Activity in the CRE industry is a good sign. And landlords are at an advantage. According to industry experts, shorter leases in the industrial sector could mean 3 to 5 year lease terms on existing & new construction assets.
Consider this for industrial & office sectors:
🔹️Industrial leases are typically 5 to 10 yrs in length.
🔹️Due to high demand for industrial space, GTA rents appreciated by 5% in 2021 & caused bidding wars.
🔹️The average length of new leases signed in 2019 was 2.5 to 3.5 years (office market).
🔹️In Q2 2020, new leases signed for an average of less than 2 years (office market). Companies are demanding more flexibility, shorter terms & more services.
Asking rates are $1 due to quick movement in the market. Landlords don’t want to miss the market gains when a building is being marketed. They’ll have to manage assets proactively. Monitor leases. Adjust pricing. And advertise vacant spaces frequently, not just yearly.
The power of the landlord. It’s coming down to the sustainability and viability of tenant businesses & what’s considered to be “the preferred customer.”
