MIAMI—It's no secret that Canadian companies are snapping up US commercial real estate like there's no tomorrow. In part two of this exclusive series on Canadian investments South of its border, we'll look at what makes US commercial real estate especially attractive to Canadian investors, what product types are selling most, and if multifamily will remain the darling.

GlobeSt.com asked Dan Carlo, a principal with Avison Young for his take on these topics. If you missed part one, you can still read it: Why Canadian Investments in US Are Surging.

GlobeSt.com: Why US commercial real estate and why now?

Carlo: In some ways, Canadian euphoria for the US commercial property markets can be easily explained by relative proximity and familiarity of the target markets, the ability to achieve a scale not available in domestic investments; preference for an English-based legal system, and the generally high levels of transparency and liquidity. At the same time, the increasing flow of Canadian capital is reflective of a global trend of capital flight from virtually all corners of the world to the US property markets for safety and better, risk-adjusted returns.

According to numerous credible surveys, the US remains far and away the most resilient, stable, and secure country for international investment. Just look at the surging popularity of the EB-5 visa program with Asian and Latin American investors.

GlobeSt.com: What product types, specifically, are Canadian investors hungry for and why?

Carlo: Canadian investors often look to the US for opportunities unavailable to them back home. Very large, fortress malls are a good example of that. The few such malls that do exist in Canada are owned by a very small group of players. Also, in light of the robust condominium market in Canada, very few apartments are purpose-built for rental.  

GlobeSt.com: Is multifamily still the darling? Do you see the appetites shifting?

Carlo: Canadian investors have been right there in line with domestic US and other global investors actively competing for US multi-residential properties—and have done their share to drive capitalization rates for those properties to historical lows. Urban residential investments—in both major gateway markets and in secondary markets, such as areas in Florida outside of Miami, as well as Austin, Nashville, and Raleigh—have been particularly attractive for Canadian investors.  

Furthermore, we have seen Canadian investors commit more than $3.6 billion to US multi-residential properties in 2013 alone—a jump of nearly 110% over an already large 2012 figure. A good indication of that voracious appetite for US multi-residential properties is the Avison Young US Apartment Fund that our investment management team started in 2012, largely at the behest of Canadian institutional clients. The fund has made several acquisitions in the southeast US, and is actively sourcing others.  

However, of late, the largest allocation of capital from Canadian sources has gone into office properties in the US—$5.1 billion in 2013 alone. Also, we see Canadian investors being increasingly receptive to secondary—and even tertiary—US markets in order to get better yields than what is available in the coastal, gateway markets.  That same search for yield is getting Canadian investors to look for value-add and even development opportunities, as opposed to just core or core-plus plays.

GlobeSt.com: Are there certain geographic areas that are a stronger focus for Canadian investors? How are Canadian investors picking their markets? What trend lines are you seeing among Canadian investors?  

Carlo: In some measure, Canadian investors are agnostic to geography. We see them active in virtually every NFL city, in coastal markets, and even in such places as the Dakota flatlands, where they are investing in development spurred by the success of fracking there. Also, we have seen them actively pursuing demographic trends in the US population. For example, following the aging baby boomer population by investing in senior housing and medical office buildings, or following the large age cohort now making its way through college by investing in student housing.