Southern US office markets still set to outperform

We expect capital values to see another drop in 2026. But led by strong rent growth in Miami, we think southern markets will start to recover before the end of next year. Occupier demand in these metros will be supported by higher rates of office utilization and faster office employment growth than western markets and the major metros. This will lead to further divergence in performance, with Miami seeing total returns of 9% p.a. over 2025-29 and Phoenix not too far behind. At the other end of the spectrum, returns in San Francisco, Boston, Seattle and San Diego will limp to just 3.5%-4% p.a. over the five-year forecast, implying the importance of market selection in this cycle.