Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271833 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 10189
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper explores the connection between tenant riskiness, commercial lease length and the term structure of lease contracts. Theory shows that the possibility of default on a long-term lease generates a risk/lease-length connection. The empirical work uses a large CompStak lease dataset combined with tenant characteristics (including risk) from Dun & Bradstreet. Regressions show that lease length is inversely related to the D&B risk measures, as predicted, and that risky tenants pay a higher rent premium for long-term contracts than low-risk tenants. The presence of such tenants thus raises the slope of the term structure of commercial rents.
Subjects: 
lease length
tenant riskiness
rent term structure
JEL: 
R30
M20
Document Type: 
Working Paper
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