What is a characteristic of the cash flows from office assets?

The characteristic of cash flows from office assets being volatile due to leasing downtime aligns with the realities of commercial real estate markets. Office properties tend to experience periods where they may not be fully leased, particularly as tenants change, move out, or renegotiate leases. This leasing downtime can lead to gaps in rental income, creating volatility in cash flows.

Additionally, office spaces are often subject to changes in demand influenced by economic cycles, shifts in working patterns (such as the rise in remote work), and the overall health of the job market. These factors can contribute to fluctuations in occupancy rates, further impacting the predictability of cash flows associated with these assets.

In contrast, cash flows from office assets are not typically described as highly predictable, as numerous market variables and tenant dynamics can significantly affect occupancy and rents. They also may not be stable across different markets since various geographical areas can have varying levels of demand for office space. Finally, cash flows from office properties are unlikely to be consistent every quarter because changes in tenant retention, lease structures, and market conditions can all lead to variability.

Thus, the inherent characteristics of leasing practices and market dynamics make the description of cash flows from office assets being volatile due to leasing downtime the most accurate choice.