What Global Investors Want — and Where — in U.S. Commercial Real Estate

Global investors appear ready to selectively run with the bulls in U.S. commercial real estate assets.

The nation’s commercial real estate market showed numerous signs of recovery in late 2025 to set the stage for plenty of investments from across the globe this year, according to a recent outlook report from owner and developer Hines. While values in U.S. real estate have recovered more slowly than in Asia and Europe from lows experienced during the COVID pandemic, healthy rent growth is poised to fuel valuation gains in the ensuing years, the Hines report predicted. 

Foreign investors broadly view U.S. real estate as a viable bet despite macro challenges from inflation, interest rates and tariffs, according to Hines. 

Joshua Scoville, head of global research at Hines, noted that U.S. multifamily and industrial remain investor favorites globally despite some slowdowns in recent years. Scoville said the U.S. multifamily and industrial sectors have stood out among property sectors in lending yields, which have remained above cap rates. That signals to investors that net operating incomes are growing steadily enough to produce heavy yield opportunities in the next couple of years.

Scoville, who authored the Hines global investment outlook report, said that while the multifamily sector experienced oversupply challenges in the Sun Belt a few years ago, that dynamic has largely stabilized with construction starts down significantly. He stressed that the Midwest, led largely by Chicago, and the Northeast have garnered the most multifamily appetite from global investors. The Sun Belt remains on their radar.

“In terms of capital flows to Sun Belt apartments, you still see plenty of investors willing to look through that near-term softness because the Sun Belt will grow its way out of this oversupply problem,” Scoville said. “The Sun Belt is going to burn through that supply situation, and I think that evidence will start to be pretty apparent by the end of 2026, and then 2027-2028, when we have very little new deliveries, you’ll start to see those fundamentals move in a pretty strong direction to the positive.” 

Coastal cities led by New York and San Francisco along with Midwest markets experienced little new construction during the period when multifamily construction boomed across Sun Belt markets such as Nashville and Austin. That has sparked more global investor demand for multifamily in these coastal and Midwestern areas, Scoville said. 

Andrew Charles, a partner at law firm HSF Kramer who advises equity investors and developers, stressed a diminishing foreign investor outlook on the Sun Belt multifamily market due to oversaturation. He said that while Sun Belt multifamily supply has decreased in the last couple of years, absorption levels nevertheless remain slow.

These oversupplied multifamily markets have prompted global investors to give longtime favored coastal markets such as New York, San Francisco and Boston more of a look despite challenges with higher land costs in those regions, Charles said. 

“Those were not the prime deals of 2023 and 2024, so they may go back and look at those deals that are coming up now and see if those deals pencil out given land costs, construction and financing costs,” Charles said. “The fact that all of those costs are up makes deals a little bit more difficult to pencil, but they’re happening and they’re working toward it.” 

The U.S. industrial sector remains attractive to global investors, too, according to Scoville, with leasing picking up steam in recent quarters despite remaining well below pre-pandemic
averages — with the exception of the Dallas, Phoenix and Columbus, Ohio, markets. Scoville noted that there are “attractive” investment opportunities on expiring leases in Dallas, Atlanta and Chicago that would net higher values based on current market rental values for industrial in those markets. He added that industrial construction starts have remained “muted” compared to previous years. 

Global investor demand for office assets has been largely limited to New York and, to a smaller extent, San Francisco. Scoville noted that San Francisco is about 18 months behind New York in terms of capital markets’ interest in office properties from institutional investors, and he noted that the Big Apple is aided by increased physical occupancy in many Manhattan Class A buildings compared to other cities.

“The folks that are leading the acquisition charge and taking advantage of significantly reset prices are mostly high-net-worth family offices and private capital, but New York has moved from that non-institutional part of the cycle into the institutional part of the cycle,” Scoville said. 

“The reset in pricing doesn’t come around often, as over the course of a 40-year career you might see maybe four downturns, and this one in the office sector in particular is pretty significant with these prices 50 to 70 percent below pre-pandemic valuations. And that is hard to ignore.”

Foreign investor interest in the New York office market was underscored last summer when Saudi Arabia’s Public Investment Fund took a two-thirds stake in Related Companies’ planned tower at 625 Madison Avenue, some 840,000 square feet of which is likely to be office space. 

Tokyo-based Mori Building Company also acquired an 11 percent stake in One Vanderbilt Avenue from SL Green Realty in late 2024. The 73-story office tower next to Grand Central Terminal opened in December 2020 during the height of the COVID-19 pandemic and is now 100 percent leased, with top asking rents over $300 per square foot.

Charles said global investors are approaching U.S. office deals selectively both in terms of the location of the asset and the quality of the sponsor. He said newer office towers in Manhattan are especially appealing given the sharp demand for Class A properties and so little new space under construction. However, it is still unclear if that will eventually translate into more foreign investments in buildings just below the Class A benchmark. 

“I have been told anecdotally that, to the extent that there are developers who are going to have a building up in four years, they already have anchor tenants in place,” Charles said. “What remains to be seen is what type of ripple effect that ultimately has, as not everyone can afford $300 or $275 or $250 a foot rents.”  

The U.S. recorded its strongest office absorption since spring 2019 during the third quarter of 2025, according to the Hines report. While the sector has been boosted by a slowdown in construction starts, which puts upward pressure on rents, a broader U.S. recovery will hinge on demand trends displayed during last year’s third quarter and continuing throughout 2026, according to the Hines report. 

As for data centers — the CRE asset class du jour — the U.S. has also attracted plenty of global capital. However, constraints related to producing enough power to sustain data centers’ electrical demands have created plenty of questions about the sector’s growth potential, Scoville said. Another unknown as far as attracting more institutional global capital for data centers is that some consider it a real estate investment while others view it as infrastructure, he added.

HSF Kramer’s Charles said clients he works with across the globe have not yet hopped aboard the data center bandwagon. 

“There may be others,” he said, “but I don’t have anybody from Germany clamoring to invest in a data center in Virginia.”

Andrew Coen can be reached at acoen@commercialobserver.com.