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2016 | CBRE FLORIDA RESEARCH FLORIDA: A DESTINATION FOR GLOBAL CAPITAL Foreign investment has poured into Florida’s commercial real estate markets in recent years. What is driving it, and will it last? Key Takeaways Over the past two years, cross-border capital flows into the U.S. have increased significantly. In 2015 alone, $78 billion was recorded, a record year and up 112% over 2014. The state of Florida has proven to be an important destination for cross-border capital coming into the U.S. In 2015, Florida ranked fourth in terms of crossborder investment volume. In Q1 2016, it ranked third. Globally, cross-border commercial property investment has been bolstered by low interest rates, low inflation, growth in developing countries and a need for investors to diversify with a greater allocation to real estate. Investors from Latin America and Spain are drawn to South Florida due to strong cultural and linguistic connections to their home countries. Currency fluctuations influence investment strategies in some instances, but to date the overall volume of cross-border capital entering the state has increased despite the strong U.S. dollar. According to CBRE professionals, Middle Eastern buyers are purchasing commercial real estate in the U.S. in search of yield and a safe haven for capital. Chinese investors entered Florida markets, particularly South Florida, in 2014 with a number of notable development site acquisitions in Miami. South Florida is a major destination for foreign buyers, particularly the emerging gateway market of Miami. South Florida has received more than 60% of the cross-border capital entering the state since 2007. In 2016, foreign investment in Florida commercial real estate is expected to moderate compared to the blistering pace set in 2015, but to remain elevated relative to historical transaction volumes. Foreign investors placing capital in the rest of the state are typically searching for higher yield and better returns, specifically in the markets of Tampa, Orlando and Jacksonville. 2 FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH © 2016 CBRE, Inc. 3 Drivers of Foreign Investment: Global & Local The oil glut has impacted Middle Eastern markets that plan budgets and expenditures on the basis of expected commodity prices. 3 Given their heavy reliance on oil commodities, Middle Eastern investors have diversified, in part, by investing in commercial real estate globally. International capital flows provide a measure of the overall health of the property investment market.1 Over the past two years, cross-border capital flows into the U.S. have increased significantly. In 2015 alone, $78 billion was recorded–a record year and up 112% over 2014. Data from Q1 2016 ($7.8 billion) suggests a cooling but stable outlook for 2016. The state of Florida has proven to be an important destination for crossborder capital coming into the U.S. In Q1 2016, the state was ranked third in terms of total cross-border investment volume–up from its fourth ranked position in 2015. Latin American countries have experienced a spectrum of economic trends from moderate expansion (Mexico and Chile) to deep recession (Brazil).4 Recently, the reduction in China’s demand for commodities has weighed on Latin American economies, with Brazil taking a particularly hard hit.5 Brazil is experiencing a deep recession with currency devaluation, slowing growth, rising inflation and falling commodity prices. In general, Latin America remains in a low-growth mode and many investors from the region have sought out U.S. commercial real estate as a safe haven for their capital. Globally, cross-border real estate investment has been bolstered by low interest rates, low inflation, growth in developing countries and a need for investors to diversify with a greater allocation to real estate. However, regional differences have had an impact on the relative volume of cross-border transactions. Recent signs of recovery in the Eurozone economy, including increased business investment and consumer spending after years of slow economic growth and high unemployment, have helped spur European investment in U.S. property markets. Britain’s decision to leave the European Union has heightened uncertainty in an already skittish global economy, but the consequences of the Brexit will take many months to play out. In the short run, the uncertainty could increase demand for assets in U.S. gateway cities, which are likely to be seen as relatively safe havens for global capital. 