Commercial real estate is down and out, which means now is the time to buy, says legendary real estate investor Berry Sternlicht, CEO of Starwood Capital.

In an interview with CNBC, he said the market is in a similar state to its last huge slump of 1991.

“All the capital is headed away from the property class. Everyone hates it. That’s usually the best time to find bargains. We’re shopping like we did in 1991.”

Sternlicht acknowledges that commercial real estate fundamentals are bad, with vacancies rising and rents falling.

But that’s what makes the market appealing. “You’re buying assets again at huge discounts to replacement cost,” he points out.

And with money-market rates at zero to 1 percent, real estate yields look downright juicy.

“There aren’t a lot of transactions. But where there are, if it’s a simple office building in Manhattan . . . it’ll sell at a maybe 7½ percent yield.”

Starwood’s customers are ready to buy.

“We have a lot of interest from families. People are looking at this as an opportunity to come in while the pension funds are reeling.”

And Starwood reportedly just won an auction for troubled real estate assets of Corus Bankshares.

Money management titan BlackRock is bullish just like Sternlicht.

“These asset classes (including commercial real estate) have not recovered as strongly as the rest of the market and, therefore, are cheap,” the firm said in a report.