The outlook for offices is negative across all markets, but we expect substantial differences across the 17 metros we forecast. We now think Seattle, San Francisco and Austin will see vacancy rise by more than 5%-pts over 2023-25, taking the total increase from Q4 2019 in all three to at least 12.5%-pts. Meanwhile, Atlanta, Miami and Phoenix are forecast to see the smallest vacancy gains. Alongside the impact of those vacancy changes on rents, further cap rate expansion over the next 18 months or so means that we expect continued substantial falls in capital values. That will mean the peak-to-trough fall in values exceeds 50% in San Francisco and Portland, with Chicago and NYC not faring much better. Smaller value falls in the southern markets means total returns could reach close to 3% p.a. in Miami in 2023-27 and around 4% p.a. in Dallas and Atlanta.
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