1 CBRE Research, Global Real Estate Market Outlook, February 2016. 2 CBRE Research, Global Office Rent Cycle MarketView, Q1 2016. 3 CBRE Research, In and Out: Middle East 2015. 4 CBRE Research, Americas Real Estate Market Outlook 2016. 4 Cross-Border Capital Flows Into Florida Source: CBRE Research, Real Capital Analytics, Q1 2016. $2.9B The Miami Herald, Latin American Economies Continue to Limp Along, March 23, 2016. 6 NAIOP, Cross-Border Investment in U.S. Commercial Real Estate, Spring 2016. FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH $1.4B $577 M 2007 2008 2009 $1.7B $1.2B $883M 2010 $734M 2011 2012 2013 2014 2015 Q1 2016 Last year, Florida ranked fourth among U.S. states for crossborder capital flows, following New York, California and Texas. 1. 2. 3. 4. 5. Cross-border investment in U.S. commercial real estate increased markedly in 2015, when transaction volume reached $78 billion–a 112% increase year over year. According to CBRE capital markets professionals, foreign investors are particularly attracted to U.S. markets due to the relatively favorable economy, healthy property fundamentals, higher asset yields, lower longterm return volatility and opportunity for scale. U.S. 5 $2.6B $1.5B Canadian capital represents the largest share of crossborder investment entering the U.S. With a limited number of dense population centers and real estate assets in which to invest domestically, Canadian investors flood U.S. markets. Energy sector contraction dampened the Canadian economy in 2015, stalling job and GDP growth, and weakening the Canadian dollar. Risk-adjusted returns are greater from U.S. investments than those found in Canada, and with recent GDP growth, the U.S. continues to see robust demand from Canadian buyers for commercial real estate assets.6 In Asia, excess global savings, low bond yields and an under-allocation to real estate have prompted robust investment in global real estate markets over the past six years. The relatively recent economic slowdown in China has had a significant impact on the global economy; however, the region is showing signs of recovery after several rounds of interest rate stimulus and increased credit availability. $4.3B FIGURE 1 NY$20.97 CA$11.89 TX$6.04 FL$4.35 DC$2.89 6. GA$2.85 7. MA$2.82 8. IL$2.56 9. WA$2.51 10.HI$1.97 2015 Sales Volume (Billions of USD) Source: CBRE Research, Real Capital Analytics, Q1 2016. © 2016 CBRE, Inc. 5 markets also provide international buyers with the opportunity to diversify portfolios and preserve capital.7 Cross-border capital flows into the U.S. will be bolstered by recent changes to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) that exempt overseas pension funds from the 35% withholding tax on proceeds of real estate dispositions. Last year, Florida ranked fourth among U.S. states for cross-border capital flows, following New York, California and Texas. In the first quarter of 2016, it moved into the third slot, now just trailing New York and California. FIGURE 2 Capital invested into asset type Cross-Border Capital Entering Florida by Global Region Office Retail Hotel Dev. Site Industrial Apartment Senior Housing From 2010 to 2016 NORTH AMERICA (EXCLUDING U.S.) $4.8B (37%) ASIA $1.7B (14%) MIDDLE EAST $1.2B (9%) The state has been a particularly attractive destination for foreign buyers thanks to its exceptionally high rates of job creation and economic growth. Florida added 260,600 non-farm jobs during the 12 months ending May 2016, more than any other state except California.8 The state’s 3.22% year-over-year rate of employment growth ranked third in the country and far outpaced the national rate of 1.66%. Florida’s real gross domestic product increased 3.4% between Q4 2014 and Q4 2015, putting the state in a tie with Utah for third place (behind California and Oregon) and well ahead of the national growth rate of 2%.9 Florida’s consumer economy has been expanding rapidly thanks in part to strong population growth and tourism. A well-known tourist destination for both domestic and international travelers, Florida received more than 106 million visitors in 2015 and a record-breaking 29.8 million tourists in the first quarter of 2016.10 Florida also owes its