Tenant demand in the office market has been increasingly favoring shorter-term lease deals, a trend that complicates how much buildings are worth.
This shift has created more flexibility for tenants who don't want to be locked into a long-term lease, and it has helped landlords fill spaces in their buildings that may otherwise sit vacant.
Despite the move toward shorter-term leases, office buildings still achieve higher valuations when they have the stability of long-term leases, and landlords have had to work to make lenders and investors more comfortable with the flexible deals their tenants crave.
Lease terms can have a variety of effects on a building's valuation, but experts agreed that buildings with longer-term leases are consistently more valuable than ones with shorter deals. But as the market evolves, some see a growing acceptance of lease flexibility that could increase the perceived value of more flexible leases.Short-term leases…
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