their books. This puts them in a position to take advantage of low prices caused by the economic downturn. In addition, REITs are required to distribute 95% of their income, so they tend to pay high dividends to investors.

Accessing REITs through an ETF can give you more diversified exposure to the sector and spread your risk around a little.

• First Trust S&P REIT Index (FRI): down 4.2% year-to-date

• Vanguard REIT Vipers (VNQ): down 3.3% year-to-date

For more stories on commercial real estate, visit our commercial real estate category.

Kevin Grewal contributed to this article.

Tags: Commercial Real Estate, FRI, Real Estate, REITs, Sector ETFs, VNQ