Commercial office leases in the USA: Financial risk transfer and the loss of innovation

Terry Barger and Glen Wong
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Glen Wong: Senior Vice President of Transaction Sciences, Transwestern, USA

Corporate Real Estate Journal, 2016, vol. 6, issue 1, 88-95

Abstract: This paper focuses on the financial risks of the freehold estate which have been transferred, through evolving lease contracts, to the leasehold estate, within the context of the US commercial office industry. This reduction of an ownership risk has occurred without diminishing the ownership right of receiving rent. This has significantly changed the market equilibrium mechanism of estate rights and risks. As a result of this market disruption, innovation in the leasehold property sector has been retarded for decades.

Keywords: lease operating expenses; financial risk transfer; evolution of US leases; lease capital expenses; landlord enterprise risk; lease vs buy; innovation (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:aza:crej00:y:2016:v:6:i:1:p:88-95

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