Landlords have responded to tighter market conditions over the last year by negotiating shorter commercial leases with retailers and commercial tenants.

The 10 th Annual Lease Review, published by the British Property Federation (BPF) and the Investment Property Databank (IPD), reflects the downturn across property during 2006/07.

The review showed that shorter leases have become more frequent; 57% of leases granted in this year’s review were five years or less, and less than 3% of leases agreed were for more than 15 years. While leases have shortened, the average first period to break on all property (where the lease contained a break) was 6.3 years compared with 5.4 years in 2002, indicating that break clauses are becoming more effective.

Liz Peace, BPF chief executive, said: “Tighter market conditions experienced by the retail sector over the last year seem to be reinforcing the longer term trend across all sectors for shorter leases. Whatever the cause in these uncertain times, what is important is that the property market is offering a choice of duration of leases that reflects the needs of its customers. Of course, this downward trend cannot continue forever but I have no doubt that the practice of providing choice to potential tenants will continue and that is what is important.”