Office Expenses Outgrew Revenue Each Year Since 2021

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Median office expense growth beat revenue growth in every year from 2021 through 2025 in Trepp's CMBS property sample.

The implied annualized growth rate was 2.7% for operating expenses, 1.3% for revenue and just 0.2% for NOI.

Property insurance had the fastest implied annualized expense growth at 6.1%. Median NOI was negative in both 2024 and 2025.

Trepp's analysis of office properties backing CMBS loans found expenses growing faster than revenue in every year from 2021 through 2025. The five annual medians produced 2.7% implied annualized expense growth. Revenue grew 1.3%, while NOI grew just 0.2%.

Median operating expense growth eased to 2.1% in 2025 from 2.5% in 2024. Revenue growth also slowed, falling to 0.7% from 1.1%. That left a 1.4-percentage-point gap between expenses and revenue for the second consecutive year. Median NOI growth was negative 0.4%, its second straight annual decline. The reporting sample also shrank over the period, from 3,599 properties in 2021 to 2,266 in 2025. The annual gap was widest in 2022 at 2.3 percentage points. It narrowed to 0.3 points in 2023, then reopened to 1.4 points in both 2024 and 2025. Median NOI growth was negative in 2021, 2024 and 2025.

Property insurance recorded the fastest implied annualized growth among reported expense lines at 6.1%. Utilities followed at 4.9%. Payroll and benefits grew 3.3%, repairs and maintenance 3.2%, and general and administrative costs 2.7%. Real estate taxes grew 1.1%, below the 1.3% revenue rate. In 2025, insurance growth slowed sharply to 3.3% from 5.8%.

Utilities moved the other way, accelerating to 6.7% from 2.0%. Base rent income posted 1.6% implied annualized growth, while other income declined 3.8%. Management fees were the exception among variable expenses. Management fees grew 1.3%, matching total revenue growth to the first decimal. Trepp called that a useful reasonableness check because fees often track effective gross income.

Refinancing Capacity Gains Little Support

Trepp said the cash-flow pattern offered limited additional refinancing support. Chaining annual net cash flow medians produced an implied five-year increase of only 1.1%. Trepp illustrated the effect with an interest-only loan at an 8.00% debt yield. The same cash-flow increase would lift it only to about 8.09%. Trepp stressed that the example is not an observed median loan.