AI IMPACT: OFFICE
Office total returns, YoY
• Stable vacancy and cap rates cap net operating income and capital growth through 2027. Beyond this vacancy begins to tighten as long-term yields normalize, providing a catalyst for NOI growth alongside cap rate compression and a dual tailwind for office returns.
2025 2026F 2027F 2028F 2029F 2030F
S1: Upside - Expansion
13.0% 12.6% 11.2% 21.6% 20.7% 23.0%
S2: Baseline
13.0% 12.4% 10.0% 19.7% 19.0% 21.5%
• Structurally lower vacancy in the expansion scenario reduces the risk profile of offices, tightening the spread to the risk-free rate.
S3: Downside - AI Bust
13.0% 8.1% 2.2% 12.1% 13.7% 17.7%
S4: Downside - Displacement
13.0% 10.5% 5.2% 10.9% 7.6% 6.1%
• Risk-off sentiment hampers the recovery in the AI bust scenario, while in the displacement scenario capital growth turns negative from 2030.
Source: Cushman & Wakefield Research
Cushman & Wakefield
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