Is It Better to Invest in Office Buildings or Retail Spaces?
- Nate Jones, CPCU, ARM, CLCS, AU
- Oct 13
- 2 min read
Choosing between office buildings and retail spaces can be a tough decision for commercial real estate investors. Both asset types offer unique advantages—and risks. In this blog, Wexford Insurance breaks down the key differences, current market trends, and how to protect your investment with the right insurance coverage.
Retail Spaces: High Yield with Market Sensitivity
Retail properties include strip malls, standalone stores, and shopping centers. These spaces are leased to businesses that sell goods or services directly to consumers. In 2025, retail continues to show resilience, especially in high-traffic, service-based locations like grocery-anchored centers and mixed-use developments.
Higher income potential: Retail leases often include percentage rent, allowing landlords to earn a share of tenant sales.
Triple-Net (NNN) leases: Tenants cover property taxes, insurance, and maintenance, reducing landlord expenses.
Long lease terms: Typically, 5–10 years with built-in rent escalations.
Market volatility: Retail income is tied to consumer spending, which fluctuates with economic cycles.
E-commerce impact: Online shopping continues to challenge traditional retail models.
Location dependency: Success hinges on foot traffic and visibility.
Office Buildings: Stability with Evolving Demand
Office buildings house professional tenants such as law firms, tech companies, and medical practices. While the sector faced challenges during the pandemic, 2025 is seeing a slow rebound, especially in Class A office spaces with modern amenities and flexible layouts.
Stable income: Long-term leases (5–15 years) with corporate tenants provide consistent cash flow.
Lower turnover: Office tenants tend to stay longer, reducing vacancy risk.
Corporate backing: Tenants often have strong financials and predictable payment histories.
Higher operating costs: Office buildings require more maintenance, including common areas and amenities.
Remote work trends: Hybrid work models have reduced demand for traditional office space.
Capital expenditures: Older buildings may need upgrades to remain competitive.
Market Trends in 2025
Retail: Demand is strong in service-oriented and essential retail (e.g., grocery stores, salons, fitness centers). Retailers are adapting to e-commerce by focusing on experiential shopping and pickup-friendly layouts.
Office: Vacancy rates remain elevated in some markets, but prime office spaces in urban cores are seeing renewed interest. Companies are seeking flexible, amenity-rich environments to attract employees back to the office.
Which Is the Better Investment?
The answer depends on your investment goals:
For higher returns with moderate risk: Retail spaces in high-traffic areas offer strong income potential, especially with NNN leases.
For long-term stability: Office buildings with corporate tenants and modern amenities provide consistent cash flow.
For recession resistance: Consider essential retail or medical office buildings, which tend to perform well even during economic downturns.
Protecting Your Investment with Wexford Insurance
Regardless of your choice, commercial property insurance is essential. At Wexford Insurance, we offer tailored coverage for:
Office buildings
Retail centers
Medical office spaces
Strip malls and standalone stores
Our team understands the unique risks of each property type and works with top-rated carriers to ensure your investment is protected.
Final Thoughts
Both office buildings and retail spaces offer compelling opportunities in 2025. The key is aligning your investment with your risk tolerance, market knowledge, and long-term goals. With the right insurance partner, you can invest with confidence.
Contact Wexford Insurance today to get a customized quote and expert guidance for your commercial property portfolio.
