Cross-Border Industrial Investment Hit Nearly $20B Last Year
The markets benefiting most from cross-border investment are shifting with Memphis, Phoenix, Houston, Philadelphia and Indianapolis all also gaining in popularity.
Cross-border investors accounted for nearly $20 billion in industrial deals last year, signaling the continued dominance of the sector in the US.
There was more than $143 billion in total industrial transactions in 2021, up 32% over the previous high in 2019, according to JLL. Cross-border investors made up $19.5 billion of that total, up 152% over 2020 numbers.
In another intriguing signal, five countries account for 91% of 2021’s total cross-border transaction volume, led by Singapore with 57%, Canada with 21%, and Bahrain, France and South Korea. Singapore’s deal volume was led by GIC’s $6.8 billion portfolio purchase from EQT Exeter in the fourth quarter, according to JLL, while Canadian investors increased their US deal flow by nearly 65% year-over-year. Canadian investment was led by the $2.2 billion-acquisition of a 14.5 million-square-foot infill and light industrial portfolio by Oxford Properties Group.
“Capital typically follows strong property fundamentals, and the strength of underlying property fundamentals has helped investors offset inflation fears, driving a record level of investment activity in 2021,” said Senior Managing Director John Huguenard, an Industrial Platform Leader with JLL’s Capital Markets group. “The favorable consumption patterns in the U.S., combined with the pressure to allocate record level dry powder, will continue to drive investors to the industrial sector in 2022.”
JLL analysts also note that the markets benefiting most from cross-border investment are shifting: while Dallas, Chicago, Atlanta, Los Angeles and the Inland Empire continue to be favored markets, Memphis, Phoenix, Houston, Philadelphia and Indianapolis are all also gaining in popularity.
Data from Real Capital Analytics shows that cross-border deals accounted for 8.5% of total US property acquisitions and are officially back to pre-pandemic levels. Globally, sales of commercial real estate hit $1.3 trillion in 2021, according to RCA. Industrial led the way, followed by apartments, which accounted for 30% of cross-border deals.
In 2021, just 38% of cross-border capital focused on the six biggest US metros, according to RCA. Manhattan fell to the #3 spot, behind Boston and Atlanta.