Double-digit cap rates have become pervasive for Class B and C properties, according to an analysis by CBRE. This comes after the firm reported earlier this year that Class C office yields were frequently exceeding junk bond levels.

Pension funds are limited in the amount they can invest in below-investment-grade fixed-income assets. Junk bonds have high yields but a greater risk of default.

Earlier this year, CBRE's Cap Rate Survey (CRS) showed double-digit yields for Class C offices, particularly in central business districts including San Francisco, Minneapolis, Houston and Philadelphia. This signals highly challenged office properties as cap rates near 15% suggest the assets have become the equivalent of junk bonds. However, high yields can attract capital from hedge funds and other risk-tolerant investors, which can translate into attractive IRRs, said CBRE.