Hollywood – August 10, 2015

In June we reported on the latest data showing that Atlanta has enjoyed substantial growth in the past year.  In this newsletter we wanted to share exciting news about the overall North American real estate market growth.

The United States as a global CRE leader

Although some global markets are currently struggling, real estate investment in the United States remains strong. The country took the lead worldwide in commercial real estate investment in the second quarter of 2015, posting a 30 percent increase in transaction volumes.

In addition, both its year-over-year and year-to-date numbers show an 18 percent increase in volumes.

“The Americas, as a whole, posted the best second-quarter performance since 2007, at US$79 billion, as the U.S. economy recovers…” reported Jones Lang Lasalle – and that is in spite of Canada’s 20 percent decline in transaction volumes. Those numbers speak to the United States’ strong position in the global real estate market.

More Asian investment in American commercial property

Cushman & Wakefield reported that the United States surpassed China as the “top investment market in the world” in 2014, and that could be in part due to more foreign interest in U.S. markets. Asian investors in particular, seem to be drawn to the prestige and higher yields that American markets offer, according to TheStreet.

“That’s all good news for commercial property sponsors, but it’s also good news for U.S. investors. The barrier to entry for Asian investors is finding the right partners, and that means opportunity for domestic investors,” reported Roy Abrams for TheStreet.

He added that there are more interested Asian investors than available American partners, which means there is an opportunity for the right U.S. investors to forge those partnerships. He notes that the key element to these partnerships is clear, well-written and expertly underwritten deals.

Jonathan Gray, global head of real estate for Blackstone, agrees that foreign investment in U.S. commercial real estate is hitting its stride, saying, “U.S. commercial real estate is the midst of a big foreign investment boom that is likely to continue…”

Demand supports CRE investment

Tenant demand continues to remain strong across commercial sectors as well. Vacancy rates decreased in office, multifamily, industrial and retail properties in the second quarter.World Property Journal quoted CBRE Chief Economist Jeffrey Havsy as saying:“The strong progress in the commercial market matched the continued steady improvement in the economy. We remain bullish for the second half of 2015 as economic growth is expected to accelerate after a sluggish start to the year.”

Havsy added that the U.S. economy is expected to support even more growth in the office market, saying that “economic fundamentals are pointing to a sustained U.S. office expansion in 2015, as companies are hiring workers at a robust pace and investment in commercial real estate continues to show a positive trend.”

Atlanta ranked fifth in the nation for office space demand during the second quarter, just behind major Bay Area markets, Los Angeles and Dallas, according to a DTZ report.

In the multifamily market, according to World Property Journal, Atlanta was among the cities with the greatest year-over-year drops in vacancy rates. PointOne Holdings has invested in several multifamily properties in the Atlanta metro area, and we have experienced high tenancy rates in those properties as more people move to the area for jobs in an improving economy.