What is the Length of a French Commercial Lease?

Stephanie Galiegue, Christian de Kerangal, Beatrice de Quinson Alary, Beatrice de Quinsonas and Louis Abel Alary

ERES from European Real Estate Society (ERES)

Abstract: Leases in continental Europe, including France, tend to be relatively short and have more frequent tenant break options than in the UK. Investors reflect the risk of a relatively early departure in their pricing, explaining in part the difference in yields. But are they accurately assessing this risk? In practice, how often do tenants exercise their break options, or leave at the end of their lease? In 2006, IPD France has conducted extensive research with Drivers Jonas in order to answer the following questions: // How many leases provide for a tenant break option after three and/or six years? // How many tenants exercise their break options? - How long do tenants remain in their premises? This survey helps to understand the tenant behaviour and the leases conditions in the French market. The first release of this survey was performed in 2003, allowing comparisons: three-yearly tenant break options were the most significant across all sectors; they were more significant for smaller offices and in Paris Central than in the rest of the Paris Region. Are those still the cases? What is the proportion of tenantsí with three-yearly break options, six-yearly break options and nine-yearly break options to choose to remain in their premises? Has the length of occupation decreased or not across all types of property compared with 2003, is there more consistency between types of properties, location and size of premises?

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2007-01-01
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