Strong fundamentals, the increasing sophistication of logistics facilities and ecommerce growth is driving a surge in foreign industrial investment in the United States, CBRE reports.
“Many foreign institutional investors view the U.S. as a safe country for investment, with opportunities to scale quickly and establish strong logistics platforms poised for growth,” says Jack Fraker, managing director, global industrial & logistics, capital markets, for the global commercial real estate services firm.
Foreign investors have acquired nearly $61 billion in U.S. industrial real estate since 2010, 48% of those funds have come from Asia-Pacific-based investors, largely from Singapore and China.
Canadians also invested more than $17 billion in U.S. industrial real estate assets during this period.
Cross-border investment in U.S. industrial real estate has increased by an annual average of 67% since 2010. Year-to-date in 2017, the cross-border share of the total investment is at 14.5%, excluding large entity deals, compared to 1.9% in 2010.
Greater Los Angeles attracted the most foreign capital ($1.4 billion) since 2010, CBRE research reveals. Other markets that saw significant foreign investment during this period include San Francisco/Oakland, Seattle and Phoenix.
Each of these markets benefits from strong demographics and well-established logistics hubs.
“Over the past decade, industrial real estate has evolved into an attractive property sector, with logistics facilities becoming more sophisticated and market fundamentals strengthening due to new consumer buying preferences,” Fraker says.
Investors from Asia have been motivated to limit their exposure to economic volatility throughout their region, as well as higher valuations and lower yields relative to U.S. industrial assets, he notes.
“We have seen Koreans come in this way, as well as smaller European investors.” Fraker observes.