NEW YORK The multifamily game in major markets is nearing an end, says Wharton Equity Partners president Peter Lewis. His firm's been buying large apartment properties in secondary markets (like the 700-unit Park at Hurstbourne in Louisville in December), but institutional investors are finally knocking on the door, too. (He recently partnered with a NYC hedge fund for a Central Florida play.) That's the first sign that it's time for opportunistic investors to look elsewhere. In two or three years, he tells us, tertiary markets like Minneapolis and St. Louis will be the multifamily land of opportunity.

What Peter looks for: re-emerging manufacturing markets (like autos in South Carolina) and biotech/engineering/healthcare hotspots like Columbus (Ohio State) and Minnesota (Mayo Clinic). He also considers the city and state's government debt levels.

Another sign that major-market multifamily isn't bringing the returns: Peter seesinvestors adjusting rental rate growth projectionssay, to 4%--to force their models to work. His firm also is looking at hotels, light industrial (more affordable for tenants than suburban office, which might be dying, he says), and master-planning live/work/play centers in secondary markets, such as Louisville's riverfront (above).