Jamil Harkness is a senior industrial analyst at CBRE.

Foreign capital is rushing into the Southern California industrial market. A recent report from CBRE shows that foreign industrial investment has tripled in Southern California. While strong demand and the expansion of ecommerce and third-party logistics has been the key driver of the industrial market, high profits are fueling the increase in foreign industrial investment. This capital has targeted industrial assets in Los Angeles, Orange County and the Inland Empire, and China, Singapore and Canada have been the most active foreign capital sources.

“Outside of e-commerce, last-mile and omnichannel supply chains, the lure of higher profits and friendly investment environment are key reasons for the strong influx of foreign capital into the greater L.A., Orange County and Inland Empire region,” Jamil Harkness, senior research analyst at CBRE, tells GlobeSt.com. “Many of these foreign nations understand the importance of being better integrated within the global economy. In many cases, overseas investors can achieve higher returns abroad than they would in their own country, and the overall increasing deregulation of capital from foreign nations has enabled the strong influx of overseas investments during this current expansion cycle.”

Although strong returns have been the major motivator of foreign investment—particularly at this heightened level—investors are focusing on warehouse and distribution facilities. For long-term holders, these assets promise stability. “The heightened level of demand to lease warehouse space coupled with strong rental growth has created an asset type for those seeking stability and good long-term returns,” says Harkness. “The increased amount of investment into industrial assets is now rivaling the more traditional value-add categories, such as multifamily and office.”