--- title: "Office Properties in UPREITs: Managing Vacancy and Market Risk" description: "Learn more about office properties in UPREITs: managing vacancy and market risk." image: https://www.realized1031.com/hubfs/iStock-1389292824-modified-88bd0959-7eea-483f-9c1d-fe77d44c82d3.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Office Properties in UPREITs: Managing Vacancy and Market Risk Posted Sep 14, 2025 ![iS-1389292824](https://www.realized1031.com/hs-fs/hubfs/iStock-1389292824-modified-88bd0959-7eea-483f-9c1d-fe77d44c82d3.jpg?width=2121&height=1193&name=iStock-1389292824-modified-88bd0959-7eea-483f-9c1d-fe77d44c82d3.jpg) Recent global events and changing work patterns have had significant effects on certain sectors, with office property being one of the most keenly affected. That said, it’s understandable that investors interested in entering umbrella partnership real estate investment trusts (UPREITs) can be apprehensive if the entity owns office buildings. UPREITs do provide tax deferral benefits and increased diversification, but office properties in UPREITs may pose vacancy and market risks. Thankfully, investors can take a more proactive role to help manage these challenges. Below, Realized 1031 shares how. ### The Current State of the UPREIT Office Properties Sector After the pandemic, the U.S. office market has made a slow recovery, only seeing [some stability in 2025](https://www.naiop.org/research-and-publications/magazine/2025/spring-2025/development-ownership/the-office-market-2025-turning-the-corner/). Vacancy rates are still on the rise, increasing by [19.9% during this year’s first quarter](https://www.commercialedge.com/blog/national-office-report-april-2025/). As new work patterns emerge, many companies are increasingly adopting hybrid office setups, fueling the rising vacancy rates. Many organizations have either downsized or gone completely remote. As such, leasing demand continues to lag behind. Apart from the rising vacancy rates, market risks are contributing to the lower demand for [UPREIT](https://www.realized1031.com/blog/how-does-an-upreit-transaction-work) office property. Inflation is rising, and so are interest rates. The broader economic volatility is making tenants hesitant about new leases. As such, UPREITs that primarily focus on office buildings are facing pressures, and by extension, the investors owning operating partnership (OP) units. ### Managing UPREIT Vacancy Risk and Market Risk It may seem like investors, given their role as limited partners, may not have a lot to say when it comes to managing the risks of underlying office properties in their respective UPREITs. However, there are proactive steps you can take to manage exposure and risk. ### Evaluating the Diversity of Underlying Assets You’ll want to review the underlying properties of an UPREIT, especially before committing to one. Those that are heavily concentrated on office buildings are more exposed to the risks we outlined. If diversification is lacking, it may be worth exploring UPREIT options with more balanced portfolios. ### Monitoring Tenant Quality and Lease Structures Make sure to evaluate the tenants of an UPREIT’s underlying properties. Those that have creditworthy tenants with long-term leases are less likely to feel the effects of the [rising vacancy rates.](https://www.realized1031.com/blog/what-is-vacancy-rate-and-how-do-you-calculate-it) Ideally, the more resilient UPREITs would be those with tenants such as government agencies, law firms, or medical services. ### Reviewing UPREIT Management Strategies While you can’t control day-to-day operations, it’s important to understand how the REIT is responding to market shifts. Ask questions such as the following to evaluate how the REIT operates and strategizes against risks. - Are they repositioning underused properties for mixed-use? - Are they investing in renovations to attract modern tenants? - Are they exploring [emerging types of office spaces like co-working hubs](https://archieapp.co/blog/coworking-statistics/)? Proactive asset management can help maintain occupancy and stabilize income streams. ### Considering Long-term Investment Goals If you’re already part of an UPREIT that focuses on office real estate, short-term fluctuations in office occupancy can be tolerable. However, if you rely on the UPREIT income for the time being, you may want to rebalance your portfolio by entering UPREITs that own less volatile property types. ### Final Thoughts on How To Manage Risks of Office Properties in UPREITs The office real estate sector is still recovering from recent events and shifting work culture, presenting challenges for UPREITs in this niche and OP unit holders. Investors can still take a more proactive approach by assessing the REIT’s diversification, tenant mix, and risk management approach. This active awareness can help you navigate the ups and downs of the sector and lower the chances of major losses. **Sources:** [https://archieapp.co/blog/coworking-statistics/](https://archieapp.co/blog/coworking-statistics/) [https://www.commercialedge.com/blog/national-office-report-april-2025/](https://www.commercialedge.com/blog/national-office-report-april-2025/) [https://www.naiop.org/research-and-publications/magazine/2025/spring-2025/development-ownership/the-office-market-2025-turning-the-corner/](https://www.naiop.org/research-and-publications/magazine/2025/spring-2025/development-ownership/the-office-market-2025-turning-the-corner/) A Guide to UPREIT Transactions [![A Guide to UPREIT Transactions](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/UPREIT-eBook-250b.png?width=250&height=250&name=UPREIT-eBook-250b.png "Learn more about the UPREIT ...") ](https://www.realized1031.com/blog/office-properties-in-upreits-managing-vacancy-and-market-risk-1#blogform) Download eBook ---   --- ### A Guide to UPREIT Transactions ![A Guide to UPREIT Transactions](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/UPREIT-eBook-550b.jpg?width=550&height=600&name=UPREIT-eBook-550b.jpg) Learn more about the UPREIT process. 