International investment in commercial real estate is dominated by Asian interests in both Canada and the U.S., according to a new survey from the Richard J. Rosenthal Center for Real Estate Studies at REALTOR®University and the National Association of Realtors®.
The survey found that 47 percent of Canadian respondents and 41 percent of those in the U.S. indicated that their international clients were from Asian countries.
“Commercial real estate has become a global industry, and Realtors® from across the U.S. and Canada now regularly serve clients from all over the world,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “This survey proves the fact that while all real estate is local, not all investors are local.”
The survey was done in collaboration with the Canadian Real Estate Association and with assistance from the CCIM Institute and Institute of Real Estate Managers. Nearly 3,000 Realtors® answered questions about their international commercial clients and the perceived changes they see in the demand for and utilization of office space.
According to the survey, 45 percent of Realtors® who practice commercial real estate in Canada noted an increase in international clients. Similarly in the U.S., more than a third of responders, 36 percent, observed an increase in international investment.
The survey found that in the U.S., 22.5 percent of international clients came from Europe, 21 percent from Latin America and 20 percent from the Middle East. In Canada, Realtors® said 18 percent of international commercial real estate investment came from the Middle East, 17 percent from Europe and 5 percent from Latin America. It is important to note that the heaviest cross-border investment in commercial real estate continues to be between the U.S. and Canada.
International investors brought significant capital into North America, nearly $13 billion in the latter half of 2014. Investors from Asiainvested $5.7 billion in real estate, $4.8 billion came from Europe, $1 billion came from Oceania and $390 million came from Latin American investors.
The survey also found a changing demand for office space in both the U.S, and Canada. Commercial clients are seeking more flexible office spaces, reducing the amount of personal space for workers and increasing the amount of communal space; 40 percent of Canadian respondents and 45 percent in the U.S. said their clients are looking for more open space in their offices.
The location of offices spaces is also seeing a shift. In Canada, a majority of investors is looking at property in metropolitan areas with populations of more than 1 million. In the U.S., however, investors have begun moving away from larger markets into secondary and tertiary markets; more than one-third of U.S. respondents reported investors are interested in markets with populations less than 750,000.
Highlights from the report are available at www.realtoru.com/real-estate-studies/current-research-programs/international-commercial-real-estate-investment. A full copy of the report is available to news media upon request.