
Dismal macroeconomic markers in Europe and the continuing war in Ukraine are inspiring investors to look beyond the region’s borders and head stateside. By Isobel Lee
It is perhaps the quintessential immigrant dream: heading to the United States in search of a better life and a more prosperous future. And as war continues to rage in Europe, and the European Central Bank signals its appetite to raise interest rates for the foreseeable future in the battle against inflation, it has become the dream of more than one European real estate player too.
“The US real estate market remains the largest, most liquid and one of the most transparent in the world, offering attractive diversification opportunities to European investors such as Union Investment,” notes Henrike Waldburg, Head of Investment Management Global at Union Investment. “We at Union Investment are seeing first-hand the true value in a globally diversified portfolio, particularly in light of the events that have impacted Europe recently.”
While the firm has been investing in the US for over thirty years, in late 2021 it signalled the rebirth of its American dream by acquiring property in Illinois and Florida worth nearly half a billion dollars. These properties included new asset classes for Union Investment in the US, namely grocery-anchored retail and multifamily.

European real estate investors see profitable opportunities
Matthew Scholl, Union Investment’s Head of Investment Management Americas, confirms that these “ new” sectors are of particular interest, but notes that the firm still believes in diversification, namely in “pursuing viable investment opportunities in all the major asset classes, with a particular focus on multifamily and grocery-anchored/necessity-based retail with the clear intention of further diversifying our growing US portfolio”.
He adds: “We certainly believe in the long-term viability of office as an asset class and will continue to focus on selected office assets where our sustainability requirements, as well as our investment criteria relating to quality, location, credit thresholds and income, are met.”
Different investment strategies all underline the trend
A number of Union’s German peers have become equally enamoured with the possibilities stateside. Commerz Real, the real assets arm of Commerzbank Group, opened its first US office – in New York – in the summer of 2022, despite having an investment track record there dating back to 2004. In the last 20 years, it has developed a portfolio of some 12 properties worth $3.2 billion through its open-ended real estate fund Hausinvest. “The United States is an extremely exciting market, offering attractive opportunities in the gateway cities above all,” notes CEO Henning Koch. Offices make up the largest portion of the firm’s portfolio at around $2.1 billion, with some $914 million in hotels and $158 million in retail.
Meanwhile, German developer Trei Real Estate has planted its flag with an impressive residential development strategy. In 2017, the firm established a team in Charlotte, North Carolina, with initial plans to focus on that area.
We are pursuing viable investment opportunities in all the major asset classes with the clear intention of further diversifying our growing US portfolio.
Pepijn Morshuis, Trei’s CEO, says: “We started developing Class A multifamily there with the expectation that we would later explore different asset classes. But we’ve had so much success with Build-to-Rent (BtR) residential that we have instead expanded into other geographies and maintained the multifamily focus.” After North Carolina, Trei moved into Georgia, Tennessee and Florida, and is studying opportunities in Virginia, Washington DC and the suburbs of Maryland. “We’re unlikely to go further north, as then you get into cities where the fundamentals are quite different, such as New York and Boston. We are instead focusing on cities where there is a growing base of employers, and continuous pressure on the leasing market with people flocking to those cities. We always underestimate how much demand there is for rental residential and every time achieve rents that are better than expected.”

Strong population growth outside the US metropolises
All these investment strategies underline an important secular trend: the best opportunities are no longer limited to the US coastal cities and the dominant asset classes of yesteryear, namely offices and shopping malls. Confirms Riaz Cassum, Global Head of International Capital Coverage at JLL: “Historically, a lot of European investors focused on gateway markets such as New York, Boston, San Francisco and LA, and then expanded into Seattle. In the last few years, most of the growth has taken place in non-gateway markets. We used to call them secondary markets, but they really aren’t.” In cities such as Nashville, Tennessee, Austin in Texas, Denver, Colorado and Miami in Florida, population growth has been impressive. “There has been migration to the Sunbelt because the cost of living is lower and income taxes tend to be more attractive; municipalities don’t have the burden of mass transit or public housing, as they do in a city like New York.” He adds: “Any European investor looking at the US should have an open mind and a two-pronged approach, planning to cover both gateway and non-gateway markets.”
Any European investor looking at the US should have an open mind and a two-pronged approach, planning to cover both gateway and non-gateway markets.
For Cassum, the arrival of European investors is likely to ramp up in the coming months. “We think there’s going to be more European capital coming to the US, since the economy is so strong – almost too strong. The Federal Bank is trying to slow down economic growth and in turn push up unemployment metrics, which remain stubborn. By way of comparison, Europe has a unique set of challenges given its energy dependence, the war in Ukraine and general macroeconomic headwinds.”
By Isobel Lee