The data was compiled for JLL's most recent Global Real EstateCapital Report, which found that direct real estate investment inall commercial real estate property types reached a record $759billion last year, up 8% from the preceding record-breaking year.Significantly, over 45% of volume traded involved a cross-borderpurchaser or vendor, compared to 43% in '06. Direct commercial realestate investment in the Americas totaled $304 billion in '07, up8% over '06, with the US accounting for 93% of the total, or $282.7billion. About $91 billion, or 30%, of the Americas total involvedcross-border transactions. According to the report, the trend wasdriven by global sources of funds, as well as by UK, US, German,Gulf Cooperation Council, Australian and Singaporean investors.

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The downtick in US industrial purchases by foreigners may be ananomaly rather than a trend. Craig Meyer, a managing director ofJLL and the national practice leader of its industrial servicesgroup, reports a growing number of inquiries from offshore entitieslooking to acquire US industrial buildings or development sites."It's not unusual that pension funds or other financial sourceswould provide funding for a large American developer like TrammellCrow, ProLogis or ING Clarion," he tells GlobeSt.com. "But in thelast 60 days, I've had at least three different inquiries fromforeign investment entities looking to make direct investmentshere, acquiring and owning property." The queries came fromAustria, France and Scandinavia.

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"I think what you're seeing is that industrial real estate isbecoming very much a global business," says Meyer. "AMB has proventhat. ProLogis has proven that. In Europe and China, you're seeingthe same brand names you see here. What you may see next is foreigndevelopers building projects in the states." As with US developersoverseas, he adds, foreign companies will be concentrating on sitesaround major ports and airports rather than the nation as a whole.They also will focus primarily on large distribution complexes withsufficient value to make their investments worthwhile.

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In Meyer's view, it only makes sense that foreign investorswould be funnelling capital into the US because the weak dollarmakes owning US hard assets far less expensive than two years ago.That they would move into industrial also makes sense, he adds,because American high-quality industrial property is the safestproduct type in the world. "That's what clients are telling me, andI think it's true," he says. "We did a survey of the topinstitutional owners and developers, and the overwhelming majorityviewed industrial as the preferred and safest asset class over thenext 12 to 18 months."

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The declining value of the dollar does not necessarily portend adecline in US investment overseas, the JLL exec emphasizes, becausemost major American developers have created offshore subsidiariesthat raise capital in the markets they serve rather than relying onhome-based sources. "If they've incorporated in the UK, forexample, and funded in the UK, they're somewhat insulated from theproblems with the dollar," he points out.

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Meyer does not expect big gains in value for US industrialproduct in the coming year, but more importantly he also does notexpect values to erode, as may happen with other product types."Industrial has been fairly steady over this last cycle," heremarks. "We haven't had a lot of run-up of excess space. It hasn'tbeen the glamor product for investors, more the steady Eddy in thebackground, which is working to its advantage right now."

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