Jefferies upgraded Supermarket Income REIT, SEGRO, and Big Yellow to "buy" on Monday, while lowering its outlook for the office sector. The brokerage warned that artificial intelligence adoption could trigger a 20% decline in office rents, drawing parallels to the post-dot-com crash era when London lost 50,000 jobs.

The upgrades come as the UK REIT index delivered just 4% returns from 2023 through 2025, lagging the broader market's 44% gain. Jefferies highlighted industrial and logistics assets as preferred, noting 4.7% rental growth in 2025, while offices now comprise 22% of the index by value.

Jefferies raised price targets for each REIT, citing specific deals. Supermarket Income REIT's target rose to 90 pence following a 123 million euro Carrefour acquisition. SEGRO's target increased to 850 pence after securing a German distribution center pre-let. The firm expects office yields to reprice 10-30 basis points higher in 2026.