* More than 70 pct are commercial real estate bears-survey
* Most blame Washington and weak job growth-survey
Oct 3 (Reuters) - An overwhelming majority of U.S. commercial real estate investors are bearish on the outlook for the sector over the next 12 months due to a lack confidence in the Obama administration, poor job growth and gridlock in Washington, according to survey by law firm DLA Piper.
More than 70 percent of those who responded to the survey described themselves as bears, up from 60 percent from a year earlier and second only to the 90 percent who answered similarly in 2008.
The 29.6 percent who described themselves as bulls, attributed their optimism to what they see as opportunities created by a market correction and an abundance of equity capital ready to be put to work.
While sales have improved significantly since the credit crisis, the U.S. commercial real estate market is struggling to regain its momentum, mirroring much of the U.S. economy.
"What you now see is a growing degree of uncertainty, and uncertainty begins to push money to the sidelines because people are much more reluctant to make a decision," said Jay Epstien, a partner with DLA Piper. Those decisions run the gamut from relocating a company to buying a shopping center or an apartment building, he added.
As of the end of July, U.S. commercial real estate prices were 42.5 percent off from their peak in October 2007 but had regained about 12.6 percent of their prices since hitting a low in April 2011, according to the most recent Moody's/REAL Commercial Property Price Index.
A slowdown in sales of commercial mortgage-backed securities (CMBS), in which loans are securitized and sold in the form of bonds, is expected to prolong the bottoming of the market as a whole, Moody's said.
The DLA Piper survey coincided with the firm's 2011 Global Real Estate Summit in Chicago on Oct 4. Some 280 real estate chief executive, operating and financial officers responded to the survey in September.
Nearly 74 percent said they did not expect interest rates to change significantly over the next six months, according to the survey. More than 67 percent said that they believe cap rates, which are based on interest rates and move in the opposite direction as real estate prices, also will not change significantly.
About 24 percent said they believed cap rates could rise, suggesting falling commercial real estate prices.
Not surprisingly, 44.6 percent said they believed that multifamily housing was the most attractive of commercial real estate investments over the next six months. For about the past year, multifamily housing has been attracting investors as demand for apartments has risen, in part on the back of tenants' aversion to own a home.
Of the types of real estate investors, about 35 percent said they expected private equity to be the most active investors with foreign investors coming in second at 25 percent and pension funds in third. Despite being flush with cash, real estate investment trusts (REITs) were fourth this year at 16 percent, down from 29 percent last year.
Nearly nine out of 10 of the respondents said they expected the CMBS market, an important source of commercial real estate financing, to cool this year. So far this year, $26.74 billion of CMBS have been issued, according to real estate financing information company Trepp LLC.
That is up from $12.6 billion last year but far off of the $243.3 billion issued in 2007, Trepp said.
About 48 percent say they expect the total CMBS issued this year to reach only $25 billion to $30 billion. About 46 percent said they expected new CMBS to top out between $30 billion and $40 billion, the survey said. (Reporting by Ilaina Jonas in New York; Editing by Steve Orlofsky)