Average lease lengths on UK commercial property fell to their lowest ever recorded levels this year, falling by more than 10 months to just five years in 2010.

An independent analysis of 91,000 tenancies recently published shows that small businesses are increasingly signing shorter deals, with 81% on leases of five years or fewer and therefore unlikely to face a rent review. By comparison just over 3% of small businesses have a lease of over 10 years.

The thirteenth edition of the BPF/IPD Annual Lease Review also shows that 2009/10 was a significant year for rent free periods and break clauses as landlords and occupiers grappled with poor economic conditions. The move towards shorter leases, however, has been constant over a period of more than 10 years now also illustrating significant long-term change in the commercial property market and our economy.

The largest study of its kind ever completed, the data shows that a quiet revolution has been taking place in leasing practice since the early 1990s, when the vast majority of leases were what was called ‘institutional’, typically for 20 or 25 years, and often containing upward only rent reviews.

This data shows that the average lease length fell from 5.9 years in 2008/09 to 5.0 years in 2009/10. Lease lengths have therefore basically halved in the period since the Conservative Party last formed a Government in the 1990s.

Other statistics showed that: Lease lengths for retail (5.4), office (4.7), and industrial property (4.0) have come down substantially over the past year from figures of 6.5, 5.4, and 4.6 respectively.

The average lease length for an SME was 4.1 years. The average lease length for a large company was 6.6 years.