Iran conflict a small downside risk to US commercial real estate returns

The increase in energy costs brought about by the conflict in Iran could hit commercial real estate returns either through squeezed occupier margins and therefore weaker property demand and rent growth, and/or higher interest rates, which would put upward pressure on cap rates. But the US is relatively well insulated compared to other economies, and for now, providing the conflict is relatively short-lived, our base case is that the impact on returns is small.