CHICAGO—Investors from a diverse range of countries including Canada, Germany, and the UK have poured an average of $2.3 billion into the US industrial market over the past four years, but the March 2015 purchase of IndCor Properties by Global Logistics Properties Ltd. of Singapore for roughly $8 billion could be the harbinger of things to come.
“The foreign capital is here to stay,” Erik Foster, a Chicago-based principal with Avison Young and the practice leader for the company's national industrial group, tells GlobeSt.com. “The US is a safe haven for investors and the IndCor transaction is only one of what is probably going to be a couple more large entity platform sales,” some of which could be even larger.
The relatively new focus on industrial real estate “is a long-term trend,” he adds. “It's our belief that industrial is going to be a mainstay for investors both foreign and domestic.” The growth of e-commerce has driven much of this change, as the need for new facilities of ever greater size and sophistication has given investors a great deal of confidence in the sector. Furthermore, the practice of onshoring has become more common among manufacturers and brought more stability to US industry.
A decade ago, “foreign investors would swoop in and spend $300 million on an office tower in San Francisco,” but today many groups, including Blackstone, the seller of IndCor, now have the ability to aggregate significant amounts of real estate. Furthermore, it's easier to complete such multibillion dollar transactions across borders given the fluidity of data in the modern world. “In some ways our investment world is so much smaller than it once was,” Foster says.
“We are talking to foreign capital sources on a daily basis and it is absolutely our opinion that this trend will continue.”
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