strong economic growth to its businessfriendly environment with pro-business sales tax policies and a competitive cost of doing business. Home to the nation’s third largest workforce, Florida offers a deep pool of talented workers to employers.11 EUROPE $3.8B (30%) SOUTH AMERICA $1.2B (9%) PACIFIC $159M (1%) The state is also home to many regional and global headquarters thanks to its strategic location and strong global connections in trade, culture and business. Florida is a leader in attracting foreign direct investment, ranking sixth among all U.S. states in employment by majority foreign-owned firms.12 Its infrastructure provides an important link for commerce on a global scale with 15 deep-water seaports, 19 commercial airports and numerous inland ports and multimodal connection points. 7 CBRE Research, United States of America Capital Markets MarketView, Q1 2016. 10 Visit Florida Research, Q1 2016. http://www.visitfloridamediablog.com/ home/florida-facts/research/ 8 Bureau of Labor Statistics, May 2016. 11 Enterprise Florida. https://www.enterpriseflorida.com 9 Bureau of Economic Analysis, Q4 2015. 12 Enterprise Florida. https://www.enterpriseflorida.com 6 FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH Source: CBRE Research, Real Capital Analytics, Q1 2016. © 2016 CBRE, Inc. 7 An Emerging Gateway Market South Florida is a major destination for foreign buyers, particularly the emerging gateway market of Miami. South Florida has received more than 60% of the cross-border capital entering the state since 2007. Miami is an emerging global hub for culture, trade, business and investment. Over the past two decades, Miami has developed into a preeminent destination for international elites in finance, commerce and the arts. This transformation has had many drivers, but a key catalyst is Miami’s emergence on the international art circuit, which has facilitated the opening of dozens of art galleries, museums and luxury shopping districts. In the process, Miami’s profile has increased among global high-net-worth individuals, and many have purchased vacation homes and luxury condominiums in the market. This, in turn, has facilitated cross-border investment in Miami’s commercial real estate market, as foreign investment managers and their affluent clients are already familiar with the city. Miami is also an attractive destination for investment because it is affordable on a relative cost basis compared to other global gateway cities. The market is perceived by some foreign investors FIGURE 3 Foreign Investment and International Arrivals at Area Airports Annual International Passengers Arriving at South Florida Airports Source: CBRE Research, Real Capital Analytics, Q1 2016 and United States Department of Transportation Bureau of Transportation Statistics, November 2015. Cross-border Capital Entering South Florida MILLION Passengers $2.7 IN 2014 12 $2.2 11 $1.7 10 $1.2 9 $0.7 8 7 2007 2008 2009 2010 2011 2012 2013 2014 2015* Sales Volume (Billions of USD) Passengers (Millions) 13 $0.2 as a relatively young city with promising growth potential. With a population of nearly 2.7 million in Miami-Dade County (more than 6 million in the South Florida region), it is small compared to other major global and U.S. markets, making it attractive to foreign investors interested in having a stake in a city that is seen as still early in its development. Foreign investors placing capital in the rest of the state are typically searching for higher yield and better returns, specifically in the markets of Tampa, Orlando and Jacksonville. These markets have strong fundamentals that are continue to improve and offer investors a significant value-add at higher cap rates. Orlando is the most soughtafter destination following South Florida (by sales volume) in large part due to record-breaking tourism with 66 million visitors in 2015–the most of any U.S. city in one year.13 Skyrocketing tourism helps attract foreign investment by driving strong economic growth, which investors like to see, and by enhancing Orlando’s global brand, which builds familiarity with the market among foreign investors. 