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.

Aug 20, 2026 - Brookfield to Increase Real Estate Investments as Market Improves

• 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.
• The Wall Street Journal reports that major US banks are returning to commercial real estate lending after years of caution, encouraged by lower delinquencies, resolved troubled loans, and demand tied to data center development. Bank of America, US Bancorp, Truist Financial, and PNC Financial Services Group posted strong year-over-year growth in commercial real estate loan balances in the second quarter, while first-quarter originations rose more than 50%, according to the Mortgage Bankers Association. Banks remain selective as office distress, higher costs, and elevated delinquencies persist, but executives see opportunities to expand earning assets. For lessors of nonresidential buildings, greater credit availability could support property purchases, refinancing, renovations, and new development, potentially improving transaction activity and tenant-ready supply. Competition among lenders and stronger financing for data centers and industrial properties could further shift investment toward sectors with better growth prospects.
• US REITs continued to outperform broader equity markets through July, with the FTSE Nareit All Equity REITs Index gaining 2.4% for the month and 17.7% year to date. Lodging and resorts led property sectors with a 48.6% year-to-date return, followed by specialty at 35.6%, and data centers at 33.0%. Industrial REITs posted the strongest sector monthly gain in July at 6.1%. Office REITs also improved, rising 3.6% in July and 16.5% year-to-date after declining in 2025. Meanwhile, mortgage REITs fell 1.6% in July, as weakness in commercial financing offset stronger performance in home financing. REIT gains came despite higher Treasury yields, persistent inflation, geopolitical uncertainty, and expectations that interest rates could remain elevated.
• According to a Q2 2026 US Office Report by commercial real estate services firm Avison Young, the national office market continued to stabilize, with availability falling for the eighth straight quarter to 22.1%, driven by shrinking inventory from office conversions, demolitions, and adaptive reuse. Trophy and Class A buildings continued to outperform, with trophy rents averaging about 50% higher than Class B space, and demand pushing rents higher as tenants favored premium offices. Leasing activity remained 21% below the 2015-19 average, while first-half 2026 leasing slipped 3.2% from a year earlier. Average lease sizes have fallen by 14.6% since 2019, although renewals have increased by 3.7% year over year. Office utilization reached 59.2% of May 2019 levels, reflecting a gradual return to workplaces, while 93% of tracked markets posted year-over-year declines in availability.

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.