By Michael Savino on November 24th, 2021
Cross-border investors in U.S. commercial real estate held a steady share of the market through the worst of the pandemic as both domestic spending and cross-border spending dropped. However, during the crisis the preferences of overseas capital have changed.
Before Covid-19 erupted, cross-border investors favored investments in the 6 Major Metros such as New York and Boston. As shown in the chart on the left, since the crisis arose this investor group has leaned more to the Non-Major Metros, which may help liquidity and in turn price growth in these areas. In the four quarters through Q3 2021, the Non-Major Metros garnered 63% of cross-border acquisition capital, up from an average of 46% in the years 2015 to 2019.
Looking at the office sector alone, which was historically a key target of overseas buyers, there has been a shift from downtown office towers to suburban assets, as shown in the chart on the right. During 2015-19, suburban office properties represented 30% of total cross-border investment in the office sector. In the four quarters through Q3 2021, this share was 47%.
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