Economists' Outlook

Housing stats and analysis from NAR's research experts.

16 U.S. Metros Are in Top 30 Largest Commercial Markets Globally in 2020; NYC is the Number One CRE Market

As the COVID-19 pandemic raged in 2020, the global volume of commercial real estate sales transactions of at least $2.5 million fell by 20%. However, while commercial real estate deals declined globally, the United States remains the top commercial estate market globally, with 16 U.S. metros in the top 30 largest commercial real estate markets on a global scale, according to NAR’s 2021 Commercial International Real Estate Business Trends Report.

NYC Metro remains the top commercial real estate market in the world

Many global cities suffered more than 20% declines in commercial real estate transactions, including the New York City metro (-41.3%), but the NYC metro area retained its #1 position as the largest commercial real estate market in the world ($28.5 B). Sixteen U.S. cities made it to the top 30 largest commercial real estate markets in the world based on the level of acquisitions of domestic, continental, and global (non-continental, non-domestic) acquisitions in those markets: NYC Metro, LA Metro, SF Metro, Dallas, DC Metro, Boston Metro, Atlanta Metro, Phoenix, Seattle, Chicago, Denver, Miami, Houston, Charlotte, Raleigh/Durham, and Philadelphia.

Bar chart: Top 30 Global Commercial Real Estate Markets, 2019 and 2020

Foreign investors are moving into secondary markets

Looking into only cross-border capital flows, investors scaled back their investments in most U.S. markets. However cross-border capital flowed into several secondary or tertiary markets in California where the cost of office space and cost of living is cheaper than in San Francisco or Los Angeles: the Inland Empire (west of LA, including Riverside), Sacramento, San Diego, and the East Bay. Indianapolis also made it onto the list of metro areas where cross-border capital flowed into commercial real estate acquisitions of $2.5 million or over.

Bar chart: Top Commercial Real Estate Markets With the Largest Cross-Capital Inflow, 2020 and 2019

Canada, South Korea, and Germany are the largest investors in U.S. commercial real estate

Canada remained the largest source of cross-border capital investing in U.S. commercial real estate in 2020 ($12.4 Bn), followed by South Korea ($5.2 Bn) and Germany ($4.0 Bn). Cross-border inflows into the U.S. decreased from several countries, except for a notable increase in inflows from South Korea (+102.7%), Singapore (+18%), United Kingdom (+15%), France (+18%), and Sweden (+63%).

Bar chart: Top Countries Investing in U.S. Commercial Real Estate, 2019 and 2020

Cross-border acquisitions shifts towards industrial and multifamily assets

Foreign investors are increasingly investing in multifamily and industrial real estate. Acquisitions of industrial property accounted for 31% of cross-border capital flows, followed by multifamily, at 27%, and office buildings located in central business districts, at 20%.

In 2020, cross-border acquisitions declined across all property types, except for industrial acquisitions, which increased by 62% to $10.8 billion ($6.7 billion in 2019).

Foreign investors have shifted from retail to industrial acquisitions. Acquisitions of retail property has sharply declined since 2018, when acquisitions peaked to $29.2 billion in 2018, or 31% of cross-border flows. Conversely, during this same period, the share of industrial acquisitions to total cross-border flows rose from 17% to 30%.

Line graph: Acquisitions of Cross-Border Capital by Property Type, Q1 2018 to Q4 2020

74% of NAR Commercial Members Expect International Real Estate Business to Recover by 2023

The commercial real estate market in the U.S. remains the top commercial estate market globally. Like other countries, the pandemic has impacted commercial real estate transactions, but this impact is transitory, especially in light of the accelerated vaccine distribution that is slated to be completed by the summer of 2021. Seventy-eight percent of NAR commercial members are optimistic that their international business will return to pre-pandemic level by 2023.

Bar chart: Percent of NAR Commercial Members Who Expect International Business Transactions to Recover in 2021 to 2023

Register for the NAR C5 Summit!

The C-5 is the premier U.S.-based commercial real estate event launching in the Fall of 2021, in the heart of the city, at the center of the industry – New York. Come for three days of networking, learning, and deal-making September 27-29, 2021. Registration is now open.

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