Our neighbor to the north continues to dominate foreign-sourced investments in the U.S. commercial real estate market. Canada’s cross-border investors have maintained their preeminent position in recent times, placing $12.8 billion in capital in 377 U.S. properties from third-quarter 2020 through second-quarter 2021.
This equates to more than 34% of all foreign investment in the U.S. during the period, according to Real Capital Analytics (RCA). No other country was even close. Second on the list was South Korea with an acquisition volume of $4.2 billion during these four quarters.
RCA reported that Canada’s acquisition momentum was starting to slow, with sales volume down 4% from the pace set in the 12-month period that ended in Q2 2020. Con-sidering all that has happened over the course of the COVID-19 pandemic, however — including the closure of the Canadian-American border — a 4% drop seems quite minor.
Canada’s strong position is nothing new as the nation’s investors have led cross-border acquisitions into the U.S. for at least the past three years. According to RCA, the largest Canadian player in the U.S. market is Brookfield Asset Management, one of the world’s largest asset management companies with more than $600 billion in property under its purview. This behemoth was everywhere during the period from Q3 2020 through Q2 2021 as it bought 28 properties in the U.S. for an aggregate volume of more than $2 billion. A Brookfield subsidiary, the publicly traded Brookfield Property Partners, was third on RCA’s cross-border acquisition list with 36 asset purchases totaling slightly less than $2 billion.
On the other side of the coin, Brookfield Asset Management also led the list of top cross-border sellers during this time frame, shedding 33 properties worth more than $4 billion. Brookfield Property Partners sold 19 properties for nearly $1 billion during this period.
One of Brookfield’s most ambitious projects is the Manhattan West development — an eight-acre, six-building, mixed-use complex in New York City’s Hudson Yards district. Started in January 2013, Manhattan West opened to the public in September 2021 and is estimated to have cost Brookfield nearly $5 billion to build. The site includes more than 7 million square feet of office space, luxury apartments, a boutique hotel, retail stores, restaurants, a seasonal ice rink and open spaces.
While Canadian firms invest throughout the world, the U.S. has traditionally been their favorite place for buying and selling properties. By a wide margin, Seattle was the top U.S. metropolitan market for Canadian direct investment from Q3 2020 through Q2 2021, RCA reported. Canadian buyers spent nearly $2 billion on Emerald City assets. The next metro area on the list was Atlanta at nearly $1 billion, followed by Dallas, San Jose, Phoenix, Boston and Northern New Jersey.
Nicola Wealth Real Estate (NWRE), based in Vancouver, British Columbia, has continued to expand its U.S. portfolio that is focused on metro areas in the West such as Denver, Las Vegas, Phoenix and Seattle. In 2021, NWRE bought various Seattle-area parcels, including the Northgate Executive Center (a 200,000-square-foot office park north of downtown) and the SODO Urbanworks site (a 170,000-square-foot industrial/flex space on a 6.78-acre site near the Port of Seattle). Urbanworks is home to several wineries, bars and restaurants.
NWRE also acquired a 26,000-square-foot, multitenant industrial property in Kirkland, Washington, a fast-growing suburb to the east of Seattle. Despite these uncertain economic times, Canadian investors appear to be continuing their pattern of betting big on the U.S. ●