Cross-border investors in U.S. commercial real estate, which the world has long considered a safe haven, are feeling more uncertain about that assumption these days. And yet, they are still investing, which is still impacting domestic markets.
“Despite global uncertainties and shifting tariffs, the U.S. remains a capital safe haven,” says Kevin McGowan, SIOR, founder of McGowan Corporate Real Estate Advisors, which specializes in global industrial real estate. Investors view U.S. assets as resilient, backed by institutional transparency and strong consumer demand, he says, though recent tariff volatility and high construction costs are prompting some investors to explore alternatives—such as Mexico, for manufacturing adjacency to U.S. markets.
The Ongoing Impact of Cross-Border CRE Investment
On the whole—especially for the United States, but not only there—cross-border investment in CRE influences domestic market dynamics and property values. One impact of international buyers entering a market in significant numbers can be an upward pressure on prices, especially in premium locations and luxury segments. One need look no further than Miami to see that dynamic at work, at least until recently. In other cases, a steady stream of cross-border capital helps keep a market stable.
The impact of foreign investment in U.S. CRE has long been recognized as a factor in liquidity and price stability, McGowan says. “Overseas investors often pursue long-term leases and high-credit tenants, fueling demand in logistics and manufacturing hubs,” he notes. “Their focus on dollar-denominated, income-producing assets reinforces confidence in U.S. fundamentals, even as domestic sentiment fluctuates due to interest rates and economic uncertainty.”
Non-U.S. investors remain interested in U.S. properties, especially industrial assets. During the first quarter of 2025, total cross-border investment in U.S. CRE came in at $2.4 billion—more than double the total (up 130%) compared with the same quarter a year earlier, according to CBRE.
Real estate is a long game. It's not day trading, right?
That sizable increase was largely spurred by the $1.1 billion purchase in January of a 45% stake in 48-building U.S. logistics portfolio by Norges Bank Investment Management, Norway's sovereign wealth fund, from the Canada Pension Plan. Without that particular deal, cross-border would have been up, but only by about 25%.
Cross-border investors are also interested in U.S. hospitality properties, with investment volume up nearly thirteenfold in Q1 2025 to $284 million, with a large part of that ($141 million) due to an investment in PGA National Resort by a British private equity firm, CBRE reports. Investment in U.S. multifamily by cross-border investors totaled $800 million in the quarter, down 23% year-over-year, and retail investment was down 40%.
Canada is by far the largest non-U.S. investor in U.S. commercial real estate, acquiring $7.3 billion during the four quarters ending in Q1 2025, or 35%of the total. Other major sources of investment for that period include Norway (13%), the U.K. (11%) and Japan (10%).
Overseas capital is flowing into both primary hubs and unexpected secondary markets, McGowan says. For example, Reno, Nevada saw strong demand from international buyers, buoyed by its proximity to West Coast ports and data center growth. There’s also rising interest in smaller Sun Belt markets and the Southeast, where onshoring trends, affordable land, and intermodal logistics appeal to foreign investors. Niche plays include multistory warehouses and sale-leaseback deals across logistics and life sciences.
Uncertainty Clouds the Market
Despite those positive indicators, doubt is in the air. The Association of Foreign Investors in Real Estate, in its survey in March of 180 non-U.S. institutional investors, pension funds, asset managers, and other organizations from 25 countries, found ambivalence. A majority (63%) of the respondents, who collectively oversee more than $3 trillion in U.S. assets under management, said they have a negative outlook for U.S. cross-border investments despite promising fundamentals in 2025. Only 42% said that in the previous survey in the fall of 2024.
On the other hand, very few plan to invest less in U.S. CRE, with 44% of non-U.S. investors planning some level of increase in U.S. property investments, compared with 24% in the previous survey. Only 8% of investors plan a decrease in investments.
“A word that I continue to use on an hourly basis is uncertainty,” says Landon Williams, SIOR, executive vice president at Cushman & Wakefield, who focuses on investment sales in industrial, office, retail, and multifamily.
“Real estate is a long game. It's not day trading, right?” says Williams. “At the same time, the winds are shifting quickly from late last year, when everybody was more bullish about the incoming administration. Now we have the tariff situation.”
Tariffs represent various levels of uncertainty for U.S. real estate and global investors. There has been uncertainty about their timing, inconsistency about their implementation, and challenges to their very legality. Even if they are not legal, the entire episode raised the specter of trade wars and a recession, neither of which would presumably be good for U.S. CRE valuations.
