Investors still love industrial real estate, no matter where they reside. The asset class saw higher-than-usual foreign investment in 2018, with the Chicago area making the top three markets for foreign funds.
According to CBRE research and Real Capital Analytics, foreign investors acquired $14.4 billion worth of U.S. industrial real estate in 2018. That’s a staggering 152 percent rise year-over-year and 29 percent above the average volume since 2015.
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The Chicago market raked in $618.4 million in foreign investment, good for third-best, following Los Angeles and Dallas/Ft. Worth. The three metropolitan areas combined for $2.4 billion in foreign investment in 2018. The lion’s share of foreign capital coming to Chicago came from China, which accounted for 38 percent. Singapore (34 percent), Israel (16 percent), Canada (8 percent) and Japan (4 percent) rounded out the rest of the list.
Foreign investors accounted for 21 percent of total U.S. industrial real estate investment volume in 2018. Nationwide, the $5.55 billion in Canadian investment and the $4.56 billion spent by Chinese buyers combined accounted for more than 70 percent of last year’s total foreign investment in industrial real estate. Singapore comprised 23 percent with $3.33 billion invested.
Last year’s increase was largely due to several large entity-level deals. In 2017, investment at the individual/portfolio level stood at $4.76 billion, while entity-level deals only totaled $960 million. Both numbers increased in 2018, but the $7.80 billion in entity-level deals surpassed the $6.63 billion in individual/portfolio transactions.
Even when excluding large entity-level transactions (which vary greatly from year to year and can skew annual comparisons), the average annual volume of foreign investment in U.S. industrial real estate during the past five years rose by 68 percent, indicating strong demand for individual industrial properties and portfolios.
