CHICAGO, February 23, 2022 – With more than $143 billion in transactions, investor demand for U.S. industrial assets hit new highs in 2021, up 32% from the previous record high in 2019. Cross-border investors accounted for a record of $19.5 billion of this activity, up 152% year over year, signaling the strength of the US industrial sector and the economy as a whole.
Five countries account for 91% of total cross-border deal volume in 2021. Boosted by GIC’s $6.8 billion portfolio purchase from EQT Exeter in the fourth quarter, Singapore led with 57% of deals, followed Canada with 21%, or $4.1 billion. Bahraini, French and South Korean investors have also channeled a significant amount of capital into the industrial sector.
“Capital generally follows strong real estate fundamentals, and the strength of underlying real estate fundamentals has helped investors offset inflation fears, driving a record level of investment activity in 2021,” said John Huguenard, Senior Managing Director and Head of Industry Platform for JLL’s Capital Markets Group. “Favorable consumption patterns in the United States, combined with pressure to allocate a record level of dry powder, will continue to attract investors to the industrial sector in 2022.”
Canadian investors have significantly increased their investment activity in the United States by 64.5% year over year and they show no signs of slowing down. The activity was led by the $2.2 billion acquisition of a 14.5 million square foot infill and light industrial portfolio by Oxford Properties Group, a leading global real estate investor, property manager assets and entrepreneur. In December 2021, Oxford formed a joint venture with Denver-based EverWest Real Estate Investors to accelerate the growth of Oxford’s infill industrial portfolio in the United States. The joint venture seeks to acquire and develop approximately $1 billion (gross asset value) of small bay infill industrial properties across the United States. JLL’s Capital Markets group represented Oxford in both transactions.
“We are surrounded by a surplus of foreign capital in the industrial market which has pushed strong operators to develop their portfolios and their platforms,” added Marc Duval, managing director of JLL’s Capital Markets group. “The joint venture between Oxford, a source of foreign capital, and EverWest, a proven operator, will be a long-term strength. We expect more partnerships to form in the coming months as a result of increased interest from foreign capital for American industrial real estate.
Another trend seen in 2021 is a shift in markets with the most cross-border investment. Where Dallas, Chicago, Atlanta, Los Angeles and the Inland Empire have always been prime markets since 2016, Memphis, Phoenix, Houston, Philadelphia and Indianapolis have become more sought after.
“Drawn by the strength of their economies and positive demographic trends, investors have accelerated their capital placement into Sun Belt markets,” said Nicholas Rita, director of research, Industrial Capital Markets. “These favorable market conditions will facilitate investor interest in 2022.”
JLL’s Capital Markets Group is a global, full-service provider of capital solutions for real estate investors and occupiers. The firm’s in-depth knowledge of the local market and global investors provides the best solutions for clients – whether it’s sales and investment advice, debt advice, equity advice or recapitalization. The firm has more than 3,000 capital markets specialists worldwide with offices in nearly 50 countries.
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