Over the past five quarters, $35.3 billion has been invested into the U.S. Skyline, causing nearly 15 percent of its inventory to change hands. Foreign investors, some facing low yields and poor liquidity at home, others seeking to diversify globally, drove 35 percent of this activity. Canadian, Norwegian and German capital have led the charge with Norges (Norway), Ivanhoe Cambridge (Canada) and Oxford Property Group (Canada) representing three of the five most active Skyline buyers in the last year. Much of the inbound capital has poured into the primary markets, with New York, Boston and Washington, D.C., each seeing in excess of $1 billion already this year.
And the appetite is growing, especially for core and core-plus assets. Of the $27.4 billion in foreign capital invested into U.S. office assets over the five-quarter period, 44 percent was invested into the Skyline, up from 33 percent in 2013, and 53 percent of foreign capital went to Trophy properties. This dynamic has driven primary asset pricing to grow 2.3 times faster than secondary assets over the past year, paralleling cap-rate compression—most notably for Trophy properties, which have declined in excess of 100 basis points year-over-year, to 4.5 percent.
Watch the video which examines:
- Why there has been an increase in foreign investment to U.S. Skyline properties
- Where the capital is coming from and to which cities
- How domestic institutional investors are responding
- The impact on pricing for Skyline properties
Learn more at jll.com/Skyline