Our article ‘The life cycle of a property’ is an important context for understanding what is happening in the commercial property market. There certainly are secular change - in particular in the retail sector - but overlaying these are the cyclical changes brought about by the pandemic of 2021/22 and the resultant recession. For real estate, a recession signals a drop in tenant demand. That is simply because businesses respond to drop in profitability by making redundancies, curtailing expansion plans (which involve costs) and closing unprofitable units. With lower demand comes rising vacancy rates - as the stock is fixed in size in the short-term - and falls in rental values. The market moves in a very explicit way tio take pricing control from the landlords and giving it to the tenants. The investment market, rightly, responds to this by reducing capital values. Sometimes the capital markets anticipate the changes in tenant demand, so that capitalisation yields for valuing property (although not necessarily those used by valuers, who will normally rely on historic comparable evidence) rise before the rental values fall while, at other times, it is the reverse, and the capital markets appear to be taken by surprise. One may be forgiven that, as the pandemic and its effect were so obvious, the investment markets would be moving quite swiftly by now, but that does not appear to be the case. The latest data from MSCI (data series formerly known as IPD) - for the fourth quarter of 2020 - shows that, yes, yields for offices rose, but the rises only caused a fall in capital values of around 1%. (I am singling out offices because the secular changes in retail and the over-done cyclical changes in industrial/logistics distort the pricing). Given taht there are short-term problems in collecting rents due, with many landlords offering concessions to their tenants and the government imposing a moratorium on evictions, a 1% fall may arguably only be reflecting the risks to the current cashflow, rather than something more substantial. Indeed, it suggests that the investment market believes that when society and businesses return to ‘normal‘ later this year (more or less the pre-pandemic state), there should be little impact of investment performance. Yet, at the same time, we all very concious of the shift to ‘working from home’ that occurred as a necessity during the pandemic and the expectation by a number of businesses that at least some of that will acquire a permanence that had not been expected prior to the pandemic. The combination f that, together with the cost-cutting actions by businesses described earlier have led to some market participants predicting that London office vacancy rates will rise to around 10%. On the face of it, this may seem like a fairly modest expectation. Previous recessions have led to much higher vacancy rates.