That's just one of the salient points of a study by Irvine, CA-based Sperry Van Ness, whose report on the "Top 10 Office Markets To Watch" includes some cities that are household words to commercial real estate investors, but other cities that aren't on a lot of radar screens. The markets on the Sperry Van Ness list are Austin, TX, Central New Jersey, Charlotte, NC, Columbia and Greenville, SC, Houston, Little Rock, AR, New York City and San Francisco and San Jose, CA.

John McDermott, Sperry Van Ness' senior vice president of business development and national director of office and industrial properties, tells GlobeSt.com that the company has an advantage in analyzing some of the smaller cities that are listed in this year's report. He explains "we have probably 100 of our offices in secondary and tertiary markets as opposed to the main CBDs."

In compiling its list of the markets it considers most promising, Sperry Van Ness looks at job growth, real estate values, price per sf and other data. And then, McDermott says, "we ask ourselves that good old-fashioned question, 'Would I spend my money here?'"

The company also looks at how it expects all of the different property types to fare over the next 24 months to 36 months in order to view office investments in the context of the overall commercial real estate outlook. "Office has kind of been the darling of investors, particularly downtown central business district office space," McDermott says. "Although toward the end of '07, there was a little uptick in cap rates and a few deals were re-traded before they closed so even the best of the best are seeing some softening in price from increasing cap rates."

McDermott says that Sperry Van Ness advises its clients to keep about four or five main principles in mind when looking at its Top 10 markets as well as a few emerging ones that McDermott likes. "Buy at a price of less per sf, at a higher cap rate, in a market with an increasing population, good job growth and demand generators," the Sperry Van Ness exec advises. As an example of a demand generator, McDermott cites the so-called "half-back" movement on the East Coast that is one driver of the growth in the Carolinas.

"People who left the Northeast and took their investment dollars with them to Florida have found it less appealing and more expensive than they expected so they have moved half-way back to the Northeast, which puts them in the Carolinas," McDermott explains. Investor demand in Charlotte is such that Sperry Van Ness has brought four or five new groups into its organization in order to meet client demand.

McDermott points out that besides being "a great industrial city," Charlotte also ranks as the second-largest banking city in the US, with a Downtown office occupancy of 100%. Even with three million sf of new office development under way, which is bound to produce some vacancy, Sperry Van Ness sees the city as "fundamentally strong so we are directing clients there," McDermott says.

Another principle that the brokerage firm is emphasizing this year is a flight to quality. "That's a mantra that we have been preaching," McDermott says. As a result of the virtual halt in conduit lending, he says the remaining lenders in the game "are cherry-picking the opportunities they lend on" and investors "are really looking for the better properties wherever they go." For example in the smaller of the markets on the Top 10 list, "savvy investors will go in and buy the class A locations to take advantage of those being substantially less expensive than a like-kind property would be in one of the really hot markets like Manhattan or San Francisco," McDermott explains.

Another principle that Sperry Van Ness is espousing is "do your due diligence." For several years, McDermott explains investors have spent less time on due diligence than they otherwise would have because "there was so much competition for deals that if they took too long on due diligence, someone else would step up and close quickly on the deal." But those days are gone so buyers today have the time to complete due diligence to ensure that the deal they're getting is the deal they want.

In a nutshell, Sperry Van Ness likes Austin for its population growth and a list of major office-using players ranging from government to high technology. The research team notes that, behind New York City and San Francisco, Austin is enjoying the most aggressive effective rent growth year-over-year of major metro markets reviewed for the Top 10 report.

Sperry Van Ness likes the Carolinas for the reasons cited by McDermott. The company's report calls Central New Jersey "an attractive option for tenants seeking to keep expenses down" in comparison to nearby New York City. Researchers attribute the expansion and success of Houston's office market to the energy sector, which "propels the market into a great position for buyers, sellers and owners alike."

And, it calls Little Rock "a well-kept secret that may not be well-kept for long" in light of a diverse economy that is driving the office market. The other Top 10 metros--New York City, San Francisco and San Jose--have perennially been strong leaders in the office sector and are expected to continue to be.

The Sperry Van Ness report includes considerably more detail on each of the top markets as well as explanations of the overall economic forces driving the US office sector. In addition to cities listed in the report, McDermott says that the company also sees promise in some places that aren't in the report, like Oklahoma City and Tulsa. "These cities are probably not on a lot of people's radar screens, but we think there is great potential appreciation in Oklahoma City and Tulsa, primarily because you can acquire there at a low price per sf," he says. "And of course, the oil and energy industry is a big part of the economy there. Whenever there is a combination of affordable land, affordable real estate and energy-related demand generators, you have very good growth opportunities."

McDermott, who is in charge of business development for Sperry Van Ness, has a final thought about why buyers and sellers will need to pay even more attention in this year's transformed economic landscape. "Real sellers will sell, marginal sellers will hesitate and lose equity, and the holdouts will just have to wait until the next cycle, whenever that may be," the Sperry Van Ness exec says.