LOS ANGELES—The widening gap between wages and apartment rents as rent growth continues to outpace wage growth is one of the more interesting trends to watch in 2016, Avison Young principal Jay Maddox tells GlobeSt.com. As he prepares to speak at the Southern California Development Forum's "Annual Real Estate and Economic Forecast" event on January 12 in L.A., an event moderated by Larry Kosmont of the Kosmont Cos. and covering California real estate and business opportunities in 2016, we spoke exclusively with Maddox about Southern California real estate trends for this year.

GlobeSt.com: In your opinion, what will be the two most interesting Southern California trends to watch in 2016?

Maddox: There is a widening gap between wages and apartment rents as rent growth continues to outpace wage growth. In L.A. and Orange County metro areas, nearly 60% of renters are spending 30% or more of their income on rent, and in some cases as much as 50%. Although 15% more apartment units are projected to be delivered in 2016 in Southern California as compared to 2015, demand should continue to outpace new supply, resulting in a continued housing shortage and a strong market for developers.

Another trend to watch is the disruptive impact that e-commerce is continuing to have on both retail and industrial sectors. E-commerce now accounts for more than 7.4% of US retail sales and is widely expected to reach 10% or more by 2020. This has triggered massive development of warehouse distribution facilities, at the same time creating huge pressures for brick-and-mortar retailers, particularly major department stores that carry substantial overheads and have been slow to up their on-line game.

GlobeSt.com: What will SoCal development look like in 2016?

Maddox: I expect we will see continued, significant new construction and adaptive reuse of multifamily, retail and creative-office properties in urban infill locations. In particular, the Downtown L.A. retail market stands to improve significantly with the rapid growth of residential development. Additionally, we are seeing signs of an outmigration of office users from Santa Monica to Playa Vista and El Segundo as users take advantage of attractive new supply or cheaper rents. Of course, new development remains very burdensome due to entitlement approval processes such as CEQA and neighborhood activist groups that have been aggressive in efforts aimed at slowing and stopping higher-density developments. These roadblocks are likely to get worse, not better. There will be significant new construction in Century City over the next several years, commencing in March with the $2.5-billion Century Plaza redevelopment, which will include two 46-story luxury residential towers, restaurants, retail shops and a newly designed five-star hotel. This is in addition to the ongoing $1-billion-plus expansion of the Westfield Century City Mall, completion of a major residential tower already under construction, and the nearby construction of the Waldorf Astoria in Beverly Hills.  Another key new development to watch for will be the potential construction of an NFL stadium which will likely trigger new demand for office, hotel and retail space, especially if two teams are approved.

GlobeSt.com: There is a high volume of CMBS maturing loans over the next two years. How will these affect the market?

Maddox: The market has for the most part absorbed the wave of 10-year CMBS loans that matured in 2014 and 2015, despite industry concerns of a potential meltdown. Having said that, the toughest road lies ahead as a massive wave of 10-year CMBS loans originated in 2006 and 2007 matures. These loans were originated at the peak of the bubble, and most were aggressively underwritten and structured. Industry observers estimate that one-third or more of these loans, approximating in excess of $30 billion in each of 2016 and 2017, are underwater. To add to the challenge, these loans will mature in a higher interest-rate environment with tougher underwriting standards than when they were originated. Consequently, I would expect to see increased delinquencies and maturity defaults and aggressive foreclosure actions by the special servicers, resulting in a potential increase in distressed-asset sales to opportunistic investors.

GlobeSt.com: What could the "Black Swans" be next year?

Maddox: There are many potential Black Swans when one thinks about Southern California, such as El Nino, earthquakes or a Hollywood writers' strike. One concern is the move by community activists led by the Coalition to Preserve L.A. to push through a November ballot measure that would potentially result in either a building moratorium for two years or an elimination of any general-plan zoning variances for City of L.A. developments. Community support for such an initiative is very strong due primarily to concerns about increasing congestion and traffic resulting from zoning exemptions granted for mega-developments. If this measure were to be enacted, many projects would have to be shelved, delayed or downsized, which would potentially be catastrophic. Another potential Black Swan is the slowdown of the Chinese economy and related devaluation of the yuan. China is the world's second-largest economy (or first, by some measures) and is our most important trading partner. The Southern California economy is particularly vulnerable to the ups and downs in China, as compared to other parts of the US.

GlobeSt.com: Overall, what is the Big Picture for Southern California commercial real estate in 2016?

Maddox: Our region remains very attractive for development and investment, and I would expect that to continue in 2016. Barring a significant Black Swan event, we expect continued growth and improvement in values during 2016, especially for class-A developments and infill locations. Despite the prospect of rising interest rates and the fact that we've already had a five-plus-year run of rising commercial real estate values (which incidentally have now eclipsed 2007 highs in many sectors), the underlying fundamentals are strong, cap-rate spreads versus long-term Treasuries remain at historically attractive levels and our real estate markets continue to be a great safe haven from the vagaries of the capital markets, both foreign and domestic.