13 Visit Orlando Research, Q1 2016. * 2015 passenger data through November 8 FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH © 2016 CBRE, Inc. 9 Strong Ties to Latin America FIGURE 4 $703M Latin American Cross-Border Capital Entering South Florida Source: CBRE Research, Real Capital Analytics, Q1 2016. $314M $58M $153M 2007 2008 $243M $197M 2009 $28M $43M 2010 2011 $181M $169M 2012 2013 2014 2015 Q1 2016 Miami is an extremely diverse and multicultural city with strong linguistic and cultural ties to Latin America and the Iberian Peninsula. 10 FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH © 2016 CBRE, Inc. Miami is an extremely diverse and multicultural city with strong linguistic and cultural ties to Latin America and the Iberian Peninsula. Spanish- and Portuguese-speaking investors, many of whom have visited and even purchased vacation homes in the city, are intimately familiar with the market and enjoy spending time there. This familiarity, coupled with direct flights into Miami International Airport, have facilitated Latin American, Spanish and Portuguese investment in South Florida real estate. Private buyers dominate Latin American investment in Miami’s commercial real estate markets. Wealth preservation and the desire to establish a personal or family connection to the city are frequently priorities for these buyers, and their investment strategies, intended holding periods, and required returns can differ significantly from institutional buyers and other private investors. In some instances they are willing to offer generous bids to obtain properties and development sites, and are able to hold these sites for extended periods as they wait for the right development opportunity. 11 $1.10 $1,400 $1.00 $1,200 $0.90 $1,000 $800 $0.80 $600 $0.70 $400 $0.60 $200 $0 2007 2008 2009 2010 2011 2012 2013 Sales Volume (Millions of USD) Canadian Investment in Florida Commercial Real Estate (left axis) 2014 2015 2016 $0.50 U.S. Dollars per 1 Canadian Dollar (right axis) $400 $1.55 $350 $300 $1.45 $250 $1.35 $200 $1.25 $150 $1.15 $100 $1.05 $50 $0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $0.60 $250 $0.45 $150 $0.40 $100 $0.35 $0.30 $50 $0 $0.25 2007 2008 2009 2010 2011 Brazilian Investment in Florida Commercial Real Estate (left axis) 2012 2013 2014 2015 2016 $0.20 U.S. Dollars per 1 Brazilian Real (right axis) FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH Middle Eastern Investment in Florida Commercial Real Estate (left axis) $500 Q4 Brent Price (right axis) $450 $100 $400 $350 $80 $300 $250 $60 $200 $40 $150 $100 $20 $50 $0 $120 Oil Prices (USD/gallon) $0.50 Exchange Rate (USD) $0.55 $200 CBRE Research, In and Out: Middle East 2015. Brent Oil Pricing and Middle Eastern Investment U.S. Dollars per 1 Euro (right axis) German Investment in Florida Commercial Real Estate (left axis) 14 FIGURE 6 $0.95 Source: CBRE Research, Real Capital Analytics, and Board of Governors of the Federal Reserve System, May 2016. 12 Since 2014, Middle Eastern acquisitions of commercial property in the U.S. have increased as falling oil prices have prompted Middle Eastern buyers to search for yield and a safe haven for their capital. Florida has received a share of this investment, particularly in the form of hotel, multifamily and industrial acquisitions. Large industrial and multifamily portfolio acquisitions by institutional buyers and sovereign wealth funds have helped drive the increase in sales volume. Private, non-institutional investors are expected to become more active in an attempt to diversify their assets as oil prices remain low.14 Sales Volume (Millions of USD) Sales Volume (Millions of USD) $1,600 Exchange Rate (USD) Notwithstanding the growth in Canadian, German and Brazilian investment over the past two years, the strong dollar is a headwind for crossborder investment in the U.S., and though overall investment from these countries has grown, it probably would have grown more if exchange rates had been more favorable. Exchange Rates and Cross-Border Capital Volume Exchange Rate (USD) To date, overall investment by top buyers such as Canada, Germany and Brazil has shown little sign of tapering in response to the relative strength of the U.S. dollar. Total Canadian investment in Florida properties has not diminished, thanks largely to strong demand for U.S. assets among Canadian multifamily investors. Canadian law caps rent growth for apartments, spurring demand for multifamily assets in the U.S. German investors continued to acquire properties in 2015 despite a dip in the strength of the Euro. And in the face of a tumbling Real, private Brazilian buyers