Commercial Drawing in Global Investors
Wednesday, July 11, 2018
By: Suzanne De Vita
Reprinted with permission from RISMedia. Copyright 2018. All rights reserved.
Abroad and at home, the economy is firming up—and in the commercial market in the U.S., international investors are riding the uptrend, according to a National Association of REALTORS® (NAR) report.
In the last five years, 35 percent of commercial REALTORS® have had more commercial clients from outside the U.S., and, in 2017, 18 percent closed with a client from another country, and 19 percent completed a lease with a foreign homebuyer.
“Since 2016, world economies have regained their footing and have pressed toward higher ground,” says Lawrence Yun, chief economist at NAR. “Global economic output increased in 2017, and commercial real estate continues to be a healthy investment for global investors.
In 2017, commercial clients were generally homebuyers—of commercial transactions, 46 percent were buyer-side transactions and 13 percent were seller-side transactions, according to NAR. The average buyer lived outside of the U.S., while the majority of sellers were living temporarily in the U.S., on visas. Of all commercial transactions, the median price was $625,000 (buyer sides, $975,000, and seller sides, $1 million). Across both, 70 percent were cash purchases.
Both buyers and sellers hailed from China and Mexico, mostly, but buyers also came from Canada and the UK, and sellers from Brazil and Israel, the report shows. The commercial markets that were the most popular? Florida and Texas.
“REALTORS®’ international clients found U.S. commercial real estate markets to be a good value in 2017,” Yun says. “About seven in 10 respondents reported that international clients view U.S. prices to be about the same or less expensive than prices in their home country.”
The average commercial REALTOR® serves a smaller market, with deals under $2.5 million, according to the report.
“The profile of smaller commercial markets is continuing to rise as many foreign investors are attracted to smaller-sized properties in secondary and tertiary markets, bringing REALTORS® confidence that increased sales and leasing activity will continue to occur in 2018,” says Yun.
In large markets, commercial sales sank 5 percent year-over-year, NAR reported in September. Activity climbed 4 percent in farther-flung markets.
The National Association of REALTORS® is a principal member of FIABCI-USA.