The Return of the Long-Term Lease

In 2021 and 2022, short-term leases were the rational choice. Why commit to five years when no one knew what the office would look like in eighteen months? Companies signed two- and three-year deals at premium rents, treating them as options rather than commitments. The strategy made sense at the time.

It no longer does.

We are now seeing a pronounced shift back toward five- and seven-year terms. The drivers are straightforward: rents have bottomed, concession packages are shrinking, and the cost of moving — both in dollars and in organizational disruption — has become impossible to ignore. A well-negotiated long-term lease today captures today's rents and today's TI allowances, both of which are likely to be less generous in 2027.

The psychology has shifted too. CEOs who spent three years managing distributed teams are now explicitly mandating in-person collaboration. The offices that are filling are not the ones with ping-pong tables and beer taps; they are the ones with quiet focus areas, good video-conferencing infrastructure, and enough meeting rooms to handle the reality of hybrid schedules.

Our advice to tenants: if you have found space that works, sign for term. Negotiate expansion rights, contraction rights, and early-termination triggers to preserve flexibility — but capture the current market while it is still a tenant's market. The landlords who are offering generous packages today are doing so because they need to. That need is diminishing.