Mark Halloron, Director
GRS | Corteq
(732) 450-8960
[email protected]
It looks like the desire by investors, in general, to put money into U.S. commercial real estate has not waned. Despite that craving, and likely higher US interest rates in 2017, there is major capital in the waiting unspent on CRE.
A big part of that interest in real estate is coming from foreign investors, as illustrated in a recent Bisnow article, and there are billions of dollars looking for investment deals.
Partially due to Brexit, and other factors involving international uncertainty, three of the top five markets for foreign commercial real estate investment are in the United States, according to the Association of Foreign Investors in Real Estate (AFIRE). Number one is New York City. Los Angeles falls in fourth while, San Francisco is fifth (London and Berlin fail in between).
This is no surprise, based on current favorable commercial real estate fundamentals in the United States. While there’s been a recent flattening of pricing on high-end apartments, vacancy rates for most asset classes are lowering, and secondary markets domestically continue to gain interest, a trend that will likely continue as investors shop for yield outside of gateway cities.
According to data collected by AFIRE, the most stable country in the world is the United States, based on companies looking for the best opportunity for capital appreciation. It is also considered the most secure and stable country in which to place investments.
From sovereign wealth funds to investment banks, their foreign-investment interest lies as follows: multifamily and industrial are both tied for the most potentially opportunistic, followed by well-placed retail, office and hotels, according to AFIRE.
Depending on a number of factors, given the uncertainty of changes in the United States due to the presidential-administration shift, most observers of commercial real estate seem to believe that not a whole lot will change for CRE in the next few years. If that is the case, and CRE fundamentals continue to track as they have the last several quarters, there is no reason to think that foreign investment in commercial real estate will wane any time soon.