But the decision