Office REITs traded broadly lower on April 24 after presentations at JPMorgan’s annual real estate conference highlighted persistent challenges across the sector. Executives from Vornado Realty Trust, Boston Properties, and SL Green Realty acknowledged that leasing velocity remains below pre-pandemic levels and that refinancing risk is rising for properties with debt maturing in 2026 and 2027.
The selloff underscores a divergence that has plagued commercial real estate for three years. While industrial, data center, and healthcare REITs have posted strong performance, office landlords continue to grapple with remote-work trends, corporate downsizing, and higher borrowing costs.
Conference takeaways for office landlords
JPMorgan hosted more than 30 REIT management teams over two days. Office operators delivered uniformly cautious guidance. Vornado reported that effective rents in its New York portfolio remain 18 percent below 2019 peaks. Boston Properties noted that tenant improvement allowances have risen 35 percent, eroding net operating income even on signed leases.
The office REIT stress is most acute in secondary markets. Sun Belt cities that saw rapid construction during the 2021-2023 boom now face vacancy rates above 25 percent. Class A buildings in prime Manhattan and Boston locations still attract tenants, but older Class B properties experience rising defaults.
| REIT | Ticker | YTD Return (%) | Occupancy (%) | Debt Maturity in 2026-2027 (% of total) |
|---|---|---|---|---|
| Vornado Realty Trust | VNO | -12.4 | 84.2 | 28 |
| Boston Properties | BXP | -8.7 | 87.1 | 22 |
| SL Green Realty | SLG | -6.3 | 88.5 | 19 |
| Kilroy Realty | KRC | -4.1 | 86.0 | 31 |
| Equity Commonwealth | EQC | +1.2 | N/A | 5 |
Data as of April 24, 2026. YTD returns are price-only. Occupancy figures are based on most recent quarterly filings.
Refinancing risk looms large
The most pressing concern for office REITs is debt maturity. Roughly $1.2 trillion in commercial real estate debt matures between 2026 and 2028, according to Trepp data. Office properties account for the largest single category. Refinancing at higher interest rates and lower property valuations is already forcing distressed sales and lender negotiations.
Boston Properties disclosed at the conference that it is negotiating extensions on three loans totaling $890 million. SL Green mentioned it sold a midtown property at a 30 percent discount to its 2022 appraisal. These signals suggest that balance-sheet stress will intensify before it improves.
Investor implications for REIT allocations
Conservative investors holding diversified REIT index funds already have office exposure. The FTSE Nareit All REITs Index allocates approximately 8 percent to office properties. That weight has fallen from 15 percent in 2019. Continued underperformance could compress the allocation further through price declines rather than active management.
Investors considering individual REITs should distinguish between quality tiers. Trophy assets in gateway cities with strong tenant credit may recover. Older properties in oversupplied markets face secular decline. The office REIT stress is not uniform, and stock selection matters more than sector timing.
Where income seekers might look instead
Healthcare REITs, industrial REITs, and data center REITs have all produced positive returns year to date while offering competitive yields. Welltower yields 2.8 percent with demographic tailwinds. Prologis yields 2.6 percent and benefits from e-commerce logistics demand. Digital Realty yields 3.2 percent as data center construction accelerates.
These alternatives do not carry the same refinancing risk that office landlords face. Their leases are longer, tenant credit is stronger, and demand drivers are more durable. Income investors who want real estate exposure without office-sector uncertainty may find better risk-adjusted returns in these subsectors.
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