how common is a 20 year lease term? under what circumstances would this be an excellent move?

In Leasing Property - Asked by Judi R. - Aug 13, 2015
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Chris R.
Denton, TX

Fairly common - especially with some retail stores and may come with options to renew. With a solid credit worthy tenant - an excellent way to insure long term tenant stability, income stream, etc. and great for marketing of the property for sale for same reasons. Lease would typically be absolute NNN and involve a national credit worthy tenant in a free standing building but could include other types as well.

Aug 14, 2015
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Moustafa E.
San Jose, CA

Generally speaking the longer the term the better. Most investors, especially REIT's will consider only long term lease. It is a great value for the landlord.
Structuring the lease terms as a full package can make huge difference in the value of the investment and can simply make the investment very attractive or otherwise. But for sure one of the greatest value added in a lease is the length of the term.
If the lease is not structure right in the long term lease it can be very bad for the landlord.
In very rare and special unique location short term lease is better options, but this is very rear areas.
Most retail anchor will be looking for 30, 45 years or even more this is a peace of mind for the landlord or investor.
Now: for the 2nd part of your question. Look at the market trend in your area, Where is the market stand in your area if the market is in the peak or up trend if so the long term is great way to go with. Otherwise if the market is downtrend I would not recommend the long term lease. Tenant credit worthiness, & tenant industry trend. How strong the tenant is? Escalation terms? Lease type, NNN will be great?
Good luck.

Aug 14, 2015
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