Foreign investors are pouring money into downtown D.C. office buildings even as many properties in the Washington suburbs struggle with stagnant leasing and growing vacancy.
Overseas investors have purchased or are under contract to buy nearly $1.9 billion in Washington office properties so far in 2013, according to data assembled by the services firm Jones Lang LaSalle. That tops the total of $1 billion for all of last year and is more than double the $807 million that foreign investors put up in all of 2011.
With the federal government undertaking stimulus spending measures to bolster the economy, Washington emerged from the recession more quickly than most commercial hubs, and foreign investors — looking for stable assets in a sea of uneasiness — began putting money into some of the city’s top downtown properties and development projects.
Middle Eastern sovereign wealth funds became primary investors in the city’s two mammoth downtown projects, the Marriott Marquis Convention Center Hotel (Abu Dhabi) and CityCenterDC (Qatar). Both are under construction.
Rather than waning as sequestration cuts began to hit Washington in March, interest from abroad appears to be strengthening. Foreign sales account for 75 percent of all investments in Washington commercial real estate this year, after not topping 30 percent in the previous three years and registering just 1 percent in 2006. On average, foreign firms accounted for 17 percent of all sales since 2001.