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10 Reasons to Invest In U.S. Commercial Real Estate

By Colby Goetz
Category: CRE Trends

Global real estate investment is becoming more and more prominent on the commercial real estate radar, with a number of factors contributing to growth. The U.S. market is attractive to foreign investors for many reasons, despite obstacles posed in some cases by fluctuating exchange rates and burdensome tax law. Many get around this with the help of Dickson Frohlich and other legal firms, leaving them able to focus on the real estate wants and needs around the nation without worry. Many get so invested into the market that they learn to love a lot about the U.S. market, with many opting to learn about the cost to build a house to buy into new developments.

According to some sources, foreign investors currently account for up to 24% of U.S. real estate investment sales. China has recently replaced Canada as the nation with the highest rate of participation in the U.S. real estate market. CBRE reports that Chinese outbound capital flows into global commercial real estate markets have exceeded $10 billion over the past year. What makes this an attractive opportunity? Here are 10 reasons why U.S. commercial real estate, be it the Jackson Lake Homes or any other around the country, is a great investment.

1. Productive US Monetary Policy

Low interest rates resulting in cheap financing have encouraged CRE investment, and the comparatively low yields in bond markets has also made these investments more attractive to both foreign and domestic buyers.

2. Improvement in Commercial Property Loans

Financing continues to be readily available, with commercial lending increasing by 16% in the last 3 years. Commercial lenders are competing for deals, and banks are relaxing lending standards to allow developers to put up less money to secure financing in many cases.

3. Population Growth

A number of secondary markets are seeing a jump in population as people follow the jobs. This is particularly true in Texas, with rapid growth in Houston, Austin, and Dallas-Ft. Worth, fueled by the technology and energy sectors. Increased development and infrastructure improvements provide opportunities for investment.

4. High-Quality Commercial Real Estate

U.S. commercial real estate is a mammoth industry, worth trillions of dollars, and it includes about a quarter of the world’s high quality commercial properties. The New York market alone has more office space than Canada’s entire market.

5. Strong Economy

The U.S. economy is the most stable and open in the world, and attracts buyers from countries where the situation is much more volatile. Foreign investors can operate with relative freedom in the U.S.

6. Tax Benefits

Real estate owners can benefit from the US Tax Code in a number of ways. Depreciation deductions and mortgage interest can protect a large portion of investment income.

7. Investor Control

There’s a high level of control available to investors in the U.S. commercial real estate market. Investing in stocks is a more passive activity, while investors can handpick properties from the inventory of U.S. commercial properties.

8. Real Estate Prices Are Skyrocketing in other Countries

With the skyrocketing of real estate prices in places like Dubai, London, China and Singapore, the US offers an ultimate bargain for those with cash to spend. In China, for example, commercial real estate prices jumped by over 35% in 2012 alone.

9. Steadily Increasing Demand

The interest from foreign investors continues to grow –particularly with buyers from Europe, Asia, and the Middle East. This has already tightened competition in the country’s primary markets, but secondary cities still offer a wealth of opportunity.

10. A Buyer’s Market

Prices are currently very low in U.S. commercial properties. They’re down 30% overall from their peak, and this makes U.S. commercial real estate the best bet for international investors, as well as an attractive option for domestic buyers. These real estate opportunists will no doubt require the aid of legal professionals to ensure that their sales are completed without issue. Fortunately, there are legal representatives similar to this Diamond & Diamond Real Estate law firm that may be able to give buyers the professional advice they need to continue their foray into commercial investment.

There can be no doubt that it’s a good time to invest in commercial real estate in the U.S. Its long-term stability and attractive inventory keep it at the forefront of international investment and continue to present opportunities that seem too good to pass up.

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