Office REITs purchase, own and manage office real estate. These REITs rent out their properties to various corporate tenants, and spaces can vary from office parks to converted warehouses or skyscrapers.
Some office REITs focus on specific industries, subdividing the sector into more nuanced categories — these classifications can include government agencies, central business districts, suburban offices, technology firms, financial institutions and more.
This wide variety of investable markets allows office REITs to be highly specialized, but perhaps their greatest advantage comes from their characteristically stable cash flow. By owning large office buildings and renting them out to several tenants at once, they are less reliant on single clients and more prepared to stay profitable in the event of multiple tenants breaking their leases. This makes them able to mute the negative impact of economic recessions, as they do not have to rent out all available space at once.
Office REITs are one of the larger real estate investment trust sectors, with 19 publicly traded companies in major US stock exchanges.
Large office REITs include Alexandria Real Estate Properties, Inc (NYSE: ARE), Boston Properties, Inc (NYSE: BXP) and SL Green Realty Corporation (NYSE: SLG).