The flow of overseas money has pushed NY deal volume past the peak of the last cycle, says JLL’s Scott Latham, whom we snapped yesterday at the ULI Fall Meeting with JLL Vancouver’s Lucy Fletcher. NY deals so far this year total $30B, and another $12B is in contract. Crossborder buyers make up 31% of that deal flow. Lucy says Canadian investors form the largest pool of buyers of US properties, spending more than $8B this year. It helps that Canadian pension funds allocate as much as 14% of their outlays to real estate; 6% to 8% is typical worldwide.
The US’s gateway markets are like gateway drugs. JLL Americas capital markets head Steve Collins out of the DC office says sovereign wealth funds often first partner with an institutional partner in a city like New York, then move on to secondary markets. They’ll soon head to tertiary markets, too, he says. Steve and his team advise only selling in markets that can boast eight quarters of projected rental growth.
The worldwide real estate market is headed for $700B in trades this year, says David Green-Morgan, who’s based in Singapore and whom we snapped with New York’s own Peter Nicoletti. Original projections put the $1 trillion mark at 2030, but it’ll likely come earlier—2020 or 2025—as long as investment vehicles pop up to absorb the capital.
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