A Lifesaver During the Pandemic, Short-Term Leases Still Hold Drawbacks For Office Owners

Office tenants struggling to contend with wave after wave of rising COVID-19 cases have increasingly turned to short-term leases – but if the trend continues, it could portend more cash flow volatility for owners, as well as more concessions and increased capital costs.

A new analysis from Kevin Fagan, Xiaodi Li and Victor Calanog of Moody’s Analytics REIS acknowledges that while it’s unclear if the trend of shorter leases will continue, a “key lingering issue will be the ultimate duration of the pandemic, where eventually remote working as triage will start to become the norm, to the detriment to the office sector writ large.”