UBS: Tenants may seek shorter duration leases going forward in post COVID-19 world

A number of tenants may seek shorter duration leases going forward. This could create challenges for landlords given the capital-intensive nature of tenant improvements and leasing commissions. CAPEX cost sharing could become more commonplace in the future, according to UBS in its U.S. office real estate market — What happens next report.

Newly constructed and newly renovated buildings are likely to be more in demand by tenants, as many already contain some features tenants will require in the post COVID-19 world, particularly as it pertains to automation, air filtration and other environmental/sustainable features. Although these buildings will still require additional capital spending to address certain COVID-specific issues, the overall level of incremental capital spending could be lower.

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