Housing Trends | Seattle surpasses Manhattan, New York, Seattle’s commercial real estate is the most popular among overseas investors

For the first time since the financial meltdown, Manhattan has slipped from the top spot for foreign investment in U.S. commercial real estate.

Seattle jumped to the top spot.

Investors from other countries spent about $2.5 billion on commercial real estate in Seattle over the past four quarters, according to commercial real estate data firm Real Capital Analytics. (The ranking measures all major types of real estate and transactions of at least $2.5 million).

That’s down 11 percent from Seattle’s previous year – but higher than the roughly $2 billion invested in Manhattan.

Perhaps you can guess the reason for that.

“What makes Seattle better than Manhattan are some safe assets,” said Jim Costello, senior vice president of Real Capital Analytics …… namely office assets tied to technology tenants.

Tech tenants offer investors “more security” than the financial sector, he says. As a potential investor in an office building, “I know Apple has a favorable rent for them. I know if Microsoft is a tenant, they’ll be there in the future,” Costello said.

Canada was the source of most of Seattle’s cross-border investment last year, followed by Asian countries and then Europe.

From the second quarter of last year through the first quarter of this year, investors purchased about $1.9 billion in office space there, compared with about $464 million in apartment buildings and nearly $78 million in industrial space, according to Real Capital Analytics.

The Seattle area has seen a number of high-priced office sales in the past year, even as the office market has sunk amid uncertainty about whether office workers will return to their cubicles.

In December, a Korean investment group bought a 95 percent stake in the 38-story 2+U building at Second Avenue and University Street downtown for $669 million.

A 36-story Amazon building on Eighth Avenue near South Lake Union was sold in part to the Canada Pension Plan Board for $589 million, while a Facebook-leased building in Bellevue’s Spring District was sold to a Canadian investment group for $365 million, according to county property records.

Still, the 2020 epidemic has taken its toll. The rebound will take time, and uncertainty remains. Office rents in the Seattle area were essentially flat in the first three months of the year, according to commercial real estate firm Savills, and office space availability was up about 6 percent compared with the same period last year.

Article is reproduced from seattletimes.com. “Seattle outdraws Manhattan as foreign investors bet on the office market rebounding” By Heidi Groover.

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