What Is Flight to Quality in Office Real Estate?

Flight to quality in office real estate is the tenant preference for high-quality space, typically new or renovated Prime Class A buildings, over older or lower-amenity alternatives, even at a rent premium. For asset managers, the term matters less as a concept than as a measurable divergence in rents and lease terms across building classes.

What Is Flight to Quality in Office Real Estate?

Flight to quality describes tenants trading up in building class and amenities, usually accepting a higher rent per square foot for space that supports return-to-office mandates, recruiting, and brand image. In lease data, it appears as a widening spread between Prime Class A performance and everything below it, not as a uniform market-wide rent increase.

The trend isn’t abstract. According to CompStak’s 2025 Biannual Office Market Report — Part One, office effective rents across CompStak’s 11 major U.S. gateway markets have exceeded 2019 levels for only the past five quarters, and are up just 7.8% since. That’s a modest headline number. The building-class breakdown underneath it is where flight to quality actually lives.

Key Takeaway: Flight to quality is a bifurcation, not a market-wide rent increase. Prime Class A space is capturing the rent growth, lease-term stability, and tenant demand that Class B/C buildings are losing.

How CompStak Data Shows the Flight to Quality Trend

The CCRI shows this bifurcation market by market, not only by building class. According to CompStak’s 2025 Biannual Office Market Report — Part Two, the office Columbia CompStak Rent Index fell 4.3% from Q4 2019 to its COVID trough and stood just 7.8% above the pre-pandemic level by year-end 2025. That national figure masks enormous variation.

CompStak’s 2025 Biannual Office Market Report — Part Three breaks the market CCRI out by metro. Dallas-Fort Worth and Boston are the strongest performers, with initial downturns of -3.9% and -5.7% that have since rebounded to +16.2% and +13.3% above pre-COVID levels. San Francisco remains 17.1% below pre-pandemic pricing, and the Bay Area/San Jose sits 15.3% below. Manhattan took the deepest initial hit, a -12.7% decline, but has rebounded 28.5% since.

These aren’t uniform recoveries. They’re markets where flight to quality has enough depth of Prime Class A supply and tenant demand to pull the index up, against markets still absorbing older inventory.

Source: CompStak’s 2025 Biannual Office Market Report — Part One, 2025 Biannual Office Market Report — Part Two, and 2025 Biannual Office Market Report — Part Three. Data as of Q4 2025.

Which Tenants Are Driving Flight to Quality?

TAMI and AI-focused firms are the clearest driver of flight to quality on the demand side. More than 44% of TAMI office leasing is now attributed to AI-focused firms, per CompStak’s Part Four report, and these tenants have shown a consistent bias toward amenitized buildings over commodity space.

That matters for underwriting. A Class B/C landlord competing for a TAMI or FIRE tenant isn’t competing on price alone. They’re competing against Prime Class A buildings that can offer column-free floor plates and updated systems that lower-tier stock often can’t retrofit economically. The tenant-quality signal in the leasing data increasingly sorts by building class before it sorts by rent.

What Does Flight to Quality Mean for Lease Terms and Rents?

Lease term length is one of the clearest markers of flight to quality, because tenants commit longer to space they consider durable and shorter to space they view as a placeholder. CompStak’s Part Three report shows Class B/C lease terms running 8.5% below the Q4 2019 baseline, a gap that has held for 24 consecutive quarters. Prime Class A terms, by contrast, have exceeded 2019 levels in only one of those 24 quarters. Notably, the rest of Class A, the non-Prime tier, has surpassed pre-COVID term lengths for six straight quarters.

That last data point is worth sitting with. It suggests flight to quality isn’t confined to trophy towers. It’s benefiting well-located non-Prime Class A buildings that offer a value alternative to top-of-market rents, while Class B/C space is squeezed from both sides.

Embedded rent-growth potential tells a similar, if narrower, story. Part Three data shows the embedded upside on expiring space is modestly higher in Class B (54.2% of leases positive) than in Class A (52.6%), with the largest specific upside concentrated in Phoenix Class A (+20.5%) and New York City Class B (+20.1%). Landlords shouldn’t read that as a reversal of flight to quality. It reflects the fact that Class B in-place rents were set lower to begin with, so the mark-to-market math has more room to run, not that demand has shifted back.

Source: CompStak’s 2025 Biannual Office Market Report — Part Three and 2025 Biannual Office Market Report — Part Four. Data as of Q4 2025.

What Are the Risks for Asset Managers Holding Non-Prime Office?

The risk is concentrated rollover into a segment losing pricing power. More than 32% of all office leases are set to expire between Q2 2026 and year-end 2028, per CompStak’s Part Three report. For an owner of Class B/C stock, that expiration wall arrives at the same time embedded rent growth is more modest than Class A’s headline story suggests, and lease terms remain compressed relative to 2019.

Sublease exposure compounds the problem. According to CompStak’s Part Four report, nearly 30% of subleases roll through 2028 at discounts of roughly 25% below in-place rents, and 63% of expiring subleases are tied to sublessors currently paying above market. That combination puts direct downward pressure on asking rents in exactly the buildings least equipped to absorb it.

Hold periods and pricing reflect the strain. Median office hold periods extended by 3.3 years since 2018, reaching a post-COVID high of 7.4 years in 2025, while median annualized sale prices declined 5% to 6% in 2024–2025, per CompStak. Owners are holding longer and selling lower, a pattern consistent with a market where quality now determines exit value more than location does.

There’s a countervailing signal worth noting. Concession ratios, while still elevated against historical norms, declined over the past two quarters for both Prime Class A and non-Prime Class A space, per CompStak’s Part Four report. That’s a tentative sign that landlord leverage is improving broadly, not just at the top of the market. Whether that holds through the expiration wall remains to be seen.

Source: CompStak’s 2025 Biannual Office Market Report — Part Three and 2025 Biannual Office Market Report — Part Four. Data as of Q4 2025.

How Can Asset Managers Track Flight to Quality?

Tracking flight to quality requires lease-level data segmented by building class and market, not aggregate rent indices. CompStak One gives asset managers that segmentation directly, pairing verified lease comps with the Columbia CompStak Rent Index (CCRI) so portfolio-level rent and term trends can be benchmarked against Prime Class A, non-Prime Class A, and Class B/C performance in the same market.

Rent Predictor and AI Market Summary extend that view forward, surfacing where mark-to-market spreads and embedded rent growth are shifting before a lease event forces the issue. For a landlord deciding whether to reposition a Class B asset or hold through the current cycle, that’s the difference between reacting to flight to quality and pricing around it.

Get started with CompStak to see how your portfolio’s rent and lease-term metrics compare across building class and market.