Average Lease Lengths Now Under 5 Years

The latest BPF/IPD Annual Lease Review has reported that the average length of leases being signed last year was just 4.8 years. The report confirms that over 75% of all leases are now 5 years or fewer in length compared with 63% of leases in 2010. Taking breaks into account, leases have shorted by 3 years since 2002.

Excluding breaks and on equally weighted terms, leases have reduced from 8.8 years in 2002 to 6 years in 2011.

David Mundy, Investment Partner at Mellersh & Harding commented …”a further shortening of lease lengths on secondary property will further put pressure on values as investors and lending banks shy away from shorter let properties”.

“In respect of Central London offices the shorter leases can be regarded as a positive and offer investors an opportunity for a change of use or refurbishment to push rents forward.” Back