New York; Boston; Washington, D.C.; the Bay Area; Southern California; and Seattle. They’re called the “sexy six,” and they led the multifamily industry out of the recession. Investor interest in those core markets has been intense since mid-2009, leading to rabid bidding wars and ever-higher price tags.

But in some ways, the sexy six may have run their collective course. Capitalization rates have gone so low in those areas—reaching and, in some case, outpacing their pre-recession peaks—that a growing list of investors is searching for yield in less-celebrated cities.

“If all the money flows into the sexy six, either not everyone will get fed, or people will get fed but won’t like the meal,” says Mike Kavanau, senior managing director in the Chicago office of Holliday Fenoglio Fowler. “At the end of last year, we saw cap rates back up a little in the core markets—you can only go so low on cap rates before people start expanding their horizons and look at secondary markets.”

The trickle-down of capital is well under way—markets like Denver, Portland, Dallas, and Houston have captured increasing inflows of investment over the past 18 months. In fact, Denver saw a 170 percent increase in apartment transaction volume last year, while Portland’s deal volume climbed 61 percent. And Dallas and Houston saw increases of 41 percent and 27 percent, respectively, last year, according to New York–based market research firm Real Capital Analytics (RCA).

“It was really in the second half of 2011 when we saw the movement of institutional capital into secondary markets,” says Hessam Nadji, managing director of research for Encino, Calif.–based Marcus & Millichap. “It’s still relatively fresh in the cycle.”

The proof is in the pudding. The markets that saw the biggest uptick in apartment values last year include Austin, Texas; Raleigh-Durham, N.C.; Nashville, Tenn.; Palm Beach, Fla.; Columbus, Ohio; and Detroit. This is hardly the sexy six, but these markets have outperformed the nation’s top markets in some key metrics.

Austin saw the most dramatic improvement last year in apartment values. The capital city led the nation last year in price appreciation, with a 42 percent rise in price per unit over the year before, reaching nearly $107,000. Cap rates fell about 160 basis points (bps) in Austin last year and are now averaging about 5.8 percent—putting it on par with markets like Los Angeles and San Diego—according to RCA.

Raleigh-Durham has popped up on a lot of radars over the past year, thanks to a concentration of technology-focused jobs and a young, well-educated workforce. Last year, the market saw a 21 percent appreciation in pricing, reaching $99,589 per unit, and cap rates compressed about 60 bps year over year, according to RCA.

Nashville has also risen in the ranks—the average price per unit jumped 18 percent last year, to $77,262, and cap rates compressed by 110 bps. Another standout was Palm Beach, which saw its average price per unit rise 18 percent, to nearly $183,000, while cap rates compressed an astounding 160 bps last year.

In terms of cap-rate compression, Detroit led the pack nationally, with average cap rates falling 300 bps year over year. But Detroit was starting in a pretty tough place to begin with—cap rates averaged nearly 11 percent there in 2010. Still, of the top 10 markets with the most cap-rate compression last year, half of them were from the Midwest, including Kansas City, Minneapolis, Cincinnati, and Cleveland.

“What we see in those Midwest markets right now is that they are performing about in line with the national norm, which is good for them because they tend to underperform compared to the country as a whole,” says Greg Willett, vice president of research for Carrollton, Texas–based MPF Research. “There is some economic momentum across the region as a whole.”

The trickle-down of capital is only starting to be felt in secondary markets, and it will take awhile before the trend reaches down further, to tertiary markets. Apartment cap rates in tertiary markets have remained between 7.50 percent and 7.75 percent for almost two years, according to RCA.