Tenants Signing Shorter Leases for Office and Industrial Space

SANTA ANA, CA--Bob Bache, (top right photo) senior vice president and chief economist, Grubb Ellis Co., says the average terms of office and industrial leases signed in the second quarter were the shortest of the decade at 52.3 months for office leases and 43.4 months for industrial leases.

The recession and weak corporate profits are prompting many tenants to choose short-term extensions as their leases expire instead of new, five-year leases.

These tenants prefer the flexibility of a shorter commitment to the generous terms on offer by many landlords who would prefer to lock in tenants for longer periods.

Not all landlords favor five-year terms, however. Some think three years is the optimum length because they believe that rental rates will begin to rebound before the five-year terms are up, and they want to be in a position to raise rents as soon as market conditions permit.

Contact: Bob Bache, corporatecommunications@grubb-ellis.com, or to Janice McDill at 312.698.6707.