29/11/2007

Market forces drive down lease lengths

Landlords have responded to tighter market conditions over the last year by negotiating shorter leases with retailers and other commercial tenants, according to a recently published survey. The tenth Annual Lease Review, published by the British Property Federation (BPF) and real estate-performance analysts IPD, reflects the downturn across property during 2006/07 and a desire more generally across business for greater flexibility, with the average length of a lease falling from 6.2 to just 5.7 years. The survey draws from detailed evidence of 75,000 tenancies, encompassing a full analysis of lease lengths, break clauses, review cycles, rent free periods and income profiles. It incorporates the 9,580 new leases granted between January 2006 and March 2007.

The BPF believes the continuing trend towards shorter, more flexible leases will boost confidence in the industry's ability to provide tenants with the terms they need and adapt to changing market conditions.

The tenth Annual Leave Review is produced by IPD on behalf of the British Property Federation. A full copy can be accessed via the BPF's website: www.bpf.org.uk.

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