“What we are trying to do is looking at a broader range of markets,” he said. Markets like Denver, Chicago, Seattle and Texas' Houston and Austin, were a few mentioned. In addition to that, he said, Metzler is also looking for smaller placements. “We are comfortable taking leasing risks as long as we have a sense of comfort in the local employment market, which was certainly the case here in San Francisco and in other markets we are looking at like in Houston. The risk premium is justified at least for now.”

When Moderater Carl Shannon, senior managing director of Tishman Speyer, asked panelist Charles Malet, chief investment officer of Shorenstein Properties, where his company was playing today, the answer was “across the risk spectrum.” On the buy side, Malet said, “we try to pay close attention to tenant demand.”

Paying attention to that, Malet continued, “has led us to in some markets like Chicago, Boston, San Francisco and Los Angeles.” And the firm also alters the type of office it is looking for. For example, in Los Angeles, Shorenstein looks at more of the creative office type product as opposed to a 40-story to 50-story high rise.

In secondary markets, Shorenstein pays attention to the market fundamentals and tenant demands. “Houston is just on fire. Employment growth there has been phenomenal,” he said. He also mentioned that the firm recently purchased an asset in Minneapolis, “which is one of those cities that has invested in infrastructure and there has been a lot of downtown development.” He added that “Those are common themes that drives tenant demand.”

Dirk Hallemeier, managing director of West Coast investments at MacFarlane Partners, is still playing in the primary markets and hasn't really gone to secondary as of yet. However, he explained that MacFarlane is now “taking more risks within the deal.”

He explained that “If we are just going to the beauty contest, we aren't going to win, so we are tying up land earlier on in the game, taking over entitlements ourselves and are taking entitlement risks.”

As far as MacFarlane's underwriting metrics, it is definitely a market by market discussion, he said. “Our general belief is cap rate growth and rent growth go hand in hand.”

And in terms of pricing those entitlement risks, Hallemeier explained that he prices the whole lifecycle of the deal. “We then look at it and say 'if we can get hurt, can we still do this?' We look at it from a bunch of angles.”

One who doesn't take development risk or buy land is Brendan MacDonald, partner of Clairvue Capital Partners. “We have had to stay one step ahead of the core buyers to generate the types of returns that we need,” he said. In 2010, he explained, Clairvue was providing capital to suburban office in places like Boston and D.C. In 2011, it was providing capital to grocery anchored shopping centers. And while the firm has only done 10 investments--because it invests in portfolios, there are more than 400 assets in our portfolios--the company has an advantage in seeing where the strength lies within the portfolio geographically, he said. “In the last six months, there has been a pronounced shift in the markets we have been investing in. Lenders are getting significantly more aggressive. We have seen capital moving into the secondary markets. We have had to go further out with good operators with good assets in markets the core buyers haven't gotten into.”

Check back with GlobeSt.com for more ULI Investment and Financing conference coverage, including in-depth exclusive interview with panelist Donald Wise.