Average lease lengths in the UK’s office and retail sectors are increasing, according to new data from Re-Leased.
In Q1 2024, the average UK office lease length increased by 27% to 3.7 years compared with 2.9 years in Q1 2023.
Re-Leased’s data shows leases with a duration of between three to five years surged by 69% in Q1 2024 compared with the same period in 2023, with leases lasting five to 10 years increasing by 28% and leases of 10+ years more than doubling compared with Q1 2023.
Short-term flexible leases remain popular, but in Q1 2024 there was a 19% reduction in leases of 12 months or less and a 15% decrease in one- to three-year leases.
The average retail lease length increased by 32%, from 37 months in Q1 2023 to 49 months in Q1 2024.
Tom Wallace, CEO of Re-Leased, said: “There are a number of driving forces increasing the shift towards longer lease agreements primarily across office and retail. The UK commercial real estate market is showing signs of stability, with businesses and property owners adapting to new market dynamics.
“In the office sector, we see a continued flight to quality as companies are committing to extended leases to secure prime locations. Retail shows optimism with extended leases, signalling a strong commitment to physical stores. This shift towards longer leases highlights the mutual desire for stability and strategic planning among tenants and landlords.”
