In fact, there are already signs that movement is afoot. Given the shallow nature of returns in fair haven bonds, for example, institutions are itching to put more money to work in real estate investments. Public pension funds had a median of 15% invested in "alternative" assets like real estate at the end of the second quarter, according to the Wilshire Trust Universe Comparison Service. That is up significantly from the 9.2% tally in June 2011. In August, the $70-billion New Jersey public pension system said it is increasing its allocation to alternatives to 30% in fiscal 2013, a jump of 7%.

I often cite CalPERS as a bellwether for future trends, and —wait for it—here I go again. While the nation's largest public pension fund eked out a meager 1% gain on its $238 billion total portfolio in fiscal 2011, ended June 30, its $21-billion property portfolio "rang the bell" with an impressive 15.9% return. That, my friends, is the kind of number that gets a management board's attention, and is likely to lift the fund's present 9% allocation to real estate to a higher level.

Across town in Sacramento, CalSTRS also tallied a slim total return of just 1.8%. But over the summer it selected 10 real estate managers (they are: BlackRock, CBRE Global Investors, Clarion Partners, Heitman, Invesco Real Estate, LaSalle Investment Management, JP Morgan Asset Management, The Lionstone Group, Principal and Thomas Properties Group) to manage up to $1 billion in new capital dedicated to core real estate. Hopefully that firepower will help the fund achieve its 7% to 9% return expectation.

Meanwhile, in private equity land, a midyear tally saw a historical high for this group of institutional players. Total assets in private equity funds reached $3 trillion for the first time, which reinforced the growth of the industry despite one of the toughest fundraising markets in recent memory.

A new study of 100 top institutional investors by London-based researcher Preqin recently found that more than half had made new commitments to private real estate funds since July 2011. Looking ahead, Preqin found that sentiment has grown more positive as 2012 has progressed.

In January, only 36% of investors said they would commit funds in the next 12 months. By August, that group grew to 48%, moving closer to levels last seen in January 2011.

Preqin also found that larger institutions are more likely to commit to private real estate funds in the next 12 months, with 70% of investors with $10 billion or more in assets under management likely to invest. Only 26% of investors with less than $1 billion in assets are looking to commit.

It's also interesting to note that Asia and "rest of world"-based investors are more likely (72%) to commit to private real estate funds in the next 12 months than their North American and European counterparts (47% and 32%, respectively). A good example is the Government Pension fund of Thailand's hiring of Cleveland-based advisor Townsend Group to invest $250 million in funds in North America, Europe and Asia. Not to be outdone, however, CalPERS is investing $530 million in two new Asian real estate funds.

So, will the year go out with a whimper or with a bang? As always, stay tuned.