by Brianna Crandall — April 17, 2015—International investment in commercial real estate (CRE) in Canada and the United States is on the rise, along with an increase in demand for flexible and open office spaces, according to a recent survey from the Richard J. Rosenthal Center for Real Estate Studies at Realtor University and the National Association of Realtors.
International investment in commercial real estate
International investment in commercial real estate is reportedly dominated by Asian interests in both Canada and the United States. The survey found that 47% of Canadian respondents and 41% of those in the USA indicated that their international clients were from Asian countries.
The survey was done in collaboration with the Canadian Real Estate Association and with assistance from the CCIM Institute and the Institute of Real Estate Managers (IREM). Nearly 3,000 Realtors answered questions about their international commercial clients and the perceived changes they see in the demand for and utilization of office space.
According to the survey, 45% of Realtors who practice commercial real estate in Canada noted an increase in international clients. Similarly in the United States, more than a third of responders, 36%, observed an increase in international investment.
The survey found that in the USA, 22.5% of international clients came from Europe, 21% from Latin America, and 20% from the Middle East. In Canada, Realtors said 18% of international commercial real estate investment came from the Middle East, 17% from Europe, and 5% from Latin America. It is important to note that the heaviest cross-border investment in commercial real estate continues to be between the United States and Canada, points out the NAR.
International investors brought significant capital into North America, nearly $13 billion in the latter half of 2014. Investors from Asia invested $5.7 billion in real estate, $4.8 billion came from Europe, $1 billion came from Oceania and $390 million came from Latin American investors.
Changing demand for office space
The survey also found a changing demand for office space in both the USA and Canada. Commercial clients are seeking more flexible office spaces, reducing the amount of personal space for workers and increasing the amount of communal space; 40% of Canadian respondents and 45% in the U.S. said their clients are looking for more open space in their offices.
The location of offices spaces is also seeing a shift. In Canada, a majority of investors is looking at property in metropolitan areas with populations of more than 1 million. In the USA, however, investors have begun moving away from larger markets into secondary and tertiary markets; more than one-third of U.S. respondents reported investors are interested in markets with populations less than 750,000.
Highlights from the “Cross Border Demand and Investment: Shifting Office Space Demand” report are available online, and a full copy of the report is available as a digital download or printed report from the NAR Realtor Store.
