IPD study: Cologne shows longest rent free periods

Hamburg/Wiesbaden, (PresseBox) - "The trend of shortening lease terms is stopped. Lease lengths in the office sector now are around five years, the retail sector shows an average lease length of about eight years", summarizes Lars Dierkes of IPD Investment Property Databank GmbH (IPD) as one of the results of the first German Annual Lease Review study. Additionally the leases have been analyzed regarding break options and rent free periods. The analysis is based on more than 45,000 leases that have been signed in the period of 2006 to 2010. The study is supported by alstria office REIT-AG and ZIA Zentraler Immobilien Ausschuss and will from now on be published annually.

"As we already do in the UK for years we want to increase transparency on lease agreements for the office and retail sectors", explains IPD's managing director Dr. Daniel Piazolo the background for this project. "Due to the comprehensive database we are able to show very reliable results for every shown market segment."

In 2010 the average lease length for all use types was 5.2 years. In the previous year the average lease length was only 3.7 years. Lars Dierkes, head of this study, adds: "It is very interesting that the share of leases with an agreed break option has fallen by 26% to only 43% in total for the year 2010. Therefore only every second lease signed in 2010 has a break option included." In the previous year it was at least two thirds of all analyzed leases. "This study also for the first time presents reliable results for measuring rent free periods of leases", says Dr. Piazolo. The analysis shows an average rent free period of 2.5 months or 3.9% of the total lease term. Office leases are above this average with 3.4 months (5.9% of the lease length) and retail leases are slightly below with 2.3 months (2.5% of the lease length).

The longest rent free periods are currently measured in Cologne with 5.6 months followed by Munich with 4.9 months. Very short rent free periods can be seen in Berlin with 2.2 months and Frankfurt am Main with 1.0 months.

"The IPD German Annual Lease Review gives an overview of the rental market and therefore highly increases transparency", says Olivier Elamine, CEO of alstria. "alstria will also keep on pushing market transparency in the future. We are proud to support this IPD initiative, as this is a perfect addition to the IPD German Rent Reversion Index."

This study is available for free under www.ipd.com/germany.

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