Commercial lease agreements: for how long?

Are you investing in properties that you intend to let long term? Whether they will be offices, shops or catering premises, it is worth paying attention to one basic matter: the length of the lease. The issue can be significant, because both short and long terms put off some groups of potential tenants. So which is the better bet?

Shorter commercial leases

Short lease terms (for example two or three years) will attract more of those entrepreneurs who do not want to risk tying themselves down for longer while they are not yet sure whether their business will survive the coming years. On the other hand, this may also be the case with business owners who have quite a clear vision of the future. They are often already seriously planning to expand in the short term and, consequently, expect to need larger premises at some point.

With this type of agreement it will be easier to find tenants. However, you must also reckon with the fact that if a commercial lease is not renewed, you may be left for some time paying to maintain premises with no tenant. Then again, this probably will not last too long.

READ ALSO – WHAT TO LOOK OUT FOR WHEN RENTING AN OFFICE?

Long commercial leases

On the other side of the dilemma over the length of commercial leases are agreements concluded for a long period, for example ten years. By looking for a tenant willing to accept such terms, you will probably attract companies with an established market position. This is because such companies can afford to commit to one place for longer.

The advantage of this solution is a stable income. However, you must remember that if someone is interested in such a long-term arrangement, they will probably push consistently for a lower rent. They may also expect a very precise list of the landlord's obligations to be agreed.