International Investors Return to Manhattan’s CRE Market

According to a report recently released by MSCI Real Assets, the pace of cross-border commercial real estate (CRE) investment activity in Manhattan has pushed the borough back into first place nationwide, after falling to third place in terms of foreign CRE international investment within the U.S. commercial real estate market. Manhattan saw a 279% increase in cross-border activity in the first 6-months of 2022 compared with the prior 4-quarters. Although activity is not what it was in 2015 when “people were paying the top price for something,” and uncertainties surrounding the future of office properties amid rising vacancies and remote work trends remain, international investment dollar volume in the first half of 2022 totaled $1.14 billion in Manhattan — largely from Asia and Europe.

Investment in multifamily assets led the way, but there were some big office acquisitions as well; and while “value opportunities in New York remain attractive to global CRE investors,” the “increased challenges to obtain debt financing for deals have proven to be a major headwind.”  In addition, heavy interest in the industrial sector, which Manhattan lacks, has shifted cross-border investment to other U.S. markets — especially the areas of the Southern U.S. which have also become “very highly competitive with capital headed towards New York” since they are higher growth markets.