On the industrial side, there has been enormous improvement. “We saw very little distressed asset activity, and the few that we did see were picked up by private occupiers,” Horne said. He expects that occupiers and private investors will continue to dominate investment activity in the industrial sector.

Regarding multifamily, Horne noted that decreases in rental rates continue and there was a huge increase in sales last year, but he still sees a disconnect between buyers and sellers. “We see rents flattening for next year and fundamentals improving.” As for retail, Horne says that there is definitely an attitude that things will get better.

Next up was Larry Kosmont, president and CEO of Kosmont Cos., who talked more about the state of the state. He explained that in 2011, “you are going to see a budget battle like you have never seen before.”

One trend Kosmont said to watch is the fight about redevelopment, which he said is ongoing. “Redevelopment has always been controversial,” he said. “We protected the tax, but didn’t protect the entity.”

California’s triple threat, according to Kosmont, is unemployment, housing and government. In terms of government, he pointed out that some structural changes need to be made. “Ballot box budgeting is not the way to run the state and it isn’t going away,” he said. “People don’t even understand what they are voting about.”

Kosmont foresees commercial real estate moving in a better direction this year, but cites challenges to the commercial recovery—local and state deficits and unemployment for example.”

Christopher Thornberg, founding principal of Beacon Economics, isn’t normally as bullish as fellow forecasters, but he ended the day on a positive note. “I am not really worried about government issues or the economy in the short run,” he said.

Overall, he pointed out that incomes are up about 2% and are rising, affordability on housing is better, and the state is starting to add jobs to the economy. “When all is said and done, there is good news. The economy is moving forward.”

The best commercial space is apartments, according to Thornberg. As for retail space, “vacancy is falling, which is nothing but a price phenomenon.” As for the office market, Thornberg, like Horne, said it is still getting brutalized.

“If there was a time for the state to finally clean up its budget mess, this is the time because now we can handle it,” Thornberg said. “We do need to find better ways to collect revenues in the state.”