Economic growth slowed in Q3, but we expect it to pick up again in Q4. And with earnings growth and inflation at high levels, we see the Fed Funds Rate and 10-year bond yields rising over the next few years, reflecting the upturn in economic activity. Occupier demand appeared to turn a corner in the office sector, with absorption turning positive. Neighbourhood and community retail centres also posted their second consecutive quarter of positive absorption, meaning that vacancy fell in all sectors. Office and retail rents stabilised, and industrial and apartment rents accelerated, while incentives fell across the sectors. With the occupier market outlook improving, investment hit a new quarterly record in Q3, driven by a record quarter for apartments. Yields fell on the back of robust competition for assets, supporting rapid capital growth in industrial and apartments. While we expect those to be the best performers, we see office values stabilising and retail values returning to growth in the coming quarters.
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