The next seven years will bring a growth cycle of real-estate investment in the U.S., that will be driven by several factors and in different areas. These will stem from a growing appetite for real asset investments, foreign investment, geographic diversification and macroeconomic events.
“For the first time since 2009, the U.S. was the top destination for capital going into real estate markets, according to Cushman & Wakefield’s annual report”. Source WSJ, March 11, 2015.
The economic events in Europe are driving major changes in corporate investments and geographic expansion decisions. In this particular situation, the expansion would be better defined as an exodus from European markets to developing and growing in the U.S.
In a nutshell, European companies will be setting-up offices and transferring employees to the U.S. - The main drivers are:
• Taking advantage of the rising dollar.
• Diversifying from the euro € and ECB risk.
• Revenue recognition outside of the EU tax base.
• Off-setting U.S. Tax liabilities by balance sheet real-estate investments.
• Leveraging ROI on liquidity for cash flow businesses.
In the 1990’s, U.S. Corporations underwent a similar expansion process into Europe. This time, the expansion phenomena will be European corporations expanding into the U.S., albeit the reasons and drivers being fundamentally different.
These European expansions/exodus will come in the form of large corporations accelerating investments and SMB’s (small & medium businesses) that will be new players in the U.S.
This, especially in the SMB market, will create a need for a new approach to serving expansions that go beyond simple relocation, site selection, etc. The gap of what is normally delivered by economic development organizations and real-estate teams will need to be filled.
This will bring cross-country collaboration to a whole new level and include partnerships in many areas, in order to successfully serve this market opportunity. For example:
• Agent network to support U.S. Wide coverage.
• Handholding of employees across professional and personal needs.
• Helping companies build there supply-chain in the U.S.
• Helping companies with U.S. Compliance & Regulations.
• Deliver to relocation needs and temporary transition needs.
This can be a new era of Corporate Real-Estate business models and teaming opportunities.
Georges Remboulis is the executive of Newbdo Inc..