Ever since Arizona experienced a turnaround from the 2007-08 financial crisis, foreign investment in our state’s real estate market has increased. Many attribute this injection into local projects as integral to the state’s continued growth since the downturn. Our geographic and cultural connection with Mexico provides for one close means for foreign investment, but Canadian, Chinese and German interests also have major stakes in the success of Arizona real estate and businesses.
A recent article from inbusinessmag explains as Arizona began to rebound in 2013, one statistic noted that “German companies support 5,800 Arizona jobs and own approximately $1.7 billion in Arizona assets — including over $500 million in Arizona real estate.”
While many recognize the positive effects of this investment on a larger scale – elevating Arizona as a great place to buy property – international investment in commercial real estate also has very localized effect on the state’s economy. Property values are often raised, and international commerce is further encouraged.
In the same article, Chad Tiedeman, a local commercial investment broker, said “the Canadians have a positive effect on sales at a micro level in Arizona. But from an investment perspective, they impact the dynamics as well.” He goes on to explain, “These investors can afford to pay more money for expensive commercial properties here because they’ve already seen a positive return.”
A similar sentiment was expressed concerning Asian investments in Arizona – that as firms and individuals with foreign backing see their compatriots succeed, they themselves are more likely to spend in a specific area.
In an article in the Business Journal penned at the end of 2015, Eric Jay Toll noted the influx of foreign investment in the valley is bringing about a ‘changing perception’ as a lucrative area for commercial properties.
He quotes a source who notes the traditionally large number of German and Canadian investors. The article also discusses the real growth statistics.
“[In the last year] With just office real estate, foreign buyers grew from 7 percent of the transactions and 4 percent of the value to 10 percent of all office transactions and 21 percent of the value,” he said. “Buyers are finding that rising prices in coastal markets move Phoenix from a tertiary market to a target market for them.”
What does this mean for commercial real estate in Arizona? It means signs are good, investors are interested and growth is on the rise.