Abstract
We construct a new quality-adjusted commercial real estate rent index for U.S. office, retail, and industrial markets using more than one million CompStak lease transactions from 2010-2025. A hierarchical hedonic framework with building-, block-, and ZIP-level fixed effects allows us to control for both observable and unobserved quality, producing quality-adjusted rent indices. Nationally, these indices show that raw and simple hedonic rent series often overstate post-COVID recoveries, especially in office and retail, and at times understate pandemic-related declines, reflecting shifts in the quality mix of transacting properties rather than true market movements. Industrial rents, by contrast, exhibit only modest composition bias. Local indices further highlight stark geographic heterogeneity, including pronounced pandemic-related declines in San Francisco and only a modest post-pandemic recovery in Manhattan. Overall, our framework provides a more accurate measure of underlying commercial rent fundamentals by accounting for quality-driven composition effects that can distort inferences drawn from market averages.
*We thank CompStak for providing the data. The indices developed in this paper will be made publicly available for research purposes. Corresponding author: Stijn Van Nieuwerburgh [email protected], 665 West 130 Street, New York, NY 10027, USA.