Over the last eight years, the exceptionally loose monetary policy environment in Europe appears to have driven a change in the dynamics of the relationship between prime office yields, risk-free rates and economic activity. In the absence of any major tightening by the ECB, our forecasts for Bund yields and unemployment mean that by 2021, office yields will be at roughly the same level as they are at present and perhaps 50 bps lower than other analysts or conventional models would suggest.
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