If you're looking for distress in the Northeast, you'd be advised to think class B properties and suburban markets. That's one of the observations of Dennis Walsh, a Boston-based senior director at Tremont Realty Capital, when asked about where the opportunities lie in the region's inventory of distressed assets. And if you're planning to focus on a specific property sector, the greatest sources of opportunities in the Northeast are in the office, retail and hospitality sectors, says Yitzie Sommer, a Marcus & Millichap vice president who points out that, "the market for industrial and especially apartments has always been, and continues to be, very tight" in the region. Sommer also echoes Walsh's observation about suburban markets, saying "Suburban areas outside of Boston and in Long Island have been the source of good opportunities for investors."

Walsh explains that lenders and owners of top-tier properties in central business districts simply aren't going to offer discounts, even if a property is under some distress, because the gateway cities in the region "are such prime markets for so many investors." Those in control of the top-quality properties, he points out, "assume that the asset will be worth something at some point, if not now," because places like Boston; New York City; and Washington, DC are so popular with investors both in the United States and abroad. "There is an expectation that properties will always be worth something to someone in the gateway cities because they are not secondary or tertiary markets, and they are high on the list for investors who take a longer-term view of things," Walsh explains.

The inventory of distressed assets in the Northeast totals $26.2 billion, according to the latest figures from New York City-based Real Capital Analytics, which notes in its August report that the distress picture in the Northeast and the rest of the US "has fundamentally changed." Lenders now are more aggressively moving to liquidate or resolve troubled assets, RCA explains, and inflows of new distress have declined since the onset of the financial crisis, dropping to their lowest level--$12.7 billion in the latest quarter after three straight quarters that topped $18 billion.