In recent years, German companies have been active buyers of trophy commercial properties in major U.S. cities. According to Real Capital Analytics (RCA), Germany ranked as the No. 2 foreign source of capital in 2019, up from No. 5 in 2018 and No. 4 in 2017. Canada was the only foreign country that had a bigger appetite for U.S. commercial real estate last year.
Germany’s climb up the ranks of U.S. foreign-investment players, however, was largely a reflection of the cooling trend in cross-border investments from Asia. Across European markets, German investments in commercial real estate hit a new record in 2019. Six of the top 10 European investors last year were headquartered in Germany, according to RCA.
In recent months, however, Germany has pulled back. German investment activity in the U.S. market for properties valued at $2.5 million or more was limited to one major deal in Manhattan that was completed in June 2019, according to RCA. Last year, German investors were partial investors in acquisition deals totaling nearly $5.9 billion.
Four of the recent acquisitions involved affiliates of Allianz, a Munich-based multinational investment company. Allianz has been expanding its holdings in the U.S. and worldwide. The company has been especially aggressive in China of late, but major U.S. cities also are being targeted.
Last year, Allianz Real Estate of America bought a 49% stake in 30 Hudson Yards, an iconic office and condominium tower on Manhattan’s west side, the company reported. Thanks to the deal valued at nearly $2.2 billion, RCA ranked Allianz as the No. 1 investor in U.S. central business district office properties.
In late 2018, Allianz Life Insurance Co. acquired a 49% stake in a 1.2 million-square-foot office property in downtown Boston, according to Commercial Property Executive. The property is known as Exchange Place and spans an entire city block, connecting the Boston Exchange Building (built in the 1890s) with a modern, 40-story glass office tower.
Around the same time, Allianz also acquired a stake in the Terminal Stores Building, a 1.2 million-square-foot, 19th-century industrial building and warehouse south of Hudson Yards. Multiple partners are planning an upscale retail and penthouse conversion.
The company also was active on the West Coast in 2018, partnering with another investor to purchase San Francisco’s historic Ferry Building for $291.5 million. The property includes office and retail space along the city’s waterfront Embarcadero.
Additionally, German companies have been sellers in recent years. This past October, Neumuller Trust sold The Culver Studios for $40 million. The 2.7-acre property is located in the Los Angeles market and was once used as a set for the HBO television series “Entourage,” according to The Real Deal.