A look at commercial r.e. trends
According to a report from the NationalAssociation of Realtors (NAR), foreign buyers continue to see the U.S. real-estate market as a secure and safe investment. The report also found that Realtors (NAR members) are experiencing an increase in the number of international clients over the past five years.
NAR’s 2018 Commercial Real Estate International Business Trends report analyzed cross-border commercial real-estate transactions made by Realtors during 2017. According to the report, of the 59 percent of Realtors who indicated they completed a commercial real-estate transaction last year, 18 percent reported closing a deal for an international client. Realtors have expertise and knowledge working with clients from different countries and their real-estate practices. International buyers find that using a Realtor is a real advantage and they can rely on their global market perspective.
The study found that most Realtors who specialize in commercial real estate reside in smaller commercial markets where the typical deal is less than $2.5 million. Generally, U.S. foreign investors are attracted to smaller-sized properties in secondary and third-level markets, helping the profile of smaller commercial markets to grow.
Realtors’ international clients found U.S. commercial real-estate markets to be a good value last year. Seventy percent of Realtors reported that international clients view U.S. prices to be about the same or less expensive than prices in their home country. The median commercial transaction was $625,000. Over 37 percent of international clients who chose not to buy cited lack of inventory as a main reason, echoing broader trends in U.S. markets.
The top countries of origin for buyers were China (20 percent), Mexico (11 percent), Canada (8 percent) and the United Kingdom (6 percent). Sellers were from Mexico (20 percent), China (15 percent), and Brazil and Israel (both at 10 percent). Florida and Texas were the top two states where foreigners purchased and sold commercial property last year, with California being the third most popular buyer and seller destination.
Foreign buyers of commercial property typically bring more cash to the table than those purchasing residential real estate. Seventy percent of international transactions were closed with cash, while NAR’s 2017 residential survey found that half of buyers paid in cash.
The Santa Fe Association of Realtors supports its commercial members through a Commercial Council that meets every other month. The council typically meets at commercial properties for sale or lease, offers a property needs and wants discussion, and a speaker on a topic of interest to members. SFAR earned its Commercial Accreditation from NAR in 2011 for achieving benchmarks and engaging members at a high level of commercial services. The association has also been successful at garnering NAR Commercial Innovation grants to support commercial conferences and bus-led property tours.
NAR’s commercial community includes commercial members, real estate boards, committees, advisory boards, councils and forums; and NAR commercial affiliate organizations: CCIM Institute, Institute of Real Estate Management, Realtors Land Institute, Society of Industrial and Office Realtors, and Counselors of Real Estate.
Rubel “Paco” Arguello is a Santa Fe native and chief executive of the Santa Fe Association of Realtors.