Public office REITs are still setting the pace in the leasing markets that matter, but private owners are starting to close the gap where it counts most: rent growth. According to CompStak's latest Portfolio Series report, companies in the FTSE Nareit Equity Office Index lead other owners in most key leasing metrics even as non‑REIT landlords have logged stronger starting rent growth than REITs over the past 24 months.
For investors trying to handicap where office cash flows will prove most durable, the findings offer a rare, apples‑to‑apples look at performance by ownership type rather than by market or building class.
CompStak's analysis finds that publicly traded office REITs outperform non‑REIT owners in four of six leasing categories: rent spread, long‑term rent growth, concessions ratio and weighted average lease term.
Non‑REIT owners lead only in tenant base employment, while the two groups are effectively tied on tenant quality.
That tilt toward listed REITs reinforces their reputation as some of the sector's strongest operators at a time when the broader office market is still working through elevated vacancies and looming loan maturities.
One of the most striking findings is the divergence in pricing power. Recent leases in REIT‑owned buildings carried an average starting rent of $74.35 per square foot, compared with $53.32 for other office landlords.
Since 2019, REIT portfolios have also delivered stronger cumulative rent growth, with starting rents up 32.5 percent versus 24.5 percent for non‑REIT owners.
Weighted average lease term is another area where REITs maintain an advantage. CompStak reports that REIT‑owned properties posted a WALT of 69.9 months, above the 63.2‑month average for other owners. For investors, that longer lease runway translates into greater income visibility at a time when many office borrowers face refinancing risk and shifting tenant space needs.
When it comes to concessions, REITs have remained competitive without overspending. Both ownership groups are offering free rent packages equal to roughly 5.8 percent of the lease term, but private owners are paying more in tenant improvement allowances—$62.74 per square foot versus $55.80 for REITs.
As a result, total concessions account for 15.6 percent of lease value among non‑REIT portfolios, compared with 14.7 percent for REITs.
The one place where private owners are clearly gaining ground is in recent rent growth. Over the past two years, average starting rents for non‑REIT office owners increased 13.4 percent, outpacing the 8.1 percent gain recorded in REIT portfolios. CompStak notes that this acceleration suggests rent recovery is beginning to broaden beyond public REITs and into the wider universe of private office owners.
Portfolio composition likely explains much of the divergence. More than half of the office space owned by FTSE Nareit office REITs is classified as Class A, compared with less than 40 percent among other office owners. That heavier weighting toward higher‑quality assets has given REITs greater exposure to the buildings that have captured most post‑pandemic tenant demand.
CompStak's findings paint a nuanced picture for office investors. Publicly traded REITs still enjoy superior pricing power, longer average lease terms and more efficient concession structures, all supported by portfolios that skew heavily toward Class A product.
But the recent outperformance in rent growth at the start of the recovery among private owners hints at a more distributed recovery, particularly for non‑REIT landlords that can reposition assets and capture flight‑to‑quality demand in their own markets.
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