GlobeSt.com: What sectors do you see as gaining momentum with investors in 2017? What will drive that momentum?

Stofflet: We believe that multifamily will continue to be strong in 2017. Clients are also looking at industrial and office in certain MSAs.

GlobeSt.com: What challenges do you see for investors in 2017?

Stofflet: Much like 2016, competition for investments is fierce. We don't expect this to change as multifamily is still the desired acquisition.

Developers will face increased difficulty in executing debt for new projects. Interest rate increases will elevate cap rates, which in turn will create a disconnect between buyer and seller expectation. This will make acquisition and dispositions more challenging than we have seen in the past couple of years.

GlobeSt.com: What fears remain for investors?

Stofflet: Absorption of new product, real estate taxes, interest rates and a new presidential administration.

GlobeSt.com: What advice would you offer to commercial real estate investors for 2017?

Stofflet: Continue to look for strong, sound investments. Our models show most markets in the Midwest will have positive absorption of new deliveries.

Although rent growth is slowing, consider it compared to historical averages. Rent growth is still strong in most parts of the county. Look to stabile neighborhoods outside the city centers. Many dollar-conscious renters are looking there for viable alternatives to $3-plus per square foot rent.

ATLANTA—The presidential election is behind us, but that doesn't mean all the uneasiness in the capital markets is gone. So what can we expect in the months ahead?

GlobeSt.com caught up with Todd Stofflet, managing partner at KIG CRE to get his thoughts on the investors' perspective in part two of this exclusive interview. You can still read part one: The Hunt for Higher Yields Driving These Investments.

GlobeSt.com: Do you expect any movement toward class B or class C properties? Why or why not?

Stofflet: A lot of investors like the B and C investment strategy—not just for value-add, but also for long-term “bread and butter” acquisitions. B and C assets have seen strong rent growth in this cycle and are performing very well. We expect to see additional focus on these asset classes in 2017.

GlobeSt.com: What sectors do you see as gaining momentum with investors in 2017? What will drive that momentum?

Stofflet: We believe that multifamily will continue to be strong in 2017. Clients are also looking at industrial and office in certain MSAs.

GlobeSt.com: What challenges do you see for investors in 2017?

Stofflet: Much like 2016, competition for investments is fierce. We don't expect this to change as multifamily is still the desired acquisition.

Developers will face increased difficulty in executing debt for new projects. Interest rate increases will elevate cap rates, which in turn will create a disconnect between buyer and seller expectation. This will make acquisition and dispositions more challenging than we have seen in the past couple of years.

GlobeSt.com: What fears remain for investors?

Stofflet: Absorption of new product, real estate taxes, interest rates and a new presidential administration.

GlobeSt.com: What advice would you offer to commercial real estate investors for 2017?

Stofflet: Continue to look for strong, sound investments. Our models show most markets in the Midwest will have positive absorption of new deliveries.

Although rent growth is slowing, consider it compared to historical averages. Rent growth is still strong in most parts of the county. Look to stabile neighborhoods outside the city centers. Many dollar-conscious renters are looking there for viable alternatives to $3-plus per square foot rent.