According to Commercial Property News, landlords are getting shorter leases and tenants are happy with the shorter fuse.
The average terms for office and industrial leases reached their lowest levels of the decade in the second quarter, according to a report by real estate services firm Grubb & Ellis Co. The average office lease during the quarter was just 52.3 months, while the average industrial lease came in at 43.4 months. The recession and weak corporate revenues have prompted many tenants to opt for short-term renewals as existing leases expire, as opposed to longer extensions. And landlords, for their part, are in no position to demand longer terms, given the downturn in demand for space across markets and resultant switch from an owners’ market to a renters’. However, some owners are only too happy to ink tenants to shorter-term leases, hoping that rental rates will rebound by the time those shorter leases are up, this allowing them to jack rents back up.