Manhattan lost its crown as the top choice for foreign investors buying U.S. property, with offices falling out of favor amid the pandemic and money moving into industrial properties.
Overseas investments in Manhattan real estate plunged 79% in the 12 months through March to about $2 billion, according to Real Capital Analytics. That came as cross-border investors poured $10.6 billion into U.S. warehouse and logistics properties -- a 39% increase and the first time they outpaced international spending on office buildings, Total spending by foreign buyers fell 33% to $35.2 billion in the period.
“Manhattan will live and die based on the health of the office market,” Real Capital Senior Vice President Jim Costello said in an interview.
Seattle climbed to No. 1 with $2.5 billion in foreign investment, down 11% from the prior 12-month period. The Northwestern city, home to tech powerhouses Amazon.com Inc. and Microsoft Corp., continued to lure money from nearby Canada, the biggest source of foreign capital in U.S. real estate.
Manhattan briefly lost its title as top U.S. target for foreign investors in 2009 to Washington, D.C., when transaction volume collapsed globally, Costello said. The last 12 months were a more mixed bag, with big drops in purchases of office, hotel, retail and apartment properties while spending rose on senior housing and industrial real estate.
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