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China Dropped Nearly $20B Into U.S. CRE Last Year, These Were Investors' Favorite Markets

WASHINGTON DC 07.12.2017

CAPITOL RIVERFRONT AND THE YARDS

Development Pipeline and Current Projects

Deborah Ratner Salzberg -- Forest City Washington
Janet Davis -- Brandywine Realty Trust
Richard Ruben -- Ruben Companies
New York skyline

China broke records in the U.S. last year. It was the top foreign investor in commercial real estate and reached a high of $19.2B in inbound investment deal volumes, according to a report from Cushman & Wakefield. Of those investments, 62%, or $11.9B, of the deals were worth more than $1B.

New York was the top destination for Chinese investors' money, with San Francisco, Los Angeles, Chicago and Seattle making up the top five markets with the heaviest deal volumes. Check out how the top metros stacked up below. 

New York City

China Dropped Nearly $20B Into U.S. CRE Last Year, These Were Investors' Favorite Markets

Total Chinese Investment Volume: $8.9B (46%)

Top Deal: Hong Kong Monetary Authority’s purchase of 1095 6th Ave. for $1.2B

Top Asset Classes: Office and hotel

New York has long been on China’s radar as a top location, but investors doubled down last year, increasing total investments by 70%. Manhattan is where investors allocated funds for half of the top 10 largest transactions, which all consisted of office space and were well over $1B.

San Francisco

China Dropped Nearly $20B Into U.S. CRE Last Year, These Were Investors' Favorite Markets

Total Chinese Investment Volume: $2.97B (15%)

Top Deal: Anbang's purchase of San Francisco hotel portfolio worth $1.37B

Top Asset Classes: Hotel and office

Chinese investment in San Francisco nearly doubled last year to almost $3B from $1.5B in 2015. Only three years ago, investment volume was less than $500M. While hotel outnumbered office last year due to Anbang’s large purchase, office was the more favored asset because of higher yields and more predictable cash flow. This year, Cushman & Wakefield predicts high prices in the Bay Area will lead to more development deals and JVs with large institutions for acquisitions to receive better yields.

Los Angeles

China Dropped Nearly $20B Into U.S. CRE Last Year, These Were Investors' Favorite Markets

Total Chinese Investment Volume: $1.6B (7%)

Top Deal: Anbang's purchase of Blackstone's Strategic Hotel portfolio for $1.1B

Top Asset Classes: Hotel and development sites

Los Angeles has benefited from mega-deals within the last three years, including GLP/China Life’s purchase of an industrial portfolio in Los Angeles in 2015 for $700M. Chinese developers also are building large projects in downtown Los Angeles, including Greenland's Metropolis, Oceanwide Plaza and Hazens L.A. Center.

Chicago and Seattle

Chicago skyline

Total Chinese Investment Volume: $1.4B (9%)

Top Deal: Anbang's purchase of Blackstone’s Chicago hotel portfolio for $1B

Top Asset Classes: Hotel and office

Both Chicago and Seattle have risen in the ranks in recent years. Chinese investment in Chicago was less than $400M in 2014 and reached $1B in the last two years. The Windy City offers higher yields than Manhattan and San Francisco.

Seattle also has received quite a bit of attention. In 2015, Capital Partners spent $711M for Seatte’s tallest tower, Columbia Center, which was the largest deal in the city’s history. Tech giants such as Amazon, Microsoft and Facebook are also growing within this area, spurring more interest.