According to the latest research, the average length of a lease on a commercial property in the UK now stands at a record low of 4.8 years.
The report published by the BPF (British Property Federation) and IPD was based on a survey of 100,000 retail, office and industrial leases.
The data shows:
• Average leases lengths have fallen from 6.2 years in 2007 to 4.8 years in 2011
• Lettings to SMEs are even shorter, at 4.1 years
• 78.3% of newly granted leases to SMEs in 2011 were under five years in length, 19.2% for up to 10 years and only 2.1% up to 15 years.
• High streets retail units saw a further reduction in lease lengths, falling from 7.7 years to 7.6 years (in 2007 they were 9.7 years).
Martyn Markland of the specialist property adviser Tenant Advisory Group says that the trend is likely to continue. “The pressure on Landlord’s to let vacant space means tenants can now secure much shorter leases and more regular break options. This is good news for UK business tenants who have had to endure some of the longest lease lengths in the world. On the continent for example, most leases tend to be three years in length. Ultimately, shorter leases will benefit landlords as they will increase the number of tenants that are able to move which should speed up the letting process. The challenge remains with funders who regard shorter leases as less valuable which is why landlords have historically been so resistant to them.”