30 Hudson Yards' net-lease transactions rounded out the top-20 net-lease transactions nationwide in Q2. Photo by Hudson Yards.
NEW YORK—New York City clocked in at number one for net-lease investment for the second quarter of 2019, outperforming high-growth cities like San Francisco and Boston. The Big Apple cemented itself as an all-star in a rosy US market for Q2 net-lease investment opportunities, encouraging market sentiment for years to come, according to a recent CBRE research report.
Plumping up the New York City market is a steady stream of net-lease investment properties, most notably 30 Hudson Yards. The net-lease transactions for the mixed-use office tower on the West Side of Manhattan rounded out the top-20 net-lease transactions nationwide in Q2. And although US investors are bullish on high growth secondary markets, they have leaned toward gateway markets like San Francisco and Boston in droves, resulting in increased net-lease investment volume consecutively for the past several years.
Net-lease investments into the Big Apple are up 46.4% year-over-year, and the total volume of net-lease investment is up 8.6% from Q2 2018 at $2.6 billion. Nationally, net-lease investments are also pulling numbers. US net-lease investment volume for Q2 2019 was the second-highest recorded to date, totaling $20.6 billion, up 33.8% year-over-year. Overall, net-lease investment volume for the year-ending Q2 2019 totaled $74.2 billion, the highest CBRE has ever reported.
The office and retail sectors were the biggest drivers of net-lease investment volume, achieving 65.7% and 52.2% growth year-over-year, respectively. Meanwhile, industrial's growth remained steady at 0.6%, but experienced a 10.9% decline in market share, eclipsed by the increased market share of office and retail.
Institutional and private buyers, the two largest investor pools for net-lease investment, have further propped up net-lease volumes, upping their acquisitions volume by 45.9% to $8 billion and 46.5% to $10 billion. International investment saw its greatest participation since 2015, representing 18.8 percent of net-lease transaction volume in Q2 2019, increasing acquisition volume 78.4% to $3.9 billion from $2.2 billion in Q2 2018.
The increase in cross border investment into the net-lease space is driven by investor demand to diversify their portfolios for risk-adjusted returns the report cited, with many having an eye toward New York City, San Francisco, Los Angeles and Chicago, cities that received the most foreign capital for net-lease investment.
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Mariah Brown
Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.
