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Investment outlook

Think U.S. cities Q2 2019 outlook

Melissa Reagen
Head of Research, Americas, Nuveen Real Estate
Skyline view of Tampa CBD on the water

The U.S. economy is expected to grow between 2.0%-2.5% in 2019, slower than that seen in 2018 but strong enough to generate continued demand for real estate.

The effects of the tax cuts and fiscal stimulus will continue to propel economic growth. The odds of a recession are starting to rise as the U.S. economy enters its 10th year of expansion.1

By many measures, the U.S. economy is the strongest it has been in decades. In 2018, U.S. consumer confidence reached an 18-year high while the unemployment rate reached an 18-year low.1 Given this backdrop and as long as the economic growth continues, we expect the U.S. real estate cycle to last at least another year if not longer.

GDP growth is expected to average 2.1% in the first quarter of 2019, despite the government shutdown.1 The Bloomberg Consensus of economists pegs the probability of a recession in 2019 at a modest 25%.1 Real estate prices rose 2% in 2018 even as yields on the 10-year U.S. Treasury increased. Much of the increase in the 10-year yield was absorbed by lenders rather than passed onto borrowers.

We expect U.S. real estate total returns to be primarily driven by NOI growth in 2019. The NFI-ODCE saw a net of fees total return of 7.36% in 2018 with a NOI growth of 4.3% in 2018.3

Canada’s economy will continue growing, but at a slower pace during the next two years.2

Think U.S. cities Q2 2019 outlook - Economic dashboard


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1 Bloomberg, Q4 2018
2 Oxford Economics, Q3 2018
3 NCREIF, Q4 2018