The Due Diligence Questions That Only Apply to Office Assets
Due diligence checklists get copied across asset classes more often than they should. A buyer moving from an industrial deal into an office deal, or a broker building a generic checklist for every listing, ends up asking questions that don't actually surface office-specific risk. Office has a handful of diligence items that simply don't exist, or don't matter the same way, in any other property type.
What's the Actual Lease Structure, Suite by Suite
The prior piece in this series covered why full-service gross, modified gross, and triple net leases shift expense risk differently. Due diligence on an office building means confirming, unit by unit, which structure governs each tenant, not assuming the whole building runs on one framework. A twelve-tenant office building can easily have four different lease structures inside it, and a diligence process that doesn't check each one is missing real exposure.
What's the Weighted Average Lease Term Across the Rent Roll
Weighted average lease term, WALT, tells you how much of the building's income is locked in versus exposed to renewal risk in the near term. A building with a 7-year WALT and one with a 2-year WALT can carry identical current rent and completely different risk. This number doesn't exist in the same form for retail or industrial, where lease terms tend to run longer and more uniformly. Office rent rolls are messier, and WALT is the number that cuts through the mess.
What Happens at Each Tenant's Renewal Option
Office leases routinely include renewal options, expansion rights, and termination rights that don't show up in the base rent number at all. A tenant with a right to terminate early if they don't achieve a specific headcount, or an expansion option on adjacent space, changes the building's actual risk profile in ways the rent roll alone won't show. These clauses have to be pulled from the lease abstracts directly, not inferred from the summary numbers.
How Much of the Operating Expense Is Actually Recoverable
In full-service and modified gross buildings, the landlord's ability to recover rising operating costs depends on the expense stop and base year language written into each lease. Two buildings with identical operating expenses can produce very different net income if one has favorable expense recovery language and the other doesn't. This is a due diligence item specific to office's expense-sharing structures. Triple net industrial and retail assets don't carry the same exposure, because the tenant is already paying the actual expense directly.
What's the Building's Position in Its Own Market Tier
The prior piece in this series covered how office recovery is splitting between prime and non-prime space. Due diligence on a specific office asset has to answer where that building sits in its own submarket's quality tier, because a prime-tier building and a dated non-prime building in the same zip code are increasingly performing like two different asset classes entirely, not two versions of the same one.
Office Diligence Is About the Paper, Not Just the Property
None of these five questions can be answered by walking the building. They live in the lease abstracts, the rent roll, and the market data specific to the building's tier. That's the core difference between office diligence and diligence on almost any other commercial asset class: the physical building matters less than the paper behind it, and the paper takes real time to read correctly.
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