Office costs have grown faster than office rent every year since 2021. That comes from a Trepp study of buildings behind CMBS loans, reported by Bisnow in September. Costs rose a median 2.7% a year. Rent rose 1.3%. Net operating income, or NOI, the money left after operating costs and before debt service, crept ahead at 0.2% a year.
Stretch it over the five years and the two lines pull apart. Operating costs grew 14.3%. Revenue grew 6.7%. And a management fee, which is a share of collected revenue in most agreements, tracks the smaller of those two. So the budget for running a building is tied to the number that grew slowly, while the work is tied to the number that grew twice as fast.
Trepp matched the same buildings year to year rather than lining up whichever ones happened to report, so the trend is hard to wave off. The sample started at 3,599 office buildings in 2021 and fell to 2,266 by 2026. And the buildings that stayed in still show five straight years of costs beating rent.
That drop of roughly a third is its own finding. Buildings leave the sample when they stop filing, get paid off, get sold, or hand the keys back to a lender. So the ones still reporting in 2026 are the ones that held on, which makes this the good news version of the story. Whatever happened inside the third that left is not in these numbers at all.
The split by region shows where it bites. Illinois, Indiana, Michigan, Ohio and Wisconsin gave up 1.4% of net operating income across the five years. Arkansas, Louisiana, Oklahoma and Texas came in at negative 0.5%, and New England at negative 0.1%. And in 2025, NOI growth across the whole sample was negative for the second year running.
Property insurance was the fastest-growing line in the study. It rose a median 6.1% a year and 34.6% over the five years. Pacific buildings took the worst of it at 9.2% a year. The Middle and South Atlantic got off lightest at 4.6%, which is still more than triple the growth in rent.
Utilities came second, up 4.9% a year and 27.1% across the period. Then come the lines a building team touches daily. Repairs rose 3.2% a year, payroll and benefits 3.3%, admin costs 2.7%, and management fees 1.3%. None of those Trepp figures count capital spending. So the money going into lobby work and elevator upgrades sits on top of everything above. A building can post a flat cost line and still be bleeding cash a floor below the operating statement.
Insurance and utilities get filed as fixed costs in most budget conversations, which is where the trouble starts. Neither one is fixed. Both are priced off things a building can change, slowly, and both get treated as weather because the change takes longer than a budget cycle. The lines a team is told to control grew at roughly half the speed of the two it was told to accept.
A fee set as a share of the rent collected reads as fair until you put it beside the cost line. Rent grew 6.7%. The costs that make the work grew 14.3%. Every dollar of insurance increase brings more paperwork, more insurance certificates to check, and a carrier asking harder questions at renewal. Every dollar of utility increase brings a tenant asking why their operating expense statement went up, and that answer has to be built by somebody.
The work rises with the cost of running the building. The fee rises with the rent roll. Those two moved together for a long time, and for five years now they have not. So a team holding the same buildings in 2026 handles more cost, more vendor invoices and more tenant questions than it did in 2021. And it does that on a fee that grew at half the rate.
That turns what the industry keeps calling an efficiency problem into something else. The fee and the workload are tied to different numbers, and nobody sat down and agreed to that. It came out of a formula that worked fine while costs and rent moved at the same speed. Commercial property managers stand in the gap it opened, and every talk about doing more with less starts there whether or not anyone names it.
The fee basis itself is worth putting on the table at the next renewal. A flat fee per square foot tracks the building rather than the rent roll. A fee with a separate line for compliance work prices the paperwork that insurance and energy rules keep adding. Neither is standard, and both are easier to argue for with five years of Trepp data in hand than with a feeling that the job got harder.
Repairs at 3.2% a year sit closest to daily control. Put off work piles up, and it lands in that line two or three years later as a bigger job than the one skipped. A preventive maintenance schedule that actually runs is the difference between a 3.2% repair line and a worse one. And the proof that it ran lives in the work order management log. That matters the day an owner asks why the line moved.
Utilities at 4.9% a year answer to how gear gets timed and how fast a fault gets caught. A rooftop unit running against an open damper burns money every hour until somebody spots it. And spotting it depends on whether anyone reads building operations data between bills. That line pays back small habits faster than the other two, and a single office building can show a result there inside a quarter.
Insurance at 6.1% a year cannot be talked down by a property manager. But it can be quoted well or badly, depending on what the building can prove about itself. Carriers price guesswork. A building that hands over inspection dates, finished repairs and a clean vendor file gives an insurer less to guess at. So the lever there is the record rather than the haggling. It works slowly, over a renewal or two.
All three of those lines run on the same raw material, which is an honest account of what the building did and when. Cove holds work orders, commercial building maintenance schedules, inspections, vendor invoices and certificates on one set of records. So the repair history behind a capital request and the inspection file behind a renewal are the same data. Nobody builds two versions and defends both. That is the job of commercial property management software once the fee stops keeping pace with the work, which is to make the record produce the reporting instead of the team producing it twice.
That matters most at month end, when an owner asks why a number moved. The honest answer to a jump in the repair line is which assets generated the jobs, and which of those jobs came back as repeat visits. Pulling that together from three systems takes a morning. Reading it off one set of records takes a minute, and the owner gets it while the question is still live. Property management reporting that runs live off those records answers in the meeting instead of the week after it. For engineers and owners working the same buildings, that's the difference between explaining a variance and documenting one, and it's time that doesn't cost more headcount. With a fee growing at 6.7% against costs growing at 14.3%, the reporting has to fall out of the work rather than out of somebody's evening.
Insurance and utilities, mostly. Trepp puts property insurance up a median 6.1% a year and 34.6% across 2021 to 2025, with utilities up 4.9% a year. Both price off conditions no single building controls, and both land in the same statement as repairs and payroll, which grew about 3.2% and 3.3% a year.
About 1% across the full five years, or 0.2% a year, on Trepp's matched-building model. Growth was negative in 2025 for the second year running. Five Midwest states recorded a 1.4% drop over the period, the worst showing of any region in the study.
No, when the fee is a share of revenue. Revenue grew 6.7% over the five years while operating costs grew 14.3%, so the fee grew at about half the rate of the work. Owners and managers rewriting contracts should check whether the fee basis still matches the job the contract describes.
Repairs and utilities, in that order, plus the records that decide how an insurer prices the building. Repairs answer to whether preventive maintenance runs on schedule. Utilities answer to equipment scheduling and how fast faults get caught. Insurance answers to what the building can prove about its condition at renewal.
Sources: Bisnow, "Office Revenues Are Failing To Keep Pace With Expenses," September 11, 2026; Trepp, office operating expense report.