Canadian pension funds and developers have been raising their investment in foreign real estate this year, primarily in the United States, as they seek alternatives to a consolidated domestic market.    

    The deal by Ivanhoe Cambridge, the real estate arm of Quebec's Caisse de depot et placement, and Chicago-based Callahan Capital Properties, to buy the 42-storey 1095 Avenue of the Americas building in Manhattan from Blackstone Group has not yet closed, two people familiar with the matter said. Caisse de depot et placement manages Quebec public and private sector pension funds and insurance funds.

A final announcement of the purchase may take weeks.

    Canadians had already poured more than $8 billion into U.S. commercial real estate in the first three quarters of 2014, surpassing the $7.8 billion spent during the same period in 2013, according to Jones Lang LaSalle and Real Capital Analytics. Canadians spent $11.86 billion on U.S. commercial property in all of last year and they are on target to surpass that in 2014. 

"The domestic Canadian market is quite tightly held by the domestic pension funds," said Lucy Fletcher, vice president, international capital group and capital markets at Jones Lang. "Very few of the assets are trading in the current market."

    Canada has been the biggest foreign buyer of U.S. commercial property for the past four years, according to data from New York City-based Real Capital.

    Since 2010, Canadian investors have bought $43.4 billion in commercial U.S. property - or 1,530 properties - spending four times as much as second-placed China. 

    The Ivanhoe deal was previously reported in the Wall Street Journal. Upon completion, it will mark the second-highest price paid for an office building in the U.S. since the 2008 sale of the General Motors building in New York for $2.8 billion.

    A spokesman for Montreal-based Ivanhoe Cambridge, which has $40 billion in assets, declined to comment. The Quebec fund's other New York investments include Manhattan office towers 1211 Avenue of the Americas and 1411 Broadway.

    The purchase would be the latest U.S. acquisition by Ivanhoe Cambridge with Callahan. The two formed an alliance in 2012 to expand Ivanhoe's U.S. commercial holdings. 

(Reporting by Allison Lampert; Editing by Martin Howell)