CHICAGO—Foreign investors have been clamoring to get into the US industrial real estate sector for years, but in 2014 the level of investment dropped, according to a new report by Avison Young's national industrial capital markets group. Investment from foreign buyers totaled $2.4 billion in 2014, down from a record level $3.1 billion in 2013, according to Real Capital Analytics. But experts say the torrid pace of 2013 could not have continued since investors eventually had fewer options for corporate distribution facilities and other industrial assets, particularly in core markets.

“Foreign investors have been on a buying spree in the US market for several years now, looking for opportunities to buy stable assets that can provide stronger yields than those found in their own or other foreign countries,” says Erik Foster, a principal with Avison Young and the practice leader for the company's national industrial group. “The decrease in volume in 2014 is not a surprise, as we move toward a more stabilized investment volume that likely will be sustained for years to come.”

Investment came from a diverse range of countries including Canada, Germany, and the UK. And the average annual foreign investment over the past four years was about $2.3 billion.

The first quarter of 2015 showed similar volume and Foster believes that activity will remain stable. “We expect to see foreign investors continue to look for ways to leverage large portfolios of US assets across multiple markets.” This might involve unique financing structures. He points to the March 2015 purchase of IndCor Properties by Global Logistics Properties Ltd. of Singapore. “The seller, Blackstone, completed the $7.9 billion transaction without going through the IPO process often seen with these types of transactions.”

Among the other trends to watch for in 2015 are:

• Canadian investors' appetite for US product remains strong, but even though they will continue to top the list of foreign investors, Canadian buying power has diminished due to decreased valuation of the currency.

• Leasing fundamentals will continue to improve, creating tangible rent growth and continued positive absorption in most markets across the country.

• A lack of supply will continue to push investment pricing higher; and new speculative construction will not come online fast enough to meet demand.

• Demand for corporate distribution space and other industrial assets will remain steady for the foreseeable future—due to stability and long term growth in this sector.