Rental Rate Clock: Hour hand on long-term leases; minute hand on the short.
The time-span of the lease has a noteworthy impact on the rental rate. If flexibility and change is imperative to you, the lessee, perhaps a short-term lease is favorable. Owners, however, generally prefer long-term leases - thus are more lenient towards a lessee's requests for such contracts. Not only is solidity available to a tenant with a long-term contract, but commercial property owners are also exposed to consistent financial security.
Lease agreements for long durations (though highly stable) yield three risks:
- Rapid business outgrowth of space
- Business decline, consequently needless spare property
- Paying above-market sums when overall demand decreases.
To avoid such situations, if possible, obtaining a short-term lease with renewal options is incredibly favorable.
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