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Most of the capital crowd folks that I have spoken to in recent weeks seem to agree that capital is crowding around a few choice deals―mainly trophy properties in top-tier markets―driving prices up and cap rates down for those assets. Unfortunately, America does not have a factory that can turn out trophy properties the way we (or the Chinese, maybe) can turn out toasters or automobiles or video game consoles by the gazillions. That means that not everybody can buy a trophy property, even if they have the money.

So what’s the capital crowd to do? Those I’ve spoken with express a lot of different opinions on where the money will go. The question of where the capital will go becomes even more intriguing when you consider that everyone seems to agree that lenders of all shapes and sizes will be ramping up allocations in 2011. On the other hand, most agree that opportunities abound. (See GlobeSt.com’s recent analysis of the commercial mortgage markets.)

So where are investors focusing their interest? At a recent Standard Capital LLC event I attended at UCLA’s Anderson School, all of the panelists—including one lender—seemed to have different answers to that question. This was a blue-ribbon panel of prominent L.A.-based real estate investors, so it was interesting to me that they had differing views on where the capital will go. Some panelists pointed out that the trauma deals in secondary or tertiary markets will continue to have opportunistic capital available chasing them (sometimes at much too inflated a price). Other industry sources said that the “tweener deals” as Jones Lang LaSalle so appropriately titled (assets between the trophy and trauma) will see the most targeted capital in 2011.

What are your thoughts? Any particular property type or geographic region tickle your fancy?

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.

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