continued to purchase office properties in Orlando and Miami, pushing 2014 and 2015 sales volumes to record levels. In the case of Brazil, a deep recession and the desire to move capital into secure, dollar-denominated assets likely trumps concerns over declining exchange rates due to the devaluation of the local currency. Middle Eastern Investors Seek to Diversify FIGURE 5 Sales Volume (Millions of USD) No Pullback Due to Exchange Rates, Yet 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 $0 Source: CBRE Research, Real Capital Analytics, and Investing.com, Q1 2016. © 2016 CBRE, Inc. 13 Growing Asian Investment Treasury Action Could Increase Visibility of CrossBorder Investment Chinese investors entered Florida markets in 2014 with a number of notable development site acquisitions in Miami. Developable land is appealing to these buyers, who have gained experience in the commercial development arena at home. Now that the first wave of Chinese investors has established South Florida as a familiar destination for investment, more Chinese capital is expected in the future, especially as financial market liberalization allows investors to increase the international diversification of their portfolios. However, the volume of Chinese investment will, in part, depend on access to Florida’s markets. A direct flight to Miami International Airport would enhance connectivity between the regions. EB-5 investment will also play a vital role in attracting more crossborder capital from China. EB-5 Florida ranks sixth in the nation in terms of EB-5 investment.15 The EB-5 program provides foreign investors permanent residence in the U.S. in exchange for investment in a commercial enterprise that creates or preserves at least 10 permanent full-time jobs.16 EB-5 investment has grown rapidly since the program’s inception in 1990, and it has expanded tenfold since 2009 when other sources of capital dried up due to the financial crisis. In Florida, there are 78 regional centers that facilitate immigration for foreign investors and partner with local developers to raise capital and market investment projects. Common commercial property investments in the state include mixed-use, hotels, senior housing and schools. Based on recently completed and proposed projects, regional centers in Florida are primarily marketing to Chinese, Latin American and Indian investors. 15 FY2010-FY2013 EB-5 Investment CBRE Research, IIUSA, Q3 2015. 16 U.S. Citizenship and Immigration Services. https://www.uscis.gov/eb-5 14 Real estate professionals who wish to identify the true owners of real estate assets may benefit from regulations and legislation recently proposed by the U.S. Department of the Treasury to prevent money laundering and tax evasion. Cross-border capital flows into the U.S. are probably much greater than currently available data sources indicate, as many off-shore buyers purchase real estate using shell companies that mask their identity. The U.S. Treasury’s Financial Crimes Enforcement Network Customer Due Diligence (CDD) Final Rule is aimed at strengthening financial transparency and will require financial institutions to verify the true owner, or “beneficial owner,” who controls and profits from those companies (at a minimum 25% ownership) at the time they open an account. The CDD Final Rule (effective May 2018) may provide greater transparency regarding ownership and a path towards greater visibility into cross-border capital flows. EB-5 Investment 2010- 2013, Top 10 States California $1,174,047,040 New York $1,069,722,874 Pennsylvania $684,220,632 South Dakota $299,500,000 Texas $251,016,786 Florida$218,500,000 Vermont $195,758,333 Maryland $167,883,421 D.C. $165,039,452 Washington $159,750,000 Source: FY2010-FY2013 EB-5 Investment CBRE Research, IIUSA, Q3 2015. FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH Outlook In 2016, foreign investment in Florida is expected to moderate compared to 2015, but remain elevated relative to historical transaction volumes. Rates of investment will vary, however, depending on the asset type and the origin of the capital. For example, activity from Latin America may wane in 2016 due to weakening economies in many countries. Land acquisition may slow in South Florida due to saturation of multifamily supply, particularly condominiums. Canadian and Middle Eastern capital flows may temper due to continued low oil