Foreign investors like Seattle real estate.

While names like Boeing, Microsoft, and Starbucks have helped Seattle build a global brand, the reality for commercial real estate investors has been that Seattle has largely remained a second-tier market for foreign investors. That situation has begun to change as new workers pour into the region and well-known tech giants like Amazon, Google and Facebook expand their operations here to tap local talent. Some 200 companies have moved in or set up operations in the region in the past year.

Now, as the local economy begins to demonstrate renewed strength, global investors are becoming a significant force and Seattle has emerged as one of the top real estate markets in the country, continuing a trend that had started before the recession hit. Foreign buyers are attracted by the regions diversified economy, its growing high tech and life sciences industries, and its ability to attract young workers as a desirable place to live. This foreign investment is helping to boost real estate values and revive a once moribund office and residence construction market.

According to the international real estate services firm Jones Lang LaSalle, in the first half of 2013, foreign investment accounted for 18.3 percent of the $2.9 billion spent on Puget Sound area commercial property, up from virtually nothing in 2011. And those numbers dont include investments foreign firms have made through third parties such as domestic insurance companies to avoid publicity.

Were reaching a critical mass in the Northwest, says Craig Kinzer, CEO of Kinzer Real Estate Services in Seattle. Historically, weve been a backwater, but not anymore.

While Seattle is not ranked on the same level as Washington, D.C., or New York, Kinzer says, Its rising up fast. Being a gateway city on the Pacific Rim has helped, as has Seattles proximity to Vancouver, B.C., which has attracted heavy investment from Asia in office, hotel, retail and industrial property.

If you include foreign investments in residential properties, the impact is even greater. Canadian developer Bosa Development Corp.s $450 million, 707-unit condo project, Insignia, was the first condo project to break ground in downtown Seattle in five years.

And its not just foreign institutions investing here. Seattle developer Henry Liebman has attracted hundreds of millions of dollars from individual foreign individual investors through deft manipulation of a federal program that provides U.S. residency cards to non-Americans who invest at least $1 million (or $500,000 in depressed areas) in projects that create 10 or more jobs.

The amount of capital now looking in Seattle is huge, says Kevin Shannon, a vice chairman at the international real estate services firm CBRE. Thanks in large part to Amazons decision to keep its headquarters downtown, Seattle has led the nation in terms of net absorption of office space for more than two years. Additionally, the Puget Sound region is spending heavily on improving its transit system as more people move into urban neighborhoods in downtown Seattle and Bellevue. Seattle has really come into its own, Shannon says.

Recent big purchases involving foreign investment include:

The $389.9 million sale of the Wells Fargo Center in downtown Seattle to Callahan Capital Partners/Ivanhoe Cambridge, which is the real estate investment arm of Canadas largest pension fund manager, Caisse de Depot et Placement du Quebec.

The $297.7 million sale of Westfield Southcenter mall to the Canada Pension Plan Investment Board in Toronto.

The record-setting $97.4 million sale of the 202 Westlake building in South Lake Union to Munich-based funds manager GLL Real Estate Partners.

The $31.7 million sale of the Marketplace at Queen Anne to Weingarten Realty Investors/Bouwinvest, a Dutch investment manager.

Contrary to previous investment cycles, foreign buyers these days are coming from all over the globe from South Korea, Israel and Africa, as well as from Canada, Germany and the United Kingdom, which have long invested in Seattle area real estate.

For example, South Koreans began investing in Puget Sound area real estate just last year, spending $36.3 million here in 2012, according to Real Capital Analytics, a New York-based real estate research firm. Through the third quarter of this year, South Korean investors have spent $114.4 million on commercial property locally. That puts South Korean investors second behind investors from Canada and ahead of investors from the United Kingdom. According to Real Capital Analytics, Canadian investment in the Puget Sound area through Q3 totaled $481.3 million while investment from the U.K. totaled $88 million.

