Canadians will lead investment in US commercial real estate in 2020

by Steve Randall30 Sep 2019

A survey of commercial real estate executives shows that Canadians will lead investment in the US market in the coming 12 months.

The State of the Market report from international law firm DLA Piper reveals cautious optimism in the CRE market in the US and internationally, despite concern about political matters and the potential for a recession.

On a scale of 1 (bearish) to 10 (bullish) most respondents were in the 6 to 7 range with 48% citing the US economy and 43% opting for the abundance of available investment capital.

Canada was cited by 55% of respondents as the most likely source of foreign investment in US CRE, aligned with the last survey at 56%.

“This year’s survey demonstrated that, despite a slowing global economy, the US CRE market continues to grow, spurred in part by evolution within the industry. Some of the opportunities created by this evolution are innovative, new technologies that are changing CRE and attracting investors into the market,” says John Sullivan, chair of DLA Piper’s US Real Estate practice and co-chair of its Global Real Estate practice. “The continued optimism in the CRE industry is encouraging, of course, but as our survey also uncovered, caution is evident in many corners.”

Challenges and impacts
Apart from political issues (37%) the main reasons for those who expressed bearishness include low cap rates (13%), reduced foreign investment (4%) and decreasing investor appetite (4%).

The most active investors in 2020 were predicted to be in private equity and pension funds/endowments.

Among the likely biggest impacts on CRE for the coming year, the execs cited tech-focused sectors including e-commerce (85%), continued evolution of logistics and warehousing (78%) and the sharing economy (59%).

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