All-property capital values rose modestly by 0.1% in Q2, suggesting a market floor, with cap rates falling by 5 bps. However, we expect values to see limited upside due to the narrow spread to risk-free rates.
At a sector and metro level, industrial, which had been performing well, is now slowing as we had expected in the face of a significant drop in demand, particularly on the west coast. Tariffs are also likely to weigh further on the retail sector over the rest of 2025. Meanwhile, office values still have further falls to come but are close to bottoming. And finally, oversupplied southern apartment markets will see slow rent growth, whereas other markets in the Northeast should see more concerted improvement.
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