LOS ANGELES-In one of our recent weekly company strategy meetings, one of my colleagues shared a conversation with his friend, the head of a major institutional real estate investment firm. My colleague asked, "What would you have done differently over the past several years?" His friend's thoughtful reply was, "I would have bought every deal that I passed on!"

Certainly hindsight is 20/20, but this reflective observation from an investment-manager underscores a call to action for US commercial real estate investors over the next several years. The US commercial real estate markets are prime ground for new investments in the immediate future.  Liquidity has returned, most markets are moving toward balanced supply and demand, and commercial real estate still offers attractive returns relative to alternative fixed income investments. Certainly the low-hanging fruit has been picked, but savvy investors will find that the next several years will offer rewards for well researched and well executed acquisitions. Let's take a closer look at a few of the relevant trends supporting this thesis:

Liquidity

The markets are liquid. Banks have moved beyond the regulatory uncertainty of the past several years and are competing aggressively for quality loans.  Pension funds, life companies, and CMBS have abundant capacity for long-term, fixed-rate loans.  On the short end, there is fierce competition for bridge financing from a variety of sources including banks, mortgage REITS, and debt funds seeking to facilitate value-added strategies.

Interest Rates vs. Cap Rates

Rates have bounced off the lows and will likely rise modestly over the next several years.  Rates will not be a headline story in 2014 or 2015.  They will remain low and underpin the steady increase in commercial real estate transactions. As borrowing rates inevitably rise, cap rates will remain relatively low. On the way down, interest rates fell further relative to cap rates. There is room for interest rates to move before these two important indices resume their more relational pattern. Our clients are adding between .50 and .75 basis points to exit cap-rate assumptions for exits 24-months out and 100 to 150 basis points beyond 24 months.  

Onshore vs. Offshore

The US is a fine place to hang out over the next several years.  Except for those chasing distress on the margins of Europe or Latin America, the US commercial real estate markets are viewed as among the most stable investment opportunities globally. This perception is keeping domestic investment allocations onshore and attracting more foreign investors to the US markets. We expect to see the volume of foreign buyers increase in the coming months for US core and core-plus opportunities. 

Compression Depression (The Antidote):

A market cannot live by cap-rate compression alone. That ship has sailed. The upside that investors are buying now is the expected, steady growth in fundamentals.  Achieving favorable results requires a solid sense of market principles and efficient operations at the property level. This return to fundamentals is healthy for the market. Slow and steady growth has been the long-term promise of commercial real estate investment. I do not expect to see headlines with the words "overheated" or "bubble" in the immediate future.

What Headlines Will We Likely See in 2014? 

Expect to hear more about secular growth markets driven by the evolving tech, energy, and creative industries. Expect to read about increasing volumes of financing activity sparked by maturities (2014 is the beginning of the three-year tidal wave of maturities) and increased purchase activity. Expect to hear more about the housing recovery, blue chip land transactions, and housing-related plays in retail.  

The US commercial real estate recovery is broadening. The confluence of these positive trends creates a compelling investment environment. Seize The Day!

David Rifkind is principal and managing director of George Smith Partners. The views expressed in this column are the author's own.