Commercial property leases ‘have undergone a quiet revolution’

Posted 25/08/2010

Lease lengths in the commercial property sector have reached their lowest level on record, according to new data from the British Property Federation (BPF).

Figures from the organisation’s annual lease review suggest a “quiet revolution” has taken place in the market over the last 20 years, with many small businesses now avoiding rent reviews.

According to the report, the average lease length has dropped from 5.9 years in 2008/09 to five years in 2009/10.

Chief executive of the BPF Liz Peace said leases have changed considerably since 1990 with “profound implications for landlords and tenants”.

She commented: “Shorter leases have undoubtedly meant fewer businesses found themselves in trouble during the recession and therefore were able to survive it.”

However, Ms Peace also noted that longer leases still have an important role to play in funding commercial property developments.

In July, the IPD UK Monthly Index revealed that the nation’s commercial property sector recorded growth of 1.9 per cent in the second quarter of 2010.