The recently published IPD UK Lease Events Review 2015 shows that average new property lease lengths rose to 7.2 years in 2015, matching 2007 levels.
Retail leases saw the greatest increase in length – from 6.7 to 7.5 years between 2014 and 2015. This is good news in terms of increasing confidence but may be also be explained by the fact that retailers are keen to stay in situ once they have found a good unit and more flexible leases mean that longer terms can be taken but with the benefit of a break option.
Despite increasing lease lengths, 73% of total leases signed in 2015 were for a term of between one and five years.
Whilst the research also shows other pleasing indications that confidence is returning as tenants are choosing to renew their leases (or not exercise break options), and indeed this is born out anecdotally by our clients' stories at Hedges, we think there is still a long way to go. We would also expect short flexible leases to remain the norm for many years to come.
The research, sponsored by Strutt & Parker and the British Property Federation, and based on an analysis of over 90,000 leases across the UK, said new property lease lengths rose to 7.2 years in 2015, matching levels last recorded at the market peak in 2007