The South Korean shopping spree is linked to increasing tension between South Korea and North Korea. This conflict has spurred South Korean investors to seek a safe haven for their funds, says Steve Collins, an international director in the Washington, D.C. office of Jones Lang LaSalle. Within the past six months, South Korean investors have been involved in deals in San Francisco, Chicago, Washington, D.C., and Houston. But they also have been paying more attention to smaller, less competitive markets such as Seattle, Atlanta and San Diego, where better deals can be found, Collins explains.

Foreign interest has helped send prices higher. In the final round of bidding for the 202 Westlake office building earlier this year, Munich-based GLL was one of two foreign investors competing for the property against two domestic buyers. The deal set a new record of $749 a square foot. The sale tipped to GLL thanks to a bid that was a tiny bit higher and GLLs very good track record for closing deals, says John Grassi, president of San Francisco-based Spear Street Capital, the seller.

Shannon wasnt surprised by the hefty price paid for the property. Its a new building under a long-term lease to Amazon in Seattles South Lake Union neighborhood, described by Shannon as arguably the hottest market in the western United States.

Grassi adds, Seattle has a nice combination of big-name tech companies and also a fairly good grouping of smaller and midsize companies.

Foreign buyers typically look for newer, well-situated, well-leased properties in core downtown neighborhoods. Sovereign wealth funds in particular prefer larger deals in the range of $100 million to $200 million. Many choose to take a minority stake of 49 percent in properties for tax reasons. High-quality real estate offers a better return and some protection from inflation compared to other investments, Grassi says.

Their expectation is for annual return on investment between 5 and 5.5 percent, Shannon notes. The majority of foreign investors typically are very conservative in their selection, notes Bill Krauch, a senior adviser at Bentall Kennedy, a Canadian real estate investment adviser and property management firm with an office in Seattle. They are looking for long-term stability and an investment that can provide good cash flow and modest appreciation over time.

Bentall Kennedy helped Seattles Pine Street Group secure a portion of its financial backing for the new 654-unit Via6 apartment project from the Canada Pension Plan Investment Board.

Increasing foreign investment continues a trend in the Puget Sound area to more institutional ownership of commercial property, compared to earlier days when ownership was more local. Additionally, foreign buyers are helping diversify ownership of local office buildings, which became very concentrated when Chicago financier Sam Zell bought dozens of high-profile properties in downtown Seattle and Bellevue in the 1990s. Foreign investors reliance on U.S. advisers makes transactions easier, according to Grassi.

Real estate professionals say there is little reason to be concerned about the increase in foreign investment. In todays world, to say someone is a foreign buyer is a little misleading, Grassi notes. Typically, he points out, those handling the transaction are based in the United States. Youre dealing with people who are very knowledgeable and conversant with the local market. It doesnt feel like youre selling to some mysterious foreigner far from it.

Like other institutional owners, foreign owners hire professional building managers who will ensure their sites are well maintained, says Collins. As for any fear that foreign owners may be more likely to drive up rents, Stuart Williams, managing director in the Seattle office of Jones Lang LaSalle, doesnt see it happening. Rents will continue to be driven more by demand for space than the prices owners paid for their buildings, Williams says. He expects foreign investment will continue to increase in the region but will not dominate the market as Zell once did.

Shannon also sees an increasingly diversified roster of domestic and foreign buyers for Seattle area commercial properties going forward.

Ownership has transitioned to an institutional Whos Who of domestic and foreign investors, says Shannon. Seattle has clearly arrived.

Major Foreign Investment Deals

wells fargo center Wells Fargo Center $389.9M Location: Seattle Buyer: Callahan Capital Partners/Ivanhoe Cambridge Country: CANADA

Westfield Southcenter Mall $297.7M Location: Tukwila Buyer: Canada Pension Plan Investment Board Country: CANADA

202 Westlake $97.4M Location: Seattle Buyer: GLL Real Estate Partners Country: GERMANY

Yarrow Bay Plaza $17.3M Location: Kirkland Buyer: Emachu Real Estate Development Corp. Country: JAPAN

Marketplace at Queen Anne $31.7M Location: Seattle Buyer: Weingarten Realty Investors/Bouwinvest Country: NETHERLANDS