Lease lengths are still falling, despite increasing business confidence and more favourable economic conditions.
A survey of office, retail and industrial leases by Nelson Bakewell and Occupiers Property Databank found that the downward trend accelerated over the past 12 months as expanding occupiers moved back into their own surplus property instead of taking new leases.
The average unexpired term fell from 11.3 years in 2002 to 10.3 this time, the sharpest decline since 1999.
Over the past five years, the average has fallen 16%, from 13 years.
The longest new leases were in the retail sector at an average of around 10 years, while leases in the office and industrial sectors averaged 5.9 and 5.5 years respectively.
Tim Asson, Nelson Bakewell’s director of corporate real estate, said the findings could undermine the case for turning the lease code into legislation.
“There are a number of new factors that will drive occupiers to pursue even shorter terms.
“These include the government’s lease code, stamp duty land tax and the introduction of international accounting standards,” he said.
References: EGi News 14/06/04