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For additional information, please contact the Realized Compliance department at 512-472-7171 or info@realized1031.com. - [Terms & Conditions](https://www.realized1031.com/terms-and-conditions) - [Privacy Policy](https://www.realized1031.com/privacy-policy) - [Form CRS](https://www.realized1031.com/hubfs/common-files/disclosures/FormCRS.pdf) - [ADV 2A](https://www.realized1031.com/hubfs/common-files/disclosures/ADV2A.pdf) - [Reg BI Disclosures](https://www.realized1031.com/hubfs/common-files/disclosures/RegBI.pdf) -   © 2026 Realized Holdings, Inc. ```json { "@context" : "http://schema.org/", "@type" : "BlogPosting", "articleBody" : "Recent global events and changing work patterns have had significant effects on certain sectors, with office property being one of the most keenly affected. That said, it’s understandable that investors interested in entering umbrella partnership real estate investment trusts (UPREITs) can be apprehensive if the entity owns office buildings. UPREITs do provide tax deferral benefits and increased diversification, but office properties in UPREITs may pose vacancy and market risks. Thankfully, investors can take a more proactive role to help manage these challenges. Below, Realized 1031 shares how. The Current State of the UPREIT Office Properties Sector After the pandemic, the U.S. office market has made a slow recovery, only seeing some stability in 2025. Vacancy rates are still on the rise, increasing by 19.9% during this year’s first quarter. As new work patterns emerge, many companies are increasingly adopting hybrid office setups, fueling the rising vacancy rates. Many organizations have either downsized or gone completely remote. As such, leasing demand continues to lag behind. Apart from the rising vacancy rates, market risks are contributing to the lower demand for UPREIT office property. Inflation is rising, and so are interest rates. The broader economic volatility is making tenants hesitant about new leases. As such, UPREITs that primarily focus on office buildings are facing pressures, and by extension, the investors owning operating partnership (OP) units. Managing UPREIT Vacancy Risk and Market Risk It may seem like investors, given their role as limited partners, may not have a lot to say when it comes to managing the risks of underlying office properties in their respective UPREITs. However, there are proactive steps you can take to manage exposure and risk. Evaluating the Diversity of Underlying Assets You’ll want to review the underlying properties of an UPREIT, especially before committing to one. Those that are heavily concentrated on office buildings are more exposed to the risks we outlined. If diversification is lacking, it may be worth exploring UPREIT options with more balanced portfolios. Monitoring Tenant Quality and Lease Structures Make sure to evaluate the tenants of an UPREIT’s underlying properties. Those that have creditworthy tenants with long-term leases are less likely to feel the effects of the rising vacancy rates. Ideally, the more resilient UPREITs would be those with tenants such as government agencies, law firms, or medical services. Reviewing UPREIT Management Strategies While you can’t control day-to-day operations, it’s important to understand how the REIT is responding to market shifts. Ask questions such as the following to evaluate how the REIT operates and strategizes against risks. Are they repositioning underused properties for mixed-use? Are they investing in renovations to attract modern tenants? Are they exploring emerging types of office spaces like co-working hubs? Proactive asset management can help maintain occupancy and stabilize income streams. Considering Long-term Investment Goals If you’re already part of an UPREIT that focuses on office real estate, short-term fluctuations in office occupancy can be tolerable. However, if you rely on the UPREIT income for the time being, you may want to rebalance your portfolio by entering UPREITs that own less volatile property types. Final Thoughts on How To Manage Risks of Office Properties in UPREITs The office real estate sector is still recovering from recent events and shifting work culture, presenting challenges for UPREITs in this niche and OP unit holders. Investors can still take a more proactive approach by assessing the REIT’s diversification, tenant mix, and risk management approach. This active awareness can help you navigate the ups and downs of the sector and lower the chances of major losses. Sources: https://archieapp.co/blog/coworking-statistics/ https://www.commercialedge.com/blog/national-office-report-april-2025/ https://www.naiop.org/research-and-publications/magazine/2025/spring-2025/development-ownership/the-office-market-2025-turning-the-corner/", "articleSection" : [ "UPREIT" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2025-09-14T14:00:00+0000", "datePublished" : "2025-09-14T14:00:00+0000", "description" : "Learn more about office properties in UPREITs: managing vacancy and market risk.", "headline" : "Office Properties in UPREITs: Managing Vacancy and Market Risk", "image" : { "@type" : "ImageObject", "height" : 1193, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/iStock-1389292824-modified-88bd0959-7eea-483f-9c1d-fe77d44c82d3.jpg", "width" : 2121 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/office-properties-in-upreits-managing-vacancy-and-market-risk-1", "name" : "Office Properties in UPREITs: Managing Vacancy and Market Risk", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/iStock-1389292824-modified-88bd0959-7eea-483f-9c1d-fe77d44c82d3.jpg" } ```