WASHINGTON, DC—As Q3's numbers come in for the District and surrounding suburbs one trend is standing out -- foreign investors are back. That is one of the main findings by CBRE as it analyzes activity in the region.

CBRE based its findings on RCA data, tracking foreign investment in real estate across the major cities in the US. Manhattan was the largest recipient of foreign investment, followed by the DC area. Los Angeles was third, Boston was fourth and Dallas was fifth.

Last year DC was in the fifth spot so the jump is significant, Revathi Greenwood, CBRE Director of Research and Analysis for the Washington/Baltimore region, tells GlobeSt.com.

These rankings are based on yearlong data, not just the third quarter. By the time the third quarter is said and done, CBRE feels confident enough to call this increased inflow a trend. "A quarter is not enough time to determine whether certain activity will continue," Greenwood said.

Of course it is always possible DC may slip a notch when 2015 is completely tallied and indeed, the gap between the various cities, such as Boston and Los Angeles, is fairly narrow. "But the jump itself is what is significant," Greenwood says.

So is the reason for it, which Greenwood attributes to investors deciding that the DC area has successfully undergone the "restructuring" it needed and has come out stronger.

But not strong enough for foreign investors to stray too far from their preference for trophy assets. It is understandable, Greenwood said, as these properties tend to have far lower vacancy rates than the District as a whole.

Other Highlights from CBRE's Q3 MarketView Report:

  • Northern Virginia saw gross leasing activity of 2.6 million square feet in Q3 2015, 12% higher than the four year quarterly average for the region.

 

  • The GSA dominated the leasing environment, accounting for 46% of deals executed, or 1.2 million square feet, with the largest deal being TSA's relocation to Victory Center in Alexandria.

 

  • Small to medium sized companies drove growth in Northern Virginia, with smaller deals between 20,000 square feet and 40,000 square feet, contributing 48,000 square feet of positive absorption in Q3 2015. Larger deals of more than 40,000 square feet on the other hand, accounted for negative 74,000 square feet of absorption in Northern Virginia.

 

  • In suburban Maryland, some 7,800 new office occupying jobs were created this year -- a huge uptick from the 10-year average of 1,300.
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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.