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2015 was a massive year for CRE deals in New York. Sales of commercial properties in the city set a new record, totaling $70 billion. This is a 12.5% increase from the previous, record, set in pre-recession 2007.
One of the factors that are driving this market is the rate of foreign investment. Foreign investment has been strong all over the U.S. in recent years. Overall, foreign buyers spent more than $87 billion on U.S. properties last year, from less than $5 billion in 2009, according to Real Capital Analytics. Interest in U.S. properties is high among foreign investors, who see our economy as a stable place to stash wealth. In fact, some of the city’s most significant CRE transactions over the past year have involved international investors.
Norges
Norway’s sovereign wealth fund entered into a partnership with church-run Trinity Real Estate to buy a 44% share of the company’s 11-building downtown office portfolio at the end of the year, the Real Deal reports. The price- $1.6 billion. Totaling nearly 5 million square feet in Hudson Square, the buildings are about 94% leased.The property occupies 215 acres, and the largest of the buildings is One Hudson Square, with 1.2 million square feet.
Norges is a division of the Norway Central Bank, and also purchased interest in properties at 11 Times Square and Citigroup Center at 601 Lexington Avenue earlier in the year.
AXA
French insurers AXA Financial, in partnership with JP Morgan, made over $3.5 billion in the sale of two midtown office towers in the past year. The properties, at 1285 6th Avenue and 787 7th Avenue, were placed on the market in August.Both properties comprise about 1.7 million square feet of space, and were sold to RXR Realty and CalPERS, the California public employees pension fund, respectively.
RXR reportedly beat out competition from Chinese and Canadian pension and sovereign wealth funds to secure the 6th Avenue property.
Anbang
Chinese insurance group Anbang purchased the iconic Waldorf Astoria in the most expensive hotel deal ever. The deal was completed this past year, and Hilton Worldwide received $2 billion for the property, which it has agreed to continue running for the next 100 years.
Five Star hotels are popular with international investors. The Plaza is currently owned by the Sahara Group of India, and the Carlyle is owned by New World Development of Hong Kong. Anbang Insurance Group has announced plans for significant renovations to restore the historic structure, first opened in 1931.
In a year with several billion-dollar deals, New York’s commercial market attracted a record level of foreign investment. Looking at the pipeline, even more major deals are in the works, many involving sovereign wealth funds, pensions, and high net worth individuals from China, the Middle East, and other parts of the globe. With 40% of commercial investment coming from outside the U.S., it’s likely that international players will be involved in some high-profile deals in the year to come.
