The changes to our forecasts this quarter reflect two partially offsetting factors – downgrades to occupier demand, and upgrades to the yield outlook. We expect NYC and San Francisco to be the worst affected markets in the next three years, seeing average annual capital value falls of 1.5%-2% in 2021-23, despite a net fall in yields in that period. This reflects that these two markets are particularly expensive to both occupy space in, meaning that relocations away from the cities are more likely. NYC also faces a large development pipeline in 2022-23. Elsewhere, Boston stands out as the best performer, with our predictions pointing to total returns of 5.5%-6% p.a. in the next three years.
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