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Coronavirus: Latest outlook for real estate investors

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COVID-19: Global research update

Nuveen Real Estate’s market-leading global research team is working daily to understand and assess the impact of the coronavirus on real estate markets and provide regular global, regional and sector perspectives. The latest insights can always be found on this page. Below are current highlights, while the entire piece can be downloaded above.


  • According to Green Street’s Commercial Property Price Index, aggregate U.S. real estate values fell 9.4% during the month of April 2020. Values fell across all property types in the month of April with malls and retail seeing the largest declines at 20% and 18%, respectively. Meanwhile industrial and life science values fell less than 5% during the month. Public REIT markets continue to suggest U.S. real estate values are down somewhere in the 20% range.
  • While Q1 2020 office, industrial and apartment rents did not fall, we expect rents will fall throughout the remainder of 2020 as the full effects of coronavirus are felt by households and businesses alike. Further, we expect office, industrial, and apartment vacancy rates to increase 200 basis points from their Q1 2020 cyclical lows by the end of 2020.
  • All 50 U.S. states have re-opened their economies to varying degrees which should help re-start economic activity. The U.S. economy lost more than 21 million jobs during the months of March and April 2020. By way of comparison, 8.7 million jobs were lost during the GFC. The March and April 2020 job losses wiped out a decade of job growth. The unemployment rate hit 14.7% as of April 2020 and is expected to move much higher to around 20-25% before a recovery begins to take place. Some of the job losses may only be temporary, meaning some of the unemployed could be called back to work once the U.S. economy restarts.
  • During Q1 2020, U.S. GDP fell at annualized rate of 4.8% and is expected to fall at an annualized rate of anywhere between 30-40% in Q2 2020. The U.S. economy is on track to shrink nearly 6% this year, more than twice that seen during the GFC. A recovery is expected to take place in the 2nd half of 2020 as businesses begin to re-open.
  • The Federal Reserve and Congress have provided financial markets, households and businesses with more than $6 trillion of fiscal stimulus and support. The actions taken by these parties cannot be overstated. The amount of fiscal stimulus should help put a floor under the fallout in economic activity.
  • Future market movements will depend on how quickly the fiscal stimulus gets distributed, how effective it is in staving off a very deep recession, and on the trajectory of coronavirus in the U.S.
  • Coronavirus has not caused a paradigm shift for real estate. Rather, coronavirus will rapidly accelerate already-present underlying trends. In our view, this means trends such as online shopping could double in the next few years rather than in the next ten years and households could move to suburbs and sunbelt cities within the next one to two years rather than during the next five years. Financially weak retailers which could have survived another five to ten years will now be forced into bankruptcy in 2020.


  • Some surprisingly positive business survey data from Germany, jumping from very negative into growth territory, have kept hopes for a strong recover alive. However, it is way too early to call, given the lack of real data.
  • The reopening of the early mover economies Austria/Germany/Netherlands/Denmark appears to have gone relatively smoothly over the last two weeks. Restaurants and shops remain largely underutilized, as queuing and distancing rules has taken the fun out of most of these activities.
  • Almost 80% of European real estate investment activity is concentrated in Germany, the Netherlands and the Nordics. All other countries, including usually very liquid markets such as the U.K., France, Italy and Spain only account for the remaining 20%. This reflects a quicker turnaround of the virus threat in the former countries as well as expectations of economic growth returning earlier and stronger.
  • Some Northern European governments even seem to encourage taking summer vacations in other EU countries. It implies that they prefer their citizens to spend money locally for holidays to the transfer of tax Euros south to struggling and tourism dependent economies.
  • On the flip side last week the Merkel-Macron plan of issuing EU debt was hailed as a ‘Hamilton moment’, similar to the federalization of war debt from U.S. states in 1790. While the debt issuance is panned to be temporary, it could pave the way for a more powerful EU and may bring much needed investments to most coronavirus hit regions.

Asia Pacific:

The easing of containment measures across the region brings a ray of hope to the economic outlook in the 2nd half but conditions are likely to stay uncertain and uneven. Condominium sales in the Tokyo area fell 52% year-on-year in April, suggesting that the hit to demand will take time to recover even as the government lifts the state of emergency to include Tokyo. Australia’s retail sales dropped 18% in April and protests have returned to Hong Kong over the weekend on the planned national security law being imposed by China.


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Wendy Pryce
Wendy Pryce
Real Estate Product Specialist