Seattle Eclipses Manhattan as Top Market for Cross-Border Buyers

Seattle surpassed Manhattan to become the leading U.S. market for cross-border investment, reported Real Capital Analytics, New York.

RCA’s U.S. Cross-Border Investment Compendium said Seattle claimed the No. 1 spot for the 12 months through first-quarter 2021, followed by Manhattan, San Francisco, Chicago and Dallas.

“Only once before has Manhattan not been the leading market for cross-border direct acquisitions of commercial real estate,” said Jim Costello, Senior Vice President with Real Capital Analytics. “That time was during the depths of the Global Financial Crisis when deal activity fell so sharply everywhere that cross-border deal volume was measured in the tens or hundreds of millions across markets rather than in the several billions.”

Cross-border investment activity actually fell in Seattle over the 12 months through first-quarter 2021, but less so than in Manhattan, Costello noted. “Manhattan has slipped so much in part due to the uncertainty over the office market,” he said. “In years past, the large, core assets on offer in the Manhattan office market fit well with the investment objectives of many cross-border investors.”

The Association of Foreign Investment in Real Estate, Washington, D.C., recently reported that three in four international investors said they plan to increase their investment in U.S. real estate in the next three to five years. AFIRE said U.S. investment allocation by non-U.S.-based investors could increase 71 percent over that time.

“The top three factors attracting investment into the U.S.–quality of assets, portfolio diversification and income return–are consistent with the rationale for investing outside the U.S.,” AFIRE said. “The range of assets available in the U.S. as well as ease of doing business are substantive motivating factors for U.S. investment.”

JLL, Chicago, said the post-pandemic capital markets recovery varies by country, with larger and more liquid markets exhibiting greater resilience. The firm’s Global Real Estate Perspective report said worldwide transaction volumes totaled $187 billion during the first quarter, a 13 percent decline year-over-year.

“Domestic access to capital is playing a pronounced role in the markets, as cross-border capital flows remain stunted by challenging border restrictions,” JLL said. “Despite near-term hindrances, longer-term tailwinds favor commercial real estate markets. Institutional allocations are forecast to climb further during 2021 and fundraising efforts are stabilizing, providing ample liquidity to the property market.”