GREATER BOSTON-There continues to be plenty of investment cash looking to find a home in the area’s real estate market but the trend towards low-risk high-quality deals is leading all those dollars to the same few products.

“There is a real bifurcation in the market,” Dick Reynolds, a principal at Spaulding & Slye Colliers, tells He points out that while high quality buildings are priced attractively and receive many bids the lower end products are barely moving. “Investment capital won’t take a chance,” notes Reynolds.

Reynolds attributes investor’s interest in the real estate market to the stock market’s continued poor performance. “The alternative is not very attractive,” he says. But he emphasizes that those investors are “still very choosy.” Creditworthy tenants also help but as Reynolds says, it is more and more difficult to discern which tenants are creditworthy. “Major financial institutions usually are, but look at Arthur Anderson,” he says. “They were considered creditworthy and then they’re gone.”

The tenant risk has only served to make high quality buildings that much more in demand. Investors want the quality so even if there are other problems the underlying asset is still solid. Reynolds points to Spaulding & Slye’s recent sale of One Boston Place as indicative of the market’s mood. The downtown building is fully leased to Mellon Financial and went for $260 million to a pension fund. The deal was put together privately and the pension fund snapped it up immediately but Reynolds says that had it gone on the market there would have been a lot of interest in the property.

According to Reynolds the investment market is likely to remain in this state for a while. “Until the general economy improves we won’t see any changes in the investment market,” he says.

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