Abstract
While considerable evidence exists that residential properties host increasingly lower income tenants as they age, little analogous evidence exists for commercial properties. Using comprehensive data on commercial leasing and occupancy, this paper shows evidence of filtering in commercial real estate. Each year, the typical office property early in its life cycle depreciates by about 0.9 percent. Since leased space per user declines by about 2 percent per year while employment declines by 1.5 percent per year, buildings become more intensively used as they age. These changes are due entirely to shifts in the mix of tenants as buildings age. Tenants in older buildings are less productive and have higher labor shares with only about one-fifth of these shifts accounted for by changes in building industrial composition with age.