"Average Lease Terms"
The average term of office leases signed so far this year is 56.2 months, a slight increase from the 2009 average of 55.5 months. The average industrial lease term has continued sinking this year to a decade-low of 44.7 months. Despite the generous deals offered by landlords, tenants remain hesitant to sign long-term leases just as they have been reluctant to hire. Businesses are conserving cash rather than using it to expand because corporate profits, though strong in recent quarters, may be hard to sustain unless overall demand picks up more than it has so far in the recovery. The average sizes of office and industrial leases signed this year remain at decade-lows, another sign that tenants are focused on minimizing their occupancy costs. As the economy gradually improves in 2011, look for tenants to step up their leasing activity, which will result in lengthening lease terms.