Wise: Key factors include: the relative strength of the US economic recovery compared to other developed economies; the relative transparency and security of the US commercial real estate markets compared to the principal emerging economies; the relatively attractive yields provided by real estate versus other investment alternatives; and the availability of historically cheap financing due to the low interest rate environment.

GlobeSt.com: What are some of the shifting strategies you have seen lately in terms of where investors are placing capital?

Wise: Capital has become increasingly frustrated both with the ability to execute on deals in the face of extensive competition and with the relatively low yields available for the most sought after assets. Accordingly, investors are seeking new ways to place capital and improve returns by expanding their search to a broader group of markets and by taking on additional risk at the asset level.

Investors have shown increased willingness to take on asset level risk in the form of modestly higher vacancies or the need for capital investment. “Develop to core” has emerged as a strategy to bypass the competition for existing top-tier assets and simply create the next generation of quality properties, hopefully at a higher risk-adjusted yield. Some traditional equity investors have turned to preferred equity or mezzanine debt structures to improve yield and move down the capital stack.

GlobeSt.com: What about offshore investment?

Wise: Offshore investors have played a growing role in the US markets. The share of direct offshore investment in total investment volume has grown from less than 6% in 2009 to nearly 10% in 2012, according to Real Capital Analytics. This doesn't include offshore capital that is participating indirectly through private equity, REITs and other fund structures. Foreign capital has flowed from traditional sources, such as Canada and Germany, which have been among the most active offshore investors. As well, several new players have entered the market, most notably from South Korea and China. Other important participants include Israel, Japan and the Middle East.

GlobeSt.com: What does the future hold?

Wise: Looking ahead, we anticipate continued strong demand for US commercial real estate. As capital moves beyond the principal markets and top-tier assets, values will begin to recover more sharply on a broader basis. This will be helpful to those owners who find themselves underwater on their financing, but still have time to wait on market recovery.

For now, property fundamentals haven't kept pace with asset values in the best markets, but with continued economic recovery, and particularly with continued improvement in employment, vacancies will continue to decline more broadly and rent growth will firm, driving sustained growth in asset level income.

Investors will continue to face challenges in placing allocated capital, particularly for offshore investors who are entering the US market for the first time. Risks remain in the form of a dramatic change in the interest rate environment or a sharp pullback in the US or global economic recoveries. Even so, US commercial real estate investment will continue to perform favorably in the near term compared with the low yield fixed income alternative or the highly volatile equities alternative.