The good news is that the Great Recession's viselike grip on the commercial real estate industry has loosened considerably in the past year, according to a recent survey conducted by KPMG, the national audit, tax and advisory firm.

The bad news — at least for the Twin Cities — is that most real estate executives see growth constrained to two areas, the Northeast and the Southwest.

But there's a reason for that, explains Bill Long, audit partner in KPMG's Minneapolis office. "Areas like the Southwest and Northeast got hit the hardest by the financial crisis. Because they fell so hard, there's way more room to increase.

"The Midwest was not impacted as much as places like Arizona and Nevada," he added.

Conducted last spring, KPMG's annual Commercial Real Estate Outlook Survey queried 100 senior commercial real estate ­executives nationwide about trends in the industry.

A key finding was that 58 percent said they expect their company to increase spending on geographic expansion, up from 21 percent over last year and 11 percent in 2011. Of the executives who responded, 56 percent came from firms with annual revenue in the $100 million to $1 billion range, with 36 percent hailing from companies reporting $1 billion to $10 billion in sales, and the remainder with ­revenue exceeding $10 billion.

Obsolete office buildings like the Soo Line Building in Minneapolis are becoming apartments.

Latin America and the Asia-Pacific regions were cited as the most-attractive markets for expansion globally.

What sort of projects will commence in the coming year? The answer, hands down, was multifamily development — although the 43 percent of respondents expecting a "significant amount" of this kind of development was actually less than the 51-percent figure logged last year.

Still, the expected surge in multifamily development is a national trend seen en masse in the Twin Cities, particularly in downtown Minneapolis. Three high-rise apartment towers, Nic on Fifth by Opus, 4Marq by Mortenson and the Soo Line Building renovation, are in the works for the central business district, and at least a half dozen are under construction in the North Loop.

"Investment in single-family residential suburban development was for a long time very hot and profitable, but it has cooled off significantly," Long said. "The younger ­generation of 20- to 30-year-olds want to be close to restaurants, transit and destinations like Target Field. It's a better real estate investment now."

Retail and hospitality development also is expected to grow, the survey concluded. Long pointed to the new $135 million Radisson Blu hotel at the Mall of America as an indication that the expected hospitality surge has reached the Twin Cities. In the past year or so, several hotels have changed hands, including the Hotel Minneapolis and the Comfort Suites, plus the Hyatt Regency on Nicollet Mall completed a $25 million renovation. And a Fairfield Inn is planned for Hennepin Avenue near S. 8th Street.

Long said the number of Fortune 500 companies in the Twin Cities, as well as the area's low unemployment rate, are attractive incentives for national hotel chains looking to upgrade their real estate.

In terms of retail expansion, Long points to the current renovation at Ridgedale, which is preparing for a Nordstrom department store, the second in the Twin Cities market.

On the downside, 40 percent of real estate executives locally and nationally are worried about "political and regulatory uncertainty." When asked what this meant, Long said federal tax policy and increased regulatory ­oversight of banks were often mentioned as potential growth killers.

Janet Moore • 612-673-7752