prices, however these buyers will likely continue to pursue portfolio sales of core assets. Miami will continue to be a primary market for cross-border investors coming into the state. FIRPTA is expected to enhance cross-border transaction volume nationally and Florida will share in the benefit of the tax exemption. Heightened uncertainty in the global economy following the U.K.’s decision to leave the European Union will enhance the allure of U.S. real estate markets as safe havens for global capital in the near term. Primary gateway markets will receive the most interest from foreign buyers, but Florida, and Miami in particular, should benefit as well. Looking ahead, future effects will depend on the process and outcome of exit negotiations between the U.K. and E.U. In a broad sense, Brexit would only be disruptive for U.S. real estate markets in a worst-case scenario. © 2016 CBRE, Inc. 15 Appendix 16 FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH © 2016 CBRE, Inc. 17 Florida South Florida • Cross-border capital flows into the state of Florida in 2015 reached more than $4.3 billion, significantly outpacing 2014. • German investment activity in the state has been steady since 2007, totaling nearly $1.3 billion. Investors from this country have by far favored shopping centers with $686 million spent predominately in South Florida markets. • Canadians have been the most active foreign investors in Florida since 2007, having invested $5.1 billion statewide across all asset types. They have demonstrated a preference for multifamily assets, having purchased $2 billion worth of apartments during the period. • Foreign investment in development sites has increased significantly since 2011. Sales volume since 2011 has totaled $855 million, versus $219 million during the prior four years. • Foreign capital surged in 2015 with nearly $2.6 billion in sales volume. The 2015 total represents a 65% increase over the previous year. property type. In 2015 office properties attracted the greatest cross-border sales volume, with $630 million in acquisitions. • Canadian investors have been the most active, followed by significant investment activity from Germany and Spain. • Miami leads the region both in terms of sales volume and transaction count, followed by Broward County and then Palm Beach County. Miami has also experienced higher average annual growth in cross-border capital since 2007. • Since 2007, South Florida’s retail and hotel markets have each attracted nearly $2.4 billion in cross-border capital, more than any other Cross-Border Sales by Geographic Origin of Capital Cross-Border Sales by Geographic Origin of Capital Other Middle East 4,500 Other Asia Other Europe 4,000 Other South America 3,500 Other North America 3,000 Qatar Norway 2,500 Netherlands 2,000 Brazil 1,500 Singapore Argentina 1,000 United Arab Emirates 500 Spain 2007 2008 2009 5,000 2010 2011 2012 2013 2014 2015 Q1 2016 Other Asia 2,500 Other Europe Other South America 2,000 Other North America Brazil 1,500 Switzerland Malaysia United Kingdom 1,000 Argentina United Arab Emirates 500 Australia Spain 0 Canada 2007 2008 2009 2010 3,000 Cross-Border Sales by Asset Type 4,500 2011 2012 2013 2014 2015 Q1 2016 2015 Q1 2016 Germany Canada Cross-Border Sales by Asset Type 2,500 4,000 Sales Volume (Millions of USD) Sales Volume (Millions of USD) Other Middle East Germany 0 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2007 2008 2009 Office 18 Other Pacific 3,000 Sales Volume (Millions of USD) Sales Volume (Millions of USD) Other Pacific 5,000 Retail 2010 2011 Industrial Apartment 2012 Hotel 2013 Senior Lvg 2014 Development Site 2015 Q1 2016 Source: CBRE Research, Real Capital Analytics, Q1 2016. FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH 2,000 1,500 1,000 500 0 2007 2008 2009 Office © 2016 CBRE, Inc. 2010 Retail Industrial 2011 Apartment 2012 Hotel 2013 2014 Senior Lvg Development Site Source: CBRE Research, Real Capital Analytics, Q1 2016. 