Economy Watch: Brexit to Drive Investors to U.S. CRE?

Historic stability and low volatility will continue to drive foreign investment into the U.S. commercial real estate market.

The initial surprise of Brexit is over, at least if the rebound of equities markets is any indication. Will there be a longer-term impact of the new arrangements in Europe on U.S. commercial real estate? Brokers who belong to CCIM Institute are seeing an increase in global activity in commercial real estate investments from primary gateway cities to tertiary markets, the organization reports.

“The trend of foreign direct investment net inflows of capital toward the U.S. commercial real estate market will remain strong, and the Brexit initial ripple effect for demand in the U.S. will initially increase as investors seek security,” said Kamil Homsi, president of Global Realty Capital LLC in New York City. “Also, I see the demand increasing constantly to acquire senior and student housing, self-storage portfolios and medical facilities across all regions.”

“Shortly after Brexit, I received several calls from international investors seeking more information about Texas commercial real estate,” said Jim Young, broker at Longbow Real Estate Group in Austin, Texas. “In addition, several U.K. investors tell me that they see U.S. commercial real estate as a safe haven. Given low interest rates on commercial real estate loans, and commercial rental rates in Central Texas that continue to rise, there will be even more of an uptick in European and global investor activity.”

“Commercial office space is often the preferred investment for overseas investors,” noted Ernest Brown IV, broker at Rohde Ottmers Siegel Realty in San Antonio. “But we also are seeing an increase in demand for well-located, newer industrial assets for warehousing, distribution and service.” In short, historic stability and low volatility, even within the presence of low cap rate markets, will continue to drive foreign investment into the U.S. commercial real estate market.