Indeed, Williams points out, April marked the first month since 2010 — in the throes of the Great Financial Crisis — when every major U.S. commercial property sector suffered both monthly and annual price declines. MSCI’s RCA CPPI turned in an overall 1.1% monthly decline in prices in April, and a 9.4% annual drop. Multifamily and office properties valuations fell 12.1% and 6.9%, respectively. That seems to be correlated to tariff uncertainty; causation remains to be seen.
Other factors are at play in generating uncertainty. “Elevated interest rates and persistent inflation have increased borrowing costs, suppressing property values and prompting investors to prioritize stable income over appreciation,” McGowan says.
In short, a rational reaction to uncertainty — whatever the cause — may not be to pull out of a market—the U.S. is simply too big and the returns too compelling for that to happen so far. Rather, cross-border investors are looking for high-quality assets even harder than before.
“Many are targeting core-plus assets in tenant-favorable industrial markets where landlords offer concessions to preserve occupancy,” McGowan says. “Sale-leasebacks have also risen, as owner-occupiers sought liquidity amid tighter financing."
“Traditionally, German investors are very risk averse, in real estate or other investments,” says Blackbird Real Estate GmbH Managing Partner Tobias Schultheiß, SIOR. “Investing abroad implies trust in political and economic stability,"
Schultheiß adds that he is in regular contact with German real estate investors active in U.S. markets (residential, logistics, office) and all are on standby.
So that's the number one canary in the mine. They know it's happening, so they wanted to shelter the money.
None of my contacts are active buyers today,” he says. “Fortunately, they do not yet think of leaving the U.S., but I heard voices saying that they might move to Canada.”
Cross-border Investment Isn't Just About the U.S.
Whatever investors believe about conditions in the United States and its real estate market, that isn't the only consideration when it comes to parking capital in U.S. commercial real estate. Investors also compare other major markets to the U.S., and some of those markets seem riskier by comparison, or at least exhibit conditions that would make realizing returns in their real estate sectors tougher than the U.S.
Accessing market data is a thornier undertaking in many places, says Guillaume Turcas, SIOR, managing partner of Faro Capital Partners, who is based in Paris.
“If you go into secondary markets, even in Germany, which is supposed to be the safe haven of Europe, to get data, to collect data, to understand what's really going on — it's kind of hard,” Turcas says. “You don't have those kinds of big platforms where you just have to click, where's the asset, what's the value? How many times has it been traded? Basically, you have nothing.”
U.S. financing structures can also be more user-friendly compared to markets that are more averse to debt financing. “In the U.S., there's a tradition of, I would say, imaginative or inventive kinds of capital stacks,” Turcas says. “The less equity you put in, the better you can do.”
Then there is simply the matter of the state of foreign markets. Turcas again cites Germany, whose CRE market, while seeing a small uptick in Q1 2025, has had a bad run since the pandemic. German commercial property prices fell 5.4% in 2024, a fourth consecutive year of declines, according to the VDP banking association. This despite Germany being the third-largest economy on Earth and a linchpin of the larger EU economy.
“The developers there are going into the ground,” Turcas says. “And the debt situation is crazy there.
Political considerations are also important influences on cross-border investment. Not always the politics of the U.S., but rather of investors' home counties. The flood of capital from parts of Latin America into South Florida in previous decades was a highly reported example of this, but hardly the only one.
“The pace of people from Mexico coming to the to invest in the U.S. has accelerated recently, since the change in government in Mexico,” says Adrian Arriaga, SIOR, CEO of McAllen, Texas-based Arriaga Group, who among other things advises an EB5 program that specializes in U.S.-Mexico cross border investors. His company has also completed several large maquiladora/manufacturing build-to-suits with long-term leases.
“Investors are concerned, and one way to shelter their money is to invest in the U.S.,” Arriaga says. More investors are looking for properties, say light industrial or shopping centers or land, because of appreciation and the value of anything that has cash flow.
“Of course, that's been true for the last 30 years,” Arriaga says. “I've been doing commercial real estate for high-net-worth investors investing in the U.S., and some people think it just got started.”
Practical considerations have long driven Mexican investment in the U.S.-Mexican investors of means have bought houses on the U.S. side of the border for decades. “Why? Because they don't want to rent or to get hotel rooms when they can buy a house for half a million dollars, then sell it 10 years later for $750,000,” Arriaga says.
That is still going on, but now the spectre of peso devaluation is on the rise once more in Mexico, according to Arriaga, spurring investors to dig a little deeper into the U.S. market.
“For the last 10 years, the peso has been fairly stable, but now it's sliding.” Arriaga says. “So that's the number one canary in the mine. They know it's happening, so they wanted to shelter the money.”
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