Canada is cooling on US trophy towers, eh?

Firms like Ivanhoe Cambridge are betting on industrial properties
August 23, 2017 11:00AM

Oh Canada, why won’t you buy our office buildings anymore? The friendly neighbor to the north is cooling on trophy commercial properties after years of frenzied buying and started shifting its focus to industrial and multifamily buildings.

A mere 39 percent of Canadian investment in U.S. real estate in the first half of the year went into office buildings, compared to 95 percent for Japanese, 81 percent for German and 71 percent for Chinese investors, according to Real Estate Alert.

Industrial properties accounted for 29 percent of Canadian spending, and multifamily buildings for another 27 percent. In one noteworthy deal, Montreal-based pension fund manager Ivanhoe Cambridge paid TPG Real Estate $1 billion for Evergreen Industrial Properties last month.

One reason why Canadians are less keen on trophy towers is that they tend to know the market better and are more willing to venture off the beaten path. “Canadians are more mature in their U.S. exposure and participation, and more comfortable with the market” than other foreigners, JLL researcher Sean Coghlan told REA. “At the core, this connects to the continuity in culture between the markets, similarities of the demographics and sectors, and a resulting risk appetite which is greater than other foreign sources.” [REA] — Konrad Putzier