Cross-border commercial investment follows broader market patterns to industrial, multifamily sectors

Reflecting pandemic-era shifts within commercial real estate as a whole, the cross-border investment market in 2021 saw a changing of the guard when it came to most sought-after sectors for property, according to Real Capital Analytics (RCA).

Cross-border investors acquired $70.8 billion in commercial property in 2021, RCA reported — up 92% from the pace set during COVID-ravaged 2020. Notably, cross-border activity in 2021 accounted for 8.5% of total commercial real estate investment, reaching roughly the same share that it took up in 2019 before the pandemic took hold on U.S. soil.

Consider, though, that central business district office was king for overseas investors in 2019, comprising 27% of all cross-border capital that year. Last year, that share shrank to just 14% of all deployed funds, overshadowed more than twice over by industrial, the new darling for enterprising investors abroad.

Industrial properties garnered 34% of all cross-border investment, led by the purchase of a 328-asset portfolio by Singapore’s GIC from Sweden’s EQT Exeter. That buy, a $6.8 billion transaction that ranks as one of the largest-ever purchases of warehouse space, closed in November.

Apartments, too, have surpassed offices in the pocketbooks of cross-border funders. Multifamily commanded 30% of overseas investment in 2021, headlined by Canadian group CPDQ’s acquisition of a 9,922-unit apartment portfolio from Greystar; that deal was one of 24 sales of apartment portfolios involving cross-border investors last year.

Correlatively, the swing in sector preference has also heralded a shift in geographic focus for investors outside the United States. Portfolio purchases in industrial and multifamily heightened the activity of cross-border investors outside the United States’ six major metros for commercial property (Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C.). Sixty-two percent of cross-border capital went to assets outside the Big Six last year, compared to an average of just 40% from 2011 to 2017.

Boston was 2021’s top destination market for capital coming from abroad, and Manhattan — despite cross-border volume in the borough dropping 15% year over year — came in third. But Atlanta (second), Phoenix (fourth) and Dallas (fifth) also penetrated the upper echelon of cross-border target cities last year, thanks in large part to extensive, liquid markets in both the multifamily and industrial sectors within their metropolitan areas.


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