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U.S. office investment largest full-year total since 2007

US office investment

March 2015

Increased demand for office space, the strongest labour market since 1999 and continued strong interest from investors combined have driven the largest full-year office investment total since 2007, according to the latest research from CBRE.

Total investment volume in U.S. office properties totalled USD 119 billion in 2014, a 15% climb over the prior year. The year closed with a very active quarter for office property investment, in terms of sales volume. In Q4 2014, U.S. office sales volume reached USD 35.6 billion—13 percent higher than Q3 2014. Despite the steady climb in office property acquisitions over the last several years, the 2014 figure was 44 percent below the prior peak of 2007.

Relative to other property types, foreign capital was particularly focused on the office sector, acquiring USD 17 billion of U.S. office assets in 2014—representing 45% of foreign investment in U.S. commercial real estate. Within the office sector, foreign capital leaned toward central business district (CBD) properties, with 80 percent of it going to such assets. Canada, Norway and Hong Kong were the largest sources of international investment capital in 2014, with New York and Boston the leading markets for foreign office investment.

“The U.S. office market remains a safe haven for foreign investors looking to make their way into the U.S. In 2015, we anticipate total office investment will rise roughly 15%,” said Jeanette Rice, Americas Head of Investment Research, CBRE.

U.S. office leasing metrics were also strong, with net office absorption totalling 15.4 million sq. ft. for the quarter, and 52.7 million sq. ft. for the year—the best performance since 2007.

“The U.S. office market ended the year on a strong note,” said Sara Rutledge, Director of Research and Analysis, CBRE.