As we enter 2010, things look very different. I use a chessboard analogy often. A year ago, people were just trying to prevent the chessboard from getting knocked over. Today, when I sit down with various CEOs and CFOs, it's clear they're looking at their chessboards and not just planning their next move, but their next 10 moves.

We're going to see a lot of activity in the next year. We're going to see M&A activity; we're already getting an uptick in requests for M&A services among our client base. We're going to see IPO activity; we've already seen a bunch of initial public offerings and there are a lot more companies moving forward with IPOs. Some of those are blind pools, where you've got a pretty talented management team raising money. Others are private real estate companies that realize that given the dislocation in the capital markets, there will need to be more public capital in this industry.

We're going to see the thrivers be active and do a number of transactions, as well as a number of new players. As I talk to our team across the country, I stress that it's incredibly important right now to spend time with our clients and, more broadly, be out in our marketplace because the next 18 to 24 months will set the table for us for the next 10 years.

GlobeSt.com: Right now, depending on whom you ask, the predictions for the year vary from cautiously optimistic to downright gloomy. Where do you stand?

O'Brien: There's some better visibility today, but that doesn't mean there won't be some challenges. Real estate operations are going to continue to struggle over the next year. I would expect to continue to see lower occupancy rates and pressure on rental rates. We will see an uptick in economic indicators such as job growth and consumer spending well before we get to the end of the year. Real estate tends to lag the broader economy, so it will take some time for our industry to really feel the benefit of those economic upticks.

But the players in the industry today can see that, whereas a year ago, I don't think they could see where we were heading. So the more opportunistic investors today are willing to look at deals, whereas they weren't a year ago. With better visibility today, there's a better ability to price deals today than a year ago. That in and of itself will drive more transactions.

GlobeSt.com: What are your views on the next generation of real estate funds and the challenges and opportunities they face?

O'Brien: We're seeing the beginning of some fund raising to invest in distressed opportunities, or make real opportunistic plays. We saw some fund raising a year ago, but it was clear that it was just too early. No one wanted to put that money to work until they had better visibility.

Foreign investors seem to be leading the charts right now. They look at the long-term prospects for the US economy and see great value in our real estate. So compared to a few years ago, where much of the real estate capital was outbound from the US to emerging markets, many of the foreign investors that beat US investors to those emerging global markets are today looking at the UK and the US and seeing great value. We are certainly working with a number of new real estate funds, helping them structure their funds and deal with the tax and technical complexities of foreign investment in the US. The rules around that may be changing, so we're working with clients trying to navigate not only the existing rules, but also how they may change.

The UK and the London market is just seeing an incredible amount of investment, particularly in the past three or four months. Some would expect that to transfer to New York, as many people look at the London and New York markets being very similar.

GlobeSt.com: Who are the major players? And are we seeing a lot of US capital going overseas?

O'Brien: We're just seeing a lot of global capital flow right now. We continue to see activity from Middle East investors; some Mid-East sovereign wealth funds have been very active. We also see a great deal of interest in investing in the US among Asian investors, particularly China and Korea.

In terms of the US, quite honestly, we've seen US money sitting on the sidelines instead of going overseas over the past 18 months. US investors see better risk-reward here than, for example, in the emerging markets today.

GlobeSt.com: You mentioned IPOs and M&As involving public companies. What's behind all the recent REIT activity?

O'Brien: A number of REITs have done a good job in improving their balance sheets. It probably felt a little dilutive at first as they raised equity capital last year. But that allowed them to fix some of their debt issues and ultimately positioned them to build the war chests they need going into what will likely be a very opportunistic environment.

The REIT industry, for the most part, is pretty proud of how they navigated the past 18 months. It's clear that access to public capital, particularly over the past year or so, has been extremely valuable to those companies. Their ability to raise debt and equity capital publicly, even some of the new securitizations that have been done involved public REITs—all those things have lent tremendous support for the public REIT as a model for investing in real estate.

We saw significant privatization among public REITs in the middle part of this decade. As we move into this year, we expect to see a tremendous influx of new REITs because the public model has been proven in this downturn. The access to public capital gives you tremendous flexibility from a capital structure standpoint. We're seeing broader recognition of that in this market and we expect to see public real estate become a much higher percentage of the overall real estate world. You'll also likely see public REITs acquiring smaller, less-healthy public REITs and acquiring properties in distressed situations. It will be interesting to see if these smaller, private players starting the IPO process now are successful in going public, or whether it doesn't just become a shopping expedition for more successful public REITs.

GlobeSt.com: Let's get back to distress. Like you said, a lot of investors have been raising capital to invest in distressed assets, but there haven't been many opportunities. Will we see more activity on that front this year?

O'Brien: We will. For much of last year, the banks were trying to figure out how to deal with all the distress out there, and there wasn't really a well-worn path for how to deal with it. In the first half of last year, with many of the distressed situations, we saw very short-term extensions of loans. As we progressed toward the end of the year, I saw a number of loans that were given three-, four- or six-year extensions. Generally those properties were cash flowing, at least enough to pay debt service, and there wasn't capital out there to refinance the debt, but the existing lenders were willing to extend at reasonable interest rates.

In situations where the properties weren't stabilized—for instance, development properties that needed significant additional capital—we started seeing those properties go back to the banks at a greater pace in the fourth quarter of 2009 and we expect to see it in the first six months of 2010. Up to that point, banks weren't necessarily seeing a lot of properties, but it certainly has picked up and we expect it to accelerate in 2010. That will create more distressed opportunities in terms of buying from banks or buying loans immediately before a foreclosure from banks.

In addition, we've seen a couple of high-profile sales of distressed assets by the FDIC, and we will see more. There are a lot of community and regional banks with some serious real estate exposure, so the FDIC has a lot of work to do in 2010. They've at least developed a path for disposing of the assets they take over from banks. The auctions they've held have been well attended and competitive, so there does seem to be a lot of money out there to invest in these types of transactions as they emerge.

GlobeSt.com: Everyone's nervous about market conditions right now. When do you think we'll finally be able to breathe a sigh of relief?

O'Brien: The recovery of real estate is going to take a while. It will ultimately depend on consumer spending and job growth. That doesn't mean the recovery process won't start for many years; I believe it will start in the latter part of this year. You're going to see these survivors and thrivers, as well as new players, be opportunistic and position themselves over the next year or two for the next decade.

I think you're going to have to be very smart in terms of investing. Accessing public capital requires a higher level of expertise in corporate governance and risk management today. Investors expect that, so to rebuild credibility with investors, new public companies and even real estate funds are really going to have to show excellent corporate governance, an alignment of interests with their investors and really understand how to manage risk.