When it comes to foreign investment in industrial real estate, Los Angeles leads the nation, according to the latest research released last week by CBRE. In fact, the Greater Los Angeles area has attracted the most foreign capital—$1.4 billion in sales of buildings and properties — in the high-growth industrial sector since 2010. Other markets that saw significant foreign investment during this period include San Francisco/Oakland ($476 million), Seattle (with $449 million) and Phoenix (with $508 million). Each of these markets has benefitted from strong demographics and well-established logistics hubs, according to the CBRE findings.
Furthermore, the sector is taking an ever-larger piece of the foreign investment pie, driven in large part by the rise of e-commerce and the subsequent need for distribution and warehouse facilities to support it.
“Historically, the foreign investors had much more interest in hotels and hospitality and high-rise office buildings and more trophy assets,” CBRE’s Barbara Emmons-Perrier, a broker specializing in industrial, office and land sales, told Commercial Observer. “And in the last year or two years that’s shifted to logistics because of the rise of e-commerce. We were not a favored product class for a lot of this foreign investment until recently.”
Gateway locations to major metropolitan markets in the United States, like Los Angeles, (home to two of the nation’s biggest ports—Los Angeles and nearby Long Beach respectively) as well as its proximity to Asia-Pacific are particularly appealing. (Foreign investors have acquired nearly $61 billion in U.S. industrial real estate since 2010, 48 percent of which has come from Asia-Pacific-based investors—largely from Singapore and China, according to CBRE.)
“Foreign investors are very attracted to core gateway markets which would be obviously Los Angeles and New York,” Emmons-Perrier said. “They want something with a recognizable name. They’re not doing much in Ohio or Minneapolis or Iowa. They want all the top markets. There are tremendous amounts of those developments and opportunities in Southern California. From Asia, it’s an easy direct flight into [Los Angeles International Airport]. It’s the ports and a lot of good fundamental historical data that point to why it’s happening here.”