With lenders chasing yield, developers need to be open to alternative sources of debt to secure construction financing in today's market.

While the East Bay has served as a second-tier choice for top-tier employment with a large collection of housing submarkets and as a mostly suburban retail territory, it is attracting increasing investor attention as Silicon Valley and San Francisco hit historic peaks.

Morningstar believes that 1,529 properties, with an allocated property balance of $19.4 billion, may be at elevated risk, and most of the properties are in Harris County, which suffered catastrophic flooding.