Corporate investments are relatively scarce, since corporate America is, for the most part, liquid and reluctant to borrow, Natsis adds, "especially when contrasted with key real estate markets, which saw increases in investment activity in the past year. Based on the low returns yielded through government investments and the low volume of corporate investments, investors will turn instead to real estate this year."

In terms of investment opportunities as they related to distressed deals, Natsis says that approaching maturity dates and defaults can pressure lenders and borrowers to under-sell mortgaged properties. "Yet the past five years have shown that these circumstances lead primarily to the transfer of those properties too far under water to warrant a lender/borrower workout, rather than the rampant sell-off of mortgaged properties," he says. "With that said, certain lenders, especially life companies and U.S. banks, given rising purchase prices, are more likely to foreclose and sell encumbered assets than negotiate a workout."

When asked where the deals are, Natsis says that investors will look to the office markets in places like San Francisco, Silicon Valley, and West L.A. this year, with North County San Diego also poised to see an increase in investments. "The last two quarters of 2011 saw significant sales activity in these key regions from investors seeking stable, long-term investments with the potential for asset appreciation, even at what seemed to be high acquisition prices," he says. "The coming year should be even more robust, barring any significant national or international economic missteps."

Of those key California office markets Natsis mentions, San Francisco will be the most in-demand this year, he says. "Rental rates in San Francisco, particularly South of Market, will continue to grow, along with investment sales and pricing. Silicon Valley will remain active in 2012, having rebounded with rent increases, low vacancy rates, and some recent high-value investment sales activity."

Institutional office investors will also look to West L.A. in 2012, he says, yet, "the office market in that area may fall short in sales volume and supply, as owners there, particularly REITs and pension funds, tend to be reluctant sellers, instead holding on to properties for the long-term."

Liquidity in the California office market should be substantial this year and will come from multiple sources, Natsis explains. "First, private equity firms have access to massive and largely untapped equity funds. Second, REITs are able to raise equity and assume more debt while investing in real estate due to increased investor confidence," he says. "Third, there is a significant amount of debt available for real estate, primarily stemming from life companies, U.S. banks, and the resurgent CMBS markets."