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Net-Lease Investment Continues to Rise, Foreign Buyers Lead Charge
Rising demand for U.S. net-lease real estate led to $57.8 billion in investment volume last year, which CBRE says is the second-highest annual total since the Los Angeles-based company began tracking the market in 2002. U.S. net-lease transaction volume, comprising office, industrial and retail properties, was up by 3.3% from 2016.
CBRE’s Guy Ponticiello, says, “Net-lease assets are well-positioned to satisfy both yield and diversification requirements, as well as offer a relatively low-risk investment option. Foreign investors are diversifying their portfolios with U.S. net-lease properties due to a persistent lack of yield opportunities abroad, and their increased market share could signal the start of a longer-term upward trend.”
Canada, South Korea and China were the top buyers. Over the past four years, foreign investors increased their U.S. net-lease holdings more than any other investor group, adding a net balance of nearly $10 billion since 2014. That represents 65% more net investment than that of private equity investors over the same period.
Cross-border investment in U.S. net-lease properties has risen to $6 billion annually over the past three years, from $2.1 billion annually between 2003 and 2014. CBRE reports that’s increased foreign investors’ market share to more than 11% from 8%.
CBRE predicts investment volume in 2018 will be comparable to 2017, with increasing investor appetite for net-lease office and industrial assets.
– Industrial sector expanded by 12.5% year-over-year
– Retail volume remained stable year-over-year
– Office volume fell modestly, the first annual decrease since 2011
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