Despite concerns over a prolonged downturn in the U.S. commercial real estate market in 2021, the opposite was true. Demand for space increased, with the sole exception being the office sector. International investors sat up and took notice, upping their capital flow into U.S. properties.
The Trends report noted that cross-border capital flows increased during four quarters through Q3 2021. In the large commercial real estate space (at least $2.5 million or higher), international inflows increased by 44% from 36.6 billion in 2020 to $52.9 billion in 2021, accounting for 8% of the $638.2 billion in U.S. commercial real estate acquisitions.
Canada led the way as the top investment country, followed by Asia and Saudi Arabia. And those funds ended up buying multifamily, office and industrial properties in Seattle, Atlanta and Dallas. The usual investment targets were down on the list, such as Manhattan (which fell to #8) and Los Angeles (at #11).
Meanwhile, foreign investor acquisitions in the small commercial market (transactions less than $2.5 million) more than doubled from $2 billion in 2020 to $4.8 billion in 2021, with Florida, Texas and California making up the top destinations. Latin America and Canada topped the list of international buyers, with multifamily assets and land the preferred property types.
The NAR forecasts a positive 2022 outlook for foreign investment, due to easing travel restrictions and an overall increase in vaccination rates.
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