In the Americas, total real estate investment surged 32% to $170.7 billion, primarily driven by the trading of prime US properties acquired as a part of private equity led REIT privatizations and subsequent portfolio break-ups. Domestic investors bought most of the prime assets, a notable change from 2006. However, cross-border investment also increased. Latin America had an especially strong first half of the year as global, North American and European investors vied for assets there.

With regard to US industrial trades, domestic investors were dominant on the buy side. US sources bought $19.8 billion of industrial product or 88.3% of total volume. Global sources purchased $2.3 billion or about 10.3% of the total. Of the remaining 1.4%, UK investors bought $147 million and buyers from the Netherlands bought $103 million. The Netherlands was the next largest source of capital for industrial property, providing $63 million. On the sell-side, US investors disposed of 79.8% of the transaction volume and global investors accounted for another 18.8%.

Cary Krier, newly hired senior vice president in the Dallas office of the Jones Lang's capital market groups, says foreign interest in US industrial real estate remains limited because of its low-profile nature. "It's not very sexy, and that's probably the biggest reason the international guys don't participate," he observes. "They like to own things they can point at. Industrial is not on their radar screens. People from the Mid-East and Asia, who are new to this market, don't get out beyond the centers of major cities. I think they'll get there eventually, but not yet."

As for US investment in other parts of the world, Krier says there's huge demand for industrial expertise in terms of development, but completed investment product remains in short supply. "I don't think capital flow tracks as much on investment as on development," he says. "Like everything else, they're catching up to us, but they've got a ways to go."

A major advantage to industrial product now, Krier adds, is that purchases generally have not been highly leveraged, meaning sales are less affected by the current lending crisis. "The leverage for industrial deals is typically 60% to 70%," he adds, "and that kind of loan is still available. Nobody is stretching to do much right now, so there's less velocity, but overall the lending situation should have minimal impact on industrial."

In terms of general investment, Steve Collins, managing director of Jones Lang's international capital group, reports a "flight to yield" in the Americas, with investors seeking relative value in secondary and tertiary markets less affected by recent yield compression.

In contrast, Collins says, Europe is experiencing a "flight to quality," with the pricing for some secondary assets now considered too close to that of prime assets. Asia is increasingly becoming the destination of choice for opportunistic international capital due to continuing strong economic growth and low interest rates, he adds.

According to Tony Horrell, CEO of Jones Lang's European capital markets group, the company expects global real estate markets to remain strong for the remainder of the year, though investors will likely become increasingly selective about markets. "Globally, we continue to see a weight of money targeting the sector, as evidenced by the record real estate funds raised by private equity in recent months," he explains. "Cross-border investment remains strong, driven by global, Middle East, North American, Irish, German and Australian funds."