NAR recently released the 2017 Commercial Real Estate International Business Trends report that analyzes cross-border commercial real estate transactions made by REALTORS® during 2016. By surveying a sample of REALTORS® who specialize in commercial transactions, the report is able to gauge foreign interest in U.S. commercial real estate and measure the sales to such buyers, provide a profile of origin, destination, pricing and buying preferences, which in return help REALTORS® better assist these clients.
According to the report, one-fifth of REALTORS® specializing in commercial real estate closed a sale with an international client in 2016. Most of the survey respondents specialize in smaller commercial markets where the typical deal is less than $2.5 million, proving foreign buyers aren’t only interested in sweeping up Class A purchases. The report found that the the typical buyer-side sales price was $1,000,000 and the median seller-side price was $550,000. Forty-seven percent of REALTORS® reported an increase in the number of international clients over the past five years and 40 percent reported that they are confident the increased sales and leasing activity will occur in 2017.
Here are some additional highlights from the report:
- China was the top country of origin in both buying and selling commercial real estate in 2016.
- Nearly two-thirds of commercial foreign buyer and seller clients were non-resident foreigners.The top countries of origin for buyers include: China (17 percent), Mexico (14 percent) and the United Kingdom and Venezuela (both at 7 percent)
The top countries of origin for sellers include: China (17 percent), Brazil, Canada, France and Mexico (all at 10 percent).
- Florida and Texas were the top two states where foreigners purchased and sold commercial property last year, with California being the third most popular buyer destination and Michigan ranking as the third top state where foreigners sold real estate.
- 60 percent of international investments were financed with cash; 34 percent were financed with debt from U.S. sources.
“Multiple years of steady job growth and the strengthening U.S. economy – albeit at a modest pace – makes commercial property a safe bet for global investors looking to diversify their portfolios and generate returns outside their country of origin,” says NAR chief economist, Lawrence Yun. “While Class A asset prices in many large markets have surpassed pre-crisis levels, REALTORS® in many middle-tier and smaller markets stand to benefit from the increased interest from foreign and domestic commercial property investors.”
It’s important for both residential and commercial focused REALTORS® to stay tuned in on what’s happening on both sides of the fence in order to gain insight to their own business, especially on the global front. There are approximately 80,000 NAR members engaged in commercial real estate brokerage and related services including property management, counseling and appraisal. Additionally, more than 200,000 members are involved in commercial transactions as a secondary business. By connecting with these professionals, residential agents are opening the doors for more opportunity. If you do not specialize in commercial, knowing what’s going on in the commercial sphere and knowing where to send foreign clients interested in commercial property can go a long way in developing relationships and producing referrals. And the same goes for a commercial broker. Connecting with residential agents, especially Certified International Property Specialist (CIPS) designees can help your referral base once your foreign clients, their families, or even employees decide it’s time to purchase a home in the U.S.
For more information, see the full report below, and feel free to share the infographic online to get the conversation started with your commercial peers!
News Release: https://www.nar.realtor/news-releases/2017/06/realtors-survey-led-by-china-foreign-investment-in-us-commercial-real-estate-on-the-rise
Full Report: https://www.nar.realtor/reports/commercial-real-estate-international-business-trends-2017