IRVINE, CA-“Last year, there were over $1 trillion of global commercial real estate transactions. One-third of that occurred in China, and much of it is from the sale of speculative land, which is driving significant wealth growth in China.” So says Reza Etedali, CEO and founder of locally based REZA Investment Group Inc., giving his thoughts on the state of the commercial real estate market.

Etedali says as we enter the New Year, we are looking at a much more stabilized CRE market. “Transaction volume has picked up noticeably, as the US is widely considered the most sought-after real estate market in the world.”

Looking ahead, savvy investors should keep a close eye on the actions of the Fed, consumer confidence, volatility in emerging markets and the state of the general economy, says Etedali. “Keep a very close eye on two significant trends, demographics and technology, intersecting at the same time, with each trend magnifying the impact of the other even more.”

Baby Boomers nearing or reaching retirement age and Millennials entering the workforce will create both great opportunities and challenges ahead, Etedali says. Also, technology will bring more changes over the next five years in how business is conducted and in how we lead our lives than we have seen over the past 10 to 15 years. “The biggest threat to existing retailers is not going to be their exiting brick-and-mortar competition, but from new Internet or new brick-and-mortar retailers using disruptive technologies. As investors, we need to become technologically savvy, observe new trends and look beyond the latest trends emerging from existing retailers. Doing so will ensure we can take advantage of these rapid changes rather than be a victim of them.”

Etedali adds that much of the growth in property valuations has been driven by the capital markets, but this can't continue forever. “We are now at a point where fundamentals need to improve to support the run-up in valuations.”

Also, retail real estate is becoming more and more dependent on CMBS financing, Etedali points out. “Close to half of all larger retail transactions were financed by CMBS, the highest ratio of any product type. Hence, retail benefits from Wall Street and yet is also most vulnerable to fluctuations in the world's capital markets.” He adds that the number of medical and educational users/tenants in shopping centers is likely to grow significantly.

Foreign transactions are becoming increasingly prevalent, Etedali notes. “The Chinese Government is trying to reign in speculation. Hence, economic success or failure there could have an impact on real estate here in the US.”

Lastly, Etedali says that there will be significant growth in loan maturities each year, peaking in 2017. “barring any macro-economic shock, we are unlikely to see any distress as a result, but this rapid increase in loan maturities is likely to lead to a noticeable increase in the  number of assets coming to market for sale.”