Commercial mortgages more popular as lease length lowers?

26 August 2010

Written by Michael Aglony

Commercial mortgages may be becoming more popular as new figures have revealed a record drop in lease lengths for offices.

Statistics from the British Property Federation showed the average tenancy for a business in the current market is five years - down from 5.9 months in 2008-09.

Liz Peace, the organisation's chief executive, admitted in challenging economic conditions a shorter agreement may benefit small firms, but she claimed it is important the sector provides variety for those companies that require lengthier arrangements.

"Some larger businesses still want a long-term commitment to a building," Ms Peace stated, adding enterprises could now land themselves a "corker of a deal" due to current trends.

According to the report, the typical lease length for small and medium-sized operations was 4.1 years, while bigger corporations stayed in the same place for around 6.6 years.

Earlier this month, CB Richard Ellis revealed take-up of industrial and logistics commercial property in the second quarter of 2010 was at its highest level since 2007.

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