19 Miami Broward County • Cross-border investment in Miami commercial real estate surged in 2015 to $1.8 billion, more than double the foreign investment during 2014 and well above the prior cycle’s peak of $1.1 billion in 2008. • Five countries stand out for their contributions to cross-border investment in Miami since 2007: Spain, United Arab Emirates (UAE), Germany, Argentina and Malaysia, in order of investment total. • Cross-border investment in Miami development sites has been robust since 2008 with a steep increase in sales volume in 2014. • Cross-border investors have shown a strong preference for office and hotel properties. Foreign investment in office assets increased significantly in 2015, totaling $395 million and accounting for more than 28% of total cross-border sales volume from 2007 to Q1 2016. Hotels accounted for 25% of foreign capital sales volume over the same period. • Foreign investment in Broward County commercial property reached $560 million in 2015, marking the second year in a row in which foreign capital flows exceeded half a billion dollars. • Since 2007, investments in multifamily assets have dominated cross-border capital flows into Broward County, with a dollar volume of $733 million representing 28% of total inflows. • Since 2007, Canadian investment in the Broward County market has totaled $1.2 billion, representing nearly 49% of all cross-border investment during the period. • Hotel assets in Broward County have attracted $661 million in cross-border capital since 2007. Cross-Border Sales by Geographic Origin of Capital Cross-Border Sales by Geographic Origin of Capital Other S. America 1,400 Other N. America 1,200 Qatar Japan 1,000 Brazil 800 Australia 600 Malaysia 400 Canada Sales Volume (Millions of USD) Sales Volume (Millions of USD) Other Europe 1,600 Argentina 200 600 Other Europe Other S. America 500 Other N. America Switzerland 400 Ukraine China 300 Netherlands Israel 200 Norway Australia 100 United Kingdom Germany 0 2007 2008 2009 2,000 2010 2011 2012 2013 2014 2015 Q1 2016 United Arab Emirates Germany 0 2007 Spain 2008 2009 700 Cross-Border Sales by Asset Type 1,800 2010 2011 2012 2013 2014 2015 Q1 2016 2015 Q1 2016 Canada Cross-Border Sales by Asset Type 600 1,600 Sales Volume (Millions of USD) Sales Volume (Millions of USD) Other Asia Other Asia 1,800 1,400 1,200 1,000 800 600 400 200 0 2007 2008 2009 Office 20 Other Middle East 700 Other Middle East 2,000 Retail 2010 2011 2012 2013 Industrial Apartment Hotel Senior Lvg 2014 2015 Q1 2016 Source: CBRE Research, Real Capital Analytics, Q1 2016. 500 400 300 200 100 0 2007 Development Site FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH 2008 2009 Office © 2016 CBRE, Inc. Retail 2010 2011 2012 2013 Industrial Apartment Hotel Senior Lvg 2014 Source: CBRE Research, Real Capital Analytics, Q1 2016. Development Site 21 Palm Beach County Tampa • Cross-border investment in Palm Beach County real estate increased significantly in 2015 but not enough to exceed the previous peak in 2007 when foreign investment reached nearly $320 million. • Germans have been the second-most active foreign buyers in the Palm Beach market, having acquired a number of shopping centers totaling nearly $330 million since 2007. • Canadian buyers have been the most active in the Palm Beach market since 2007, having invested over $427 million, or 29% of the total foreign capital investment in the market. • Foreign buyers in Palm Beach County have favored multifamily assets, having acquired over $635 million worth of apartments since 2007 representing 39% of total cross-border capital flows to the market. • Cross-border capital flows into Tampa reached new heights in 2015 when foreign investment was nearly $540 million, the highest level recorded since 2007. • Canadians have contributed 42% of the foreign capital entering Tampa CRE markets since 2007, with a total investment over $957 million. Canadian investors have expressed a strong preference for multifamily assets. Cross-Border Sales by Geographic Origin of Capital • Cross-border investment in retail properties has represented 30% of foreign investment across all property types since 2007. Cross-Border Sales by Geographic Origin of Capital 350 600 Other Pacific Other Middle East 300 Other Asia Other Europe 250 Other S. America Mexico 200 Brazil Norway 150 Netherlands Israel 100 United Kingdom Sales Volume (Millions of USD) Sales Volume (Millions of USD) • Foreign investment in multifamily properties has totaled nearly $730 million since 2007, accounting for 32% of the total cross-border sales volume across all property types. Other Asia 500 Other Europe Sweden 400 United Arab Emirates United Kingdom 300 Israel China 200 Singapore Switzerland 100 Bahrain 50 Other Middle East Netherlands Switzerland Australia Germany 