Despite office vacancy falling in most major cities, most landlords are still watching their margins shrink a half-decade after tenants embraced remote work. 

Median total operating expense growth has exceeded revenue every year from 2021 through 2025, according to a Trepp analysis of office properties backing CMBS loans. 

Operating expenses have increased 2.7% annually, compared with a 1.3% growth rate for revenues. Net operating income has been squeezed to just a 0.2% uptick annually as a result. 

Overall, the implied five-year growth rate is 14.3% for operating expenses and 6.7% for revenues. NOI was up just 1% during the period, according to Trepp’s model. 

Trepp’s methodology involves matching properties year-to-year. The sample began with 3,599 properties in 2021 but declined to 2,266 in 2026. A property may exit the sample if it stops reporting, no longer has all of the financial metrics required to be included, is paid off, liquidated, or is taken over by a lender.  

Illinois, Indiana, Michigan, Ohio and Wisconsin have struggled the most, with NOI dropping by 1.4% over the five-year span. 

Also in the negatives were the West South Central states — containing Arkansas, Louisiana, Oklahoma and Texas — and New England. NOI decreased by 0.5% and 0.1% for the respective regions.

Property insurance has become the highest-growing expense across the board, rising a median 6.1% annually and 34.6% over the five years. 

In the Pacific U.S., insurance costs surged the most, with an annual median increase of 9.2%. The Middle and South Atlantic regions experienced the lowest increase at 4.6%.

Utilities were the second-leading cost driver, increasing 4.9% annually and 27.1% between 2021 and 2025. 

Not included are the capital expenditures that office owners have had to shell out to upgrade their properties. Trophy buildings have attracted the greatest amount of leasing activity as companies use amenities and shorter commutes to draw employees back to in-person work. 

In markets like New York, where Class-A space has become hard to find — and afford — leasing has spilled over to Class-B properties. Still, many landlords find themselves needing to spend money to make money. 

But that spending adds to already growing maintenance and management costs. Each year between 2021 and 2025, building repairs increased 3.2%, payroll and benefits grew by 3.3%, administrative costs rose 2.7%, and management fees were up 1.3%.

Trepp’s report notes that, looking forward, operating expense growth has moderated, but revenue growth has also slowed. In 2025, annual NOI growth was negative for the second consecutive year.