German Law Could Mean $500M Buying Surge in US

CHICAGO-New legislation in Germany could open the gates for nearly $500 million in commercial real estate in the US. That is Jones Lang LaSalle’s conclusion of the effects of Germany’s Fourth Financial Market Promotion Act.

The impact is expected to have ramifications across all major markets, with indications the local office market may attract more eurodollars from Germany.

“German investors have historically been very aggressive in pursuing real estate acquisitions in the US that meet their investment criteria,” says managing director of capital markets James Hanson in a statement. “They have acquired some very high profile properties in Chicago in the past and we expect that with broader criteria and more liquidity we will see an immediate impact on asset values in the US.”

Most recently, Atlanta-based TMW Real Estate Group, LLC bought 181 W. Madison St. from the Davis Cos. for $248 million on behalf of a German closed-end public fund.

“With more capital and increased liquidity, open-ended funds will have the ability to pursue investments in major U.S. markets such as New York, Boston, Washington, D.C., Chicago, Los Angeles and San Francisco, where transaction size tends to be larger,” says managing director of capital markets Noble Carpenter. “German OEFs currently have approximately $8 billion in cash, so the new law change will allow for more opportunities to buy larger assets and be more competitive with the German closed-end funds.