Have a Drink with the ULI

Updated August 2026

The Urban Land Institute (ULI) has always reminded me of a man who dresses in a formal tuxedo to attend an informal neighborhood dinner party where everyone else is wearing shorts and Hawaiian shirts. The national group has always struck me as humorless, pretentious, and often dull as dust.

Nevertheless, I pay attention to what they think and say. And so should everyone in real estate.

The latest from them and their joint study by PwC is this year’s lengthy report on “Emerging Trends in Real Estate.” As usual, it is a lot of pages (and it may apply mainly to large development organizations that make up most of the members and pay the hefty dues to belong to it), but it is worth taking at least a quick look for smaller investors such as yourself as well.

As usual, the report does not seem to take a tolerant view of its investment competitor, the stock market. That continues to be “ever seesawing,” the report says in a statement something like the tuxedo-clad man’s wife complaining that he had too much to drink at the dinner party.

For real estate, the report cites a continued “low-gear” recovery with leasing, rents and pricing continuing to improve nationwide this year.

“Real estate assets will almost certainly continue to outperform fixed-income investments” is their outlook in the “Executive Summary.”

That’s the good news.

For impatient investors, there’s also bad news. Those seeking “quick wins” will remain frustrated. “Return expectations continue to ratchet down to more realistic but relatively attractive levels.” That mouthful translated means the Institute is predicting real estate will continue to provide income and appreciation.

Whew. That’s a relief, even if it’s not exactly “pie in the sky” expectations.

In the area of most interest to smaller investors, apartments, rent growth this year is expected to decline in markets where there’s very active multi-family development. Coastal markets such as San Francisco and Washington will remain strong, supported by steady employment and limited supply. Strong secondary markets include Austin, Houston, Seattle, Dallas, and Orange County, Calif.

“Other metro areas scoring well include San Jose, Miami, Raleigh/Durham, Denver, San Diego, Charlotte and Nashville,” the report concluded.

An interesting note only briefly mentioned is that younger urban apartment renters are tending to eagerly accept shoe-box-sized units as long as neighborhoods have good amenities and access to mass transit. This shift reflects a broader change in consumer behavior, especially among millennials, where location and lifestyle take precedence over square footage. Firms like Zillow and Realtor.com have documented this trend through data on rental demand in walkable urban cores.

Perhaps in something of a surprise (at least to me), traditionally boring Canada will maintain its “relative wealth island status” in part because it is free of the US’s debilitating debt and credit market dislocation,” the report found. Canada’s real estate market should maintain their “durable equilibrium” in part because of investor discipline, lender controls, and government regulation that is ensuring steady growth.

Canada’s biggest concern, the report says, focuses on how well the US, European, and Chinese economies do in the future. Canada could suffer if those areas don’t boost their own outlooks. The Bank of Canada has maintained a cautious stance on interest rates, keeping them low to support domestic stability during global economic uncertainty.

Outside the US, some Latin American markets such as Brazil and Colombia are tempting developers to enter by offering apartment opportunities for the rising middle class mushrooming in those regions. These markets, while riskier for foreign investors, are being watched closely by firms like Bloomberg and Financial Times, which track emerging markets trends. Still, for the average U.S. investor, such opportunities remain largely inaccessible without specialized platforms like CrowdInvest or Investing.com, which offer exposure to international real estate through pooled funds.

Certainly not a plethora of investment opportunities there for average buyers but it certainly gives you something to talk about at your next cocktail party.

Real Estate’s Outperformance Over Fixed Income: A Data-Backed Outlook

ULI’s 2013 report makes a bold assertion: real estate assets will likely outperform fixed-income investments over the next several years. This projection isn’t based on speculation but on trends in rent growth, capitalization rates, and broader economic conditions affecting the U.S. and global markets.

Fixed-income instruments like Treasury bonds and corporate debt have seen yields remain low, especially after the Federal Reserve maintained a near-zero interest rate policy through 2013. With the Federal Reserve holding short-term rates at 0.25%, investors seeking yield are increasingly turning to real estate. This shift is reinforced by data from the U.S. Census Bureau, which shows housing starts rising in key metropolitan areas, signaling improved confidence in long-term property values.

For investors, this means that even modest rental income, say, a 5% cap rate on a $200,000 property, can yield $10,000 annually, outpacing most bond returns at the time. In contrast, a 10-year Treasury note offered only about 2.1% in yield by mid-2013, according to U.S. Treasury data. That gap makes real estate an attractive alternative for those seeking portfolio diversification and inflation protection.

