The popular former Reds midfielder hung up his boots at the end of last season after failing to shake off long-standing injury problems, which restricted his first team appearances towards the end of his second City Ground stay.
But his affection for the club remains strong.
He said: “First and foremost the club needs to be galvanized and to settle on a direction. Will the current owner stay there or will it be sold to someone else?
“For a plan moving forward that needs to be made clear as soon as possible because at the moment they’re on a downward spiral. This needs to be sorted.”
As well as uncertainty surrounding the ownership of the club, Forest find themselves without a manager after Fawaz Al Hasawi sacked Philippe Montanier on Saturday evening.
The bookies’ list for his replacement has Billy Davies favourite for a third return to the club, while Oscar Garcia, Nigel Pearson, Paul Heckingbottom and Nigel Clough have also been speculated.
“It’s a difficult one because it’s more of a question as to who would want to take on the job,” said Reid, who was speaking exclusively to 888sport. “With the takeover fallen through the club is in limbo so who could they convince to come there?
“At the moment the team is in good hands with Gary Brazil looking after them. I know that Jack Lester has been mentioned for the job from within the club and something like that wouldn’t be a bad idea for the time being.”
Former Republic of Ireland international Reid, who made 290 appearances for Forest during two spells, also helped out on the coaching side before he left the club.
And he would be open to a return.
He added: “I’m finishing off my coaching badges at the moment and I got a taste of coaching last season. I would definitely like to go into it at some stage and if that was at Forest it would be brilliant.
“I have a big affinity with the club and the fans and a lot of the players there.”