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Short-Term Leases Can Create Value Uncertainty

By Erik Sherman
March 01, 2022

If the pandemic has infused business with any one idea, it's flexibility. Companies need to be flexible to get work done. Employees want flexibility to work but also be safe and manage personal and family obligations.

Flexibility has largely come down to space and uncertainty. When executives aren't sure what normal will look like in where employees work, they can't tell how much office space they need. While some sectors of commercial real estate are stable in terms of tenants, others are a question. That's leading to some pushing for shorter-term leases — ironically, both by tenants and some owners — as well as headaches for underwriting as the predictability of tenancy is up in the air.

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