Average Commercial Lease Term is Dropping | Commercial Real Estate Wausau Wisconsin

filed under: Commercial Real Estate Market posted on July 6th, 2009

The National Average Terms of office and industrial leases signed in the second quarter of 2009 were the shortest of the decade at 52.3 months for office leases and 43.4 months for industrial leases. This is in comparison to average 62 months for office leases and 55 months for industrial leases in the years 2000 and 2001. The recession and weak corporate profits are prompting many tenants to choose short-term extensions as leases expire instead of new, five-year leases. These tenants prefer the flexibility of a shorter commitment to the generous terms on offer by many landlords who would prefer to lock in tenants for longer periods. However, not all landlords have five-year terms. Some think three years is the optimum length because they believe that rental rates will begin to rebound before the five-year terms are up, and want to be in a position to raise rents as soon as market conditions permit.

Source: Robert Bach, Senior Vice President, Grubb and Ellis.

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This entry was posted on Monday, July 6th, 2009 at 3:57 pm and is filed under Commercial Real Estate Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.