Los Angeles has become the top investment destination for institutional capital, bumping New York out of the number one spot, according to new research from CBRE. In 2017, equity funds accounted for the majority of the institutional investment activity, increasing 60% year-over-year to $6.2 billion. Foreign investment activity also accounted for a significant portion of institutional funds, however, the number fell over prior years. We sat down with CBRE's George Entis, senior research analyst of capital markets and Michael Longo, VP, to talk about the surge of private equity activity in Los Angeles.

GlobeSt.com: Why is Los Angeles attracting so much institutional capital?

George Entis: Global and institutional capital prefers safe and stable markets and it tends to focus disproportionally on major gateway markets. The nation's five largest investment markets represented roughly one-quarter of all institutional investment in the U.S. last year. In Los Angeles, high levels of investment and a strong local economy have contributed to a confident investor outlook. According to CBRE's Investor Intentions Survey 2018, Los Angeles ranked as the top metro for property purchases for the third consecutive year. Nearly half of survey respondents—47%—indicated that strong economic fundamentals driving rental value growth was the primary factor that attracted them to their preferred metros. Global investors are also attracted to Los Angeles because Class A properties can be acquired at a relative discount when compared to other gateway markets, like London, Manhattan and San Francisco.