Lessors of Nonresidential Buildings

The 31,300 firms in the US act as lessors of nonresidential buildings, such as office buildings, shopping centers, and retail stores. The industry includes owner-lessors and firms that rent real estate and subsequently sublet property to others. Professional and office buildings account for about 36% of sales; commercial property, which includes shopping centers and retail stores, account for about 36%; and manufacturing and industrial buildings 8%. Firms may manage properties or outsource management to a third party.

Competition for Desirable Locations

The location of properties is a primary factor that determines rental rates, and properties in sought-after areas are priced at a premium.

Capital-Intensive, Debt Heavy

The nonresidential lessor industry is capital intensive, and firms typically have sizeable investments in real estate holdings.

Sep 19, 2026 - Luxury Retailers Concentrate on Prime Locations

• US luxury retail openings totaled about 123,000 square feet in the first half of 2026, down 46% from a year earlier, according to JLL. Brands increasingly are concentrating on fewer high-quality locations, particularly prominent street retail corridors. The shift can favor owners of premium retail properties that offer the visibility, location, and building quality that luxury tenants seek. Strong demand for a smaller pool of desirable space may support occupancy and leasing leverage at top-tier properties. Owners of less-competitive buildings, however, may face greater pressure to upgrade their properties, offer more attractive lease terms, or pursue different tenant categories. The widening distinction between prime and secondary locations could make property quality, surrounding amenities, and location increasingly important to rental income and long-term asset performance.
• Hotel sales increased 28% during the first half of 2026 as investors targeted aging properties for renovation, The Wall Street Journal reports. New hotel room construction equaled only about 0.5% of existing supply, below the long-term average of 1.6%. Limited additions to supply can strengthen the competitive position of existing hotels, particularly properties in desirable locations. For owners of lodging properties, increased investor interest also may support asset values and create incentives to renovate older buildings rather than pursue new development. Lessors of hotel properties may need to balance renovation spending against expected improvements in occupancy, rents, operating performance, and long-term property value.
• Commercial real estate conditions remained mixed in July, as elevated borrowing costs continued to limit access to financing relief, according to the National Association of Realtors. Office demand improved, with 11.3 million square feet of annual net absorption, but vacancy remained elevated at 13.9%, while retail vacancy held at a relatively tight 4.3%. Industrial vacancy stabilized at 7.5% as demand strengthened, and hotel investment activity increased despite continued financing pressures. Uneven conditions can leave lessors facing sharply different leasing and pricing environments by property type. Stronger demand may support occupancy and rents for some properties, while elevated vacancies and borrowing costs can increase pressure on owners to retain tenants, control operating expenses, delay capital projects, or carefully evaluate refinancing and acquisitions.
• Bisnow reports that Brookfield Asset Management plans to launch its next flagship real estate opportunity fund in 2027, earlier than expected, as market sentiment improves and deal activity accelerates. The firm deployed $5.2 billion in the latest quarter, nearly triple the year-earlier amount, and has $27 billion available to invest in real estate. Brookfield also expects asset sales to increase, with $27 billion remaining to be sold from earlier opportunity funds. Stronger investment activity could benefit lessors of nonresidential buildings by supporting property transactions, valuations, redevelopment, and demand for leased commercial space, although market conditions and financing costs remain important factors. Brookfield manages $280 billion in real estate assets and raised $4.3 billion for its real estate business during the quarter, while quarterly real estate revenue slipped to $259 million from $261 million a year earlier.

Industry size & Structure

The average nonresidential lessor operates out of a single location, employs about 5 workers and generates about $5 million annually.

• The nonresidential lessor industry consists of about 31,300 firms that employ 159,900 workers and generate $155.1 billion annually.
• The industry is concentrated at the top and fragmented at the bottom. The 50 largest firms account for 45% of industry sales. Large firms may operate as real estate investment trusts (REIT) and have properties in foreign countries.
• While commercial space is concentrated in large buildings, large buildings account for a relatively small number of the overall stock of commercial buildings, according to the National Association of Realtors (NAR). The majority of buildings are relatively small.
• Large firms with nonresidential lessor business include Prologis, Simon Property Group, LaSalle Investment Management, and Brookfield Property Partners. The largest firms are fully integrated, own and develop land and buildings, and provide leasing, management, and construction services.