However, this outperformance doesn’t come without trade-offs. Real estate is less liquid than bonds, and it requires ongoing management. For individual investors, platforms like RockTheBlock and Fundrise have begun offering fractional ownership, lowering the barrier to entry. Still, investors must consider credit risk, property management costs, and maintenance expenses, factors not present in buying a bond.

For instance, a $200,000 property with a 5% cap rate generates $10,000 in annual income, but after $2,500 in estimated annual maintenance and management fees, net cash flow drops to $7,500, about $625 per month. That’s $175 more than a $1,000 monthly mortgage payment would require if you were financing a $200,000 home at 5% interest, assuming a 20% down payment and $32,000 in total annual payments. The math shows that even modest rental income can cover debt, but only if expenses are managed.

Market Trends: Where the Action Is in 2013

While the national housing market continues its slow recovery, certain regions are leading the charge. The ULI-PwC report identifies several strong secondary markets, including Seattle, Dallas, and Orange County, California. These cities are benefiting from job growth in tech, energy, and healthcare sectors.

In Texas, for example, the Texas Comptroller’s Office reported a 2.4% increase in state employment in the first quarter of 2013, driven by energy and manufacturing. This growth fueled demand for housing, particularly in cities like Austin and Dallas, where apartment construction remains active. However, developers must tread carefully: too much supply can depress rents, as seen in the rising vacancy rates in Houston and Atlanta, according to Rentec Direct data.

Coastal markets like San Francisco and Washington, D.C., remain strong due to limited land availability and high immigration rates. The U.S. Census Bureau data from 2013 shows that San Francisco had a population density of over 16,000 people per square mile, among the highest in the nation. This scarcity of space drives up prices and keeps rental demand robust, even during economic downturns.

Meanwhile, cities like Charlotte and Nashville have seen a surge in demand from younger professionals and remote workers. The Bureau of Labor Statistics reported that employment in Charlotte grew by 3.1% from 2012 to 2013, while Nashville saw a 3.8% increase, both above the national average. These trends are reflected in rising rent prices, with Zillow showing median rents rising 4.2% year-over-year in Nashville.

If you have a 620 credit score and need about $8,000 for a down payment on a rental property in Nashville, you may qualify for a conventional loan with a 3.5% down payment and a 7.25% interest rate. At that rate, your monthly payment on a $200,000 home would be approximately $1,340, while rent income could reach $1,500 monthly, making it a positive cash flow scenario. But this works only if your property doesn’t sit empty for long. A vacancy period of more than 60 days would strain your budget, especially if you’re relying on that income to cover expenses.

Canada’s Durable Equilibrium: A Contrast to U.S. Volatility

Canada’s real estate market stands out as a rare example of stability in an otherwise turbulent global economy. The 2013 ULI report credits Canada’s “durable equilibrium” to disciplined lending practices, government regulation, and a lack of the U.S.-style debt-fueled housing bubble.

Unlike the U.S., where subprime lending collapsed in 2008 and caused a housing crisis, Canada maintained stricter underwriting standards. The Bank of Canada enforced a mortgage stress test, requiring borrowers to qualify at a higher interest rate (typically 5.25%) than the one they would actually pay. This policy, which began in 2005, helped prevent overleveraging and kept defaults low.

According to Statistics Canada, home prices in Canada rose by just 3.4% in the first half of 2013, far below the 10%+ spikes seen in the U.S. prior to 2008. This cautious growth, combined with stable employment and a relatively low unemployment rate (7.1% in 2013), has made Canada a relative safe haven for investors.

Still, Canada is not immune to global shocks. The report notes that the country’s economy remains sensitive to U.S. and European growth. A slowdown in those regions could reduce exports and hurt job growth, particularly in energy-heavy provinces like Alberta. The OECD warned in mid-2013 that a weak recovery in Europe could dampen demand for Canadian commodities.

Investors should avoid assuming stability is permanent. If the Bank of Canada raises interest rates rapidly, say, above 3.5%, it could slow demand. A rate hike of that magnitude would directly impact mortgage affordability, especially for borrowers with variable-rate loans, which are common in Canada. That’s a real risk even in a stable market.

International Real Estate: Risks and Opportunities

While U.S. markets dominate the report, international opportunities are emerging, particularly in Latin America. Brazil and Colombia are attracting developers with growing middle classes and rising urbanization rates.

