Industrial set to underperform

Industrial demand is relatively well-placed to weather the upcoming recession. Vacancy is low going into the downturn and the gradual shift to online shopping will continue. It should therefore be the only sector to avoid a fall in rents. However, significant yield compression over the past couple of years also means it is the most overvalued, and we expect it will see the largest rise in yields. Accordingly, at 18% the peak-to-trough fall in capital values we forecast next year is the largest of all the sectors.