Savills recently reported that mega-deals in the European commercial property market are on the rise. Now a similar trend is emerging on the other side of the Atlantic according to Real Capital Analytics.
Investment from around the world is flowing into the US market with transactions jumping by 45 per cent (in dollar volume) in the first quarter alone.
The increase was largely driven by company acquisitions or portfolio sales. Since the end of Q1, General Electric Co has firmed up an agreement to sell real estate assets to Blackstone Group LP and Wells Fargo & Co. The deal is valued at approximately US $23 billion, making it the largest single property purchase since the global financial crisis.
As the amount of funds being set aside for purchasing US commercial real estate increases, competition for the most desirable properties is influencing investors to buy in bulk. Real Capital reports that the second quarter, which includes the GE deal, may end up being one of the biggest on record for property transactions.
During the first three months through March, real estate deals surged to US $129 billion, which added up to the busiest start to a year since 2007. The largest transaction was Blackstone’s sale of IndCor Properties Inc to GIC Pte, which was worth US $8.1 billion.
Demand for properties in all sectors, from industrial warehouses to office skyscrapers is booming, thanks to the Federal Reserve’s decision to keep interest rates low for the past six years to stimulate economic growth.
International investors have injected US $24 billion in foreign capital into the US market in the first three months of the year – equaling more than half the amount invested during 2014 as a whole.
