CRE foreign investment roared back in 2021— with a few focus shifts

Overseas investors spent $70.8B in 2021, leaned into warehouses and multifamily rental

Maja Procz, global head of transactions, Commerz Real (Commerz Real, LoopNet)
Maja Procz, global head of transactions, Commerz Real (Commerz Real, LoopNet)

Foreign investors were boxed out of the American commercial real estate market for much of 2020, but they roared back for the sector’s record-breaking 2021.

Overseas investors bought $70.8 billion of commercial real estate last year, according to data from Real Capital Analytics reported by the Wall Street Journal. The total almost doubled from 2020 and reached the highest overall total since 2018, when investors spent $94.6 billion.

While spending made its way past pre-pandemic levels, the types of properties that pulled in funds varied.

The focus has shifted from office buildings and hotels in major cities like San Francisco and New York to warehouses, rental apartments and pharmaceutical office buildings, the Journal reported.

Smaller markets also pulled more attention from foreign investors last year. A record 64 percent of overseas investments took place in non-major markets, up 11 percent from two years earlier.

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Several foreign investors took advantage of having offices in the United States by getting back into commercial real estate purchases before those contending with international travel restrictions.

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Bahrain-based Investcorp spent $2.5 billion in 2021, according to the Journal. The deals by the company, which has an office in New York, include its January 2021 purchase of five apartment buildings across the U.S. valued at $330 million.

Commerz Real bought no American real estate in 2020. The investor made a major splash in 2021, however, buying the office building at 100 Pearl Street in Manhattan for $850 million.

“As soon as [travel] became possible in the early summer last year, we started our international activities,” Maja Procz, Commerz Real’s global head of transactions, told the Journal.

Commercial real estate had a monster 2021, more than simply bouncing back from a tough 2020.

Real Capital Analytics data reported last month show commercial property sales totaled $809 billion in 2021, a record for the industry. The sales volume was almost doubled from 2020 and easily surpassed 2019’s record of about $600 billion.

[WSJ] — Holden Walter-Warner