RCA Insights

No Q3 Comeback for Cross-Border Deal Activity in US

By on November 4th, 2020

Total U.S. investment activity improved to some degree in Q3 2020, with sales volume up more relative to Q2 2020 than normal seasonal patterns would suggest. Not so for cross-border investment. Deal volume for cross-border buyers edged lower in the third quarter.

Cross-border investors were behind $3.5 billion of deal volume in Q3 2020, down 71% from the level of Q3 2019. Still, this third quarter level is better than the low of $0.5 billion seen in the depths of the Global Financial Crisis.

cross-border commercial property transaction volume United States

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Cross-border investors are usually focused on particular types of properties. These investors have large amounts of capital to deploy, and while cap rates might look fantastic in areas like suburban Tulsa, for example, the types of properties these investors pursue are not often found in smaller markets. The issue is one of economies of scale, with cross-border groups finding it easier to purchase larger properties.

Looking at U.S. sales volume by the size of the deals involved, the sharpest declines have been for the largest transactions. Sales for assets priced greater than $50 million fell 61% year-over-year in the third quarter, versus a 39% year-over-year pace of decline for properties priced $5 million and below. Local investors and especially private capital sources are more focused on this smaller end of the market.

Deal activity on the larger end of the spectrum is always more volatile than the market overall, with higher highs and lower lows for rates of growth. Cross-border investors operate in this more volatile segment of the market, helping to explain at least some of the lack of a rebound in third quarter deal activity. A rebound, however, is not in the cards so long as the Covid-19 pandemic restrains international travel.


Real Capital Analytics will release the Q3 2020 edition of the US Cross-Border Investment Compendium in November. This report dissects the who, where, what and how of cross-border investing in the world’s largest commercial real estate market. Not yet an RCA client? Contact us to learn more. 

Also on RCA Insights:

Cross-Border Investors Into US Retreat in Second Quarter

Which Cross-Border Heavyweights Are Buying in APAC?

Chart: Global Activity Tracker, Reckoning at End of Q3


Jim Costello

Jim Costello

Senior Vice President

Jim Costello has worked in the CRE space on issues of urban economics since 1990, including a 20-year stint at Torto Wheaton Research. Jim expanded the reach of the Torto Wheaton Research team developing forecasts of global market fundamentals. He also developed approaches to pair the forecast results with frameworks to answer investor questions on asset values and relative investment opportunities.

In the aftermath of the Global Financial Crisis, Jim provided advice to the Treasury Department and helped educate these professionals on commercial real estate performance. Jim is a member of the Commercial Board of Governors of the Mortgage Bankers Administration, where he helps policy makers understand the commercial real estate industry.

Jim is expanding the capabilities of the Real Capital Analytics team on issues of real estate market dynamics. Jim has a master’s degree in economics and is a member of the Counselors of Real Estate.