0 2007 2008 2009 350 2010 2011 2012 2013 2014 2015 Q1 2016 0 2007 Canada 2010 2011 2012 2013 2014 2015 Q1 2016 Canada Cross-Border Sales by Asset Type 500 Sales Volume (Millions of USD) Sales Volume (Millions of USD) 2009 600 Cross-Border Sales by Asset Type 300 250 200 150 100 50 0 2007 2008 Office 22 2008 2009 Retail 2010 Industrial 2011 Apartment 2012 Hotel 2013 Senior Lvg 2014 Development Site 2015 Q1 2016 Source: CBRE Research, Real Capital Analytics, Q1 2016. FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH 400 300 200 100 0 2007 2008 Office © 2016 CBRE, Inc. 2009 2010 Retail Industrial 2011 Apartment 2012 Hotel 2013 Senior Lvg 2014 2015 Q1 2016 Source: CBRE Research, Real Capital Analytics, Q1 2016. Development Site 23 Orlando Jacksonville • Cross-border sales activity in 2015 reached $590 million, surpassing the previous high mark reached in 2012. • Since 2007, Canadians have invested $957 million in Orlando real estate, mostly in multifamily and retail assets. Canadians have accounted for 36% of total foreign investment in Orlando’s commercial real estate markets from 2007 through Q1 2016. • The total cross-border investment in apartments from 2007 to Q1 2016 was $836 million, accounting for nearly 32% of foreign investment across all property types. • Foreign appetite for shopping centers returned in 2011 after a three-year hiatus with sales volume totaling $58 million for the year and $213 million from 2011 to 2015. • Foreign investment exceeded $183 million in 2014, the highest level yet in the current market cycle. • Since 2007, Canada and Israel have been the most active sources of foreign investment in Jacksonville’s commercial real estate markets. Cross-Border Sales by Geographic Origin of Capital 800 Other Middle East Sales Volume (Millions of USD) Other Europe 600 Other N. America France 500 Bahrain Argentina 400 Israel 300 Cayman Islands China 200 200 Sales Volume (Millions of USD) Other Asia 700 Germany 100 2009 2010 2011 2012 2013 2014 2015 Q1 2016 Canada Germany Netherlands 120 United Arab Emirates 100 Chile 80 Japan 60 Spain Bahrain Australia Israel 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 2015 Q1 2016 Canada Cross-Border Sales by Asset Type 200 180 Sales Volume (Millions of USD) Sales Volume (Millions of USD) 140 2007 700 600 500 400 300 200 100 0 2007 2008 2009 Office 24 Other Europe 0 Cross-Border Sales by Asset Type 800 Other Asia 160 20 Australia 0 Other Middle East 180 40 Brazil 2008 • Industrial and retail asset types each contributed 21% to the cross-border sales volume from 2007 to Q1 2016. • Canadians exhibit a preference for multifamily and retail while Israeli buyers predominately seek multifamily assets. Cross-Border Sales by Geographic Origin of Capital 2007 • Multifamily transactions have accounted for 44% of foreign investment across all property types since 2007. 2010 Retail Industrial 2011 Apartment 2012 Hotel 2013 Senior Lvg 2014 2015 Q1 2016 Source: CBRE Research, Real Capital Analytics, Q1 2016. 160 140 120 100 80 60 40 20 0 2007 2009 Office Development Site FLORIDA: A DESTINATION FOR GLOBAL CAPITAL | CBRE FLORIDA RESEARCH 2008 © 2016 CBRE, Inc. Retail 2010 Industrial 2011 Apartment 2012 2013 Hotel Senior Lvg 2014 Development Site Source: CBRE Research, Real Capital Analytics, Q1 2016. 25 2016 | CBRE FLORIDA RESEARCH FLORIDA: A DESTINATION FOR GLOBAL CAPITAL FOR MORE INFORMATION ON CROSSBORDER CAPITAL IN FLORIDA PLEASE CONTACT: FOR MORE INFORMATION ON FLORIDA LEASING AND INVESTMENT SERVICES, PLEASE CONTACT: AMERICAS RESEARCH CBRE TRANSACTION AND ADVISORY SERVICES QUINN EDDINS Director of Research and Analysis +1 305 428 6325 [email protected] SOUTH FLORIDA SHANNA DRWIEGA Senior Research Analyst +1 813 273 8433 [email protected] To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at www.cbre.com/researchgateway. MARY JO EATON Global President Asset Services/Valuation and Advisory Services +1 305 428 6329 [email protected] TAMPA CHASE PATTILLO Managing Director +1 813 273 8420 [email protected] ORLANDO WILLIAM MOSS Senior Managing Director +1 407 839 3140 [email protected] JACKSONVILLE/PANHANDLE WILLIAM “TRIPP” GULLIFORD III Managing Director +1 904 630 6344 [email protected] Disclaimer: Information contained herin, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy we have not verified it and make no gurantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.