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Canadians buying U.S. commercial real estate at record rate

11/24/2014 | Real Estate Blog

The purchase of a Manhattan skyscraper by an American-Canadian partnership may be the capstone for a record year of Canadian investment in U.S. commercial properties. Reuters reports that Canadian investors purchased more than $8 billion worth of commercial real estate south of its border in the first three quarters of 2014, putting the country on target to beat last year’s record of $11.86 billion in purchases.

The latest deal is for the 1095 Avenue of the Americas building, a 42-story office tower. The purchase, which had not closed as of Nov. 18, is reportedly for $2.25 billion, the second-highest price paid for an American office building since the General Motors building was bought for $2.8 billion. It is part of a trend of increasing investment across the border that has made Canada the largest foreign investor in U.S. commercial property since 2010.

Canadian investors have spent $43.4 billion in commercial real estate in that time, four times as much as second-place China.

What accounts for this trend? One analyst told Reuters that there are more property investment opportunities in the U.S. than in Canada. She said that the Canadian market is tied up by domestic pension funds, so few office buildings are available for purchase.

Much of this involves high-end commercial real estate, but it does show that the market can draw investors from around the world. Negotiating with foreign buyers and sellers can be tricky, given possible language barriers and differing business customs. Having an attorney help with the process may be invaluable.