WASHINGTON, DC—With capital flows shifting decidedly toward North America, and the US in particular, the value of commercial real estate stock held by investors hit a new high of $13.6 trillion in 2014, DTZ says in its annual “Money Into Property” report. North American stock climbed 5% over 2013 and is now 2% above its 2007 peak, and at $4.2 trillion it is gaining on Europe, which saw flat growth last year. Also expected to surpass the '07 peak is CRE investment in North America in 2015: $390 billion, compared to $373 billion at the height of the previous cycle.

“Foreign investment in the US property markets is soaring,” says Kevin Thorpe, DTZ's chief economist, in a release accompanying the report. “International capital is now involved in nearly 20% of total sales volume in the US, more than double the norm.'

Some of that activity is driven by capital preservation, Thorpe says. “Some of it is driven by relative yield, which still generally favors the US, and some of it is driven by an economic trajectory that is a clear standout on the world stage.” Regardless, in the absence of a black swan, Thorpe predicts that “US capital markets will shatter records this year, both in terms of volume and pricing.”

The cross-border capital flows into the US may be a continuation of a trend we've seen for the past few years, yet Thorpe tells GlobeSt.com there's been a shift in buyers' priorities. “There is clear evidence that foreign investors are drifting into new geographies and new product types,” he says. “Up until last year, foreign capital was targeting, almost exclusively, core assets in gateways, office and multifamily specifically. This year, it is evolving into high-quality assets of any type, in any major market.”

He points to the example of Atlanta, which lately has become a target for foreign capital. “Two years ago, crickets,” says Thorpe. “Foreign investors still favor core assets in gateway markets by a mile, but given the limited opportunities for that product, the foreign capital tsunami is splashing all over the place.”

The report compares the capital markets in the US favorably to those in Europe, which are not as advanced in terms of recovery. Not surprisingly, this lag continues to have some bearing on the quality and availability of European product.

“To be clear, the capital markets in the eurozone are also strengthening, but it's more uneven,” Thorpe tells GlobeSt.com. “Core assets in the prime markets such as London and Paris are just as white-hot as the gateways in the US. Prime yields even in markets that were behind the curve, such as Spain and Italy, are compressing."

However, he says, outside of the prime assets and markets, “lenders are still far more cautious, so lower LTVs and less buyer interest are the themes. There is also a fairly sizable backlog of troubled assets that Europe is still working through. Beyond the prime assets in the prime markets, Europe is generally where the US was two years ago—improving, but slow and with pain points.

The report also notes that part of the reason that North American stock is closing in on Europe's $4.4 trillion is the strengthening of the dollar compared to the euro. Yet Thorpe says “too much has been made” of the rising dollar.

“The rising dollar is a function of the US economy being on a faster growth trajectory than the majority of the advanced and emerging world,” he says. “In other words, faster growth leads to higher NOI and greater asset appreciation, and that trumps exchange rate fluctuations to a certain degree.”