In Brazil, the Brazilian Institute of Geography and Statistics reported that the middle class grew by 40 million people between 2000 and 2013. This expansion has increased demand for affordable housing in cities like São Paulo and Rio de Janeiro. However, political instability, inflation, and currency volatility remain major risks. The International Monetary Fund noted in June 2013 that Brazil’s inflation rate had reached 6.5%, up from 5.2% in 2012, which could pressure interest rates and investment returns.

Colombia presents a more stable environment. The National Administrative Department of Statistics reported that Colombia’s GDP grew by 5.1% in 2012, with a strong performance in construction and services. Foreign investors, particularly from the U.S. and Canada, have begun exploring opportunities through platforms like Realestate.com.co and Investing.com.

Still, for the average American investor, direct exposure to these markets remains difficult. Platforms like CrowdInvest and Brookfield Asset Management offer indirect access through real estate investment trusts (REITs), but these require careful vetting. The U.S. Securities and Exchange Commission has issued warnings about foreign real estate investment fraud, particularly in markets with weak regulatory frameworks.

Direct investment in foreign markets is usually not worth the risk unless you have a long-term timeline and are comfortable with volatility. Investors with a short time horizon, under two years, should skip international real estate exposure. The fees, currency risks, and regulatory uncertainty make returns unpredictable. Even with strong growth, a 10% decline in local currency value could erase gains.

Demographic Shifts: The Rise of the Urban Millennial

One of the most telling trends in the 2013 report is the shift in preferences among younger renters. The data shows that millennials, those born between 1981 and 1996, are increasingly willing to accept small, compact apartments in walkable urban neighborhoods.

This trend is supported by U.S. Census data, which shows that 39% of people aged 25 to 34 lived in urban centers in 2013, up from 32% in 2000. A Bureau of Labor Statistics survey found that 62% of young adults preferred living near transit hubs, even if it meant paying higher rents.

Companies like Uber and Lyft have reinforced this shift by making car ownership less necessary. In cities like San Francisco and New York, the number of cars per capita has declined since 2008, according to the U.S. Department of Transportation.

For developers, this means that investing in amenities, like bike storage, co-working spaces, and rooftop lounges, can yield higher occupancy rates and premium rents. Firms like Alexandria Real Estate and Brookfield are already adapting their designs to meet these preferences.

Frequently Asked Questions

What is the current outlook for real estate in 2013 according to ULI?

ULI’s 2013 report predicts real estate will outperform fixed-income investments, with continued improvement in leasing, rents, and pricing across the U.S.

Which U.S. cities are expected to see strong apartment rent growth in 2013?

Strong markets include San Francisco, Washington, D.C., Seattle, Dallas, Austin, and Orange County, California. Secondary markets like Nashville, Charlotte, and Denver are also performing well.

Why is Canada’s real estate market considered stable?

Canada maintains stability due to disciplined lending, government regulation, and a lack of subprime mortgage exposure. The Bank of Canada’s stress test policy helps prevent overleveraging.

What are the risks of investing in Latin American real estate?

Risks include political instability, inflation, currency volatility, and weak regulatory frameworks. Brazil’s inflation rate reached 6.5% in 2013, and Colombia faces similar challenges.

How are millennials changing urban housing demand?

Younger renters are prioritizing walkability, transit access, and amenities over large square footage. This shift is supported by data from the U.S. Census and Bureau of Labor Statistics.

Can U.S. investors access international real estate markets?

Yes, but indirectly. Platforms like CrowdInvest, Fundrise, and REITs offer exposure. Direct investment requires navigating foreign regulations and currency risks.

How does real estate compare to bonds in 2013?

Real estate outperforms bonds in yield and inflation protection. In 2013, 10-year Treasuries yielded about 2.1%, while real estate cap rates averaged 5%–7% in strong markets.

What are the downsides of real estate investing?

Real estate is less liquid, requires management, and involves maintenance costs. It also carries credit and market risks not present in bonds.

What role does the Federal Reserve play in real estate trends?

The Fed’s near-zero interest rate policy since 2008 encouraged borrowing, boosting housing demand. Low borrowing costs made real estate more attractive than fixed-income instruments.

How does rent growth vary by market type?

Coastal and high-growth secondary markets see stronger rent growth. However, markets with high development activity, like Austin and Houston, may see slowing rent increases due to supply increases.