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The Maginot Line, you undoubtedly recall, was designed by France’s brightest generals who were intent on “fighting yesterday’s war.” The feckless French army relying on outdated tactics proved to be no more than a speed bump to the advancing forces of the Third Reich.

I was reminded about fighting the last war recently when a top commercial real estate broker with several Ivy League degrees said that investors are primarily interested in value-add opportunities. A perfectly nice statement of course, one that elicits nodding heads all around the conference room table, until the one lad asks how anyone can have the confidence to undertake a development or redevelopment project.

The US economy is likely to face an extended period of low economic growth and anemic job creation. Today’s top generals recognize that the value of vacant space in most geographic areas is worth almost nothing and there are more prudent applications of capital than fixing up a building to attract new tenants.

While my war analogy could take a rest, one of the best investment strategies currently is to hide in a bunker during this extended period of economic malaise.  With the 10-Year Note and 30-Year Bond trading in the 2% and 3% range, respectively, a property that generates a healthy dividend and is not subject to cap rate risks upon sale is an optimal strategy until we are no longer operating in a war zone.

Winning tactics include assets that have: a) high cap rates; b) solid in place rents; c) tenants that are likely to renew and d) highly defensible locations. Investors should segment asset valuations by paying up for in place rents, forecasting most lease renewals at below market rates, and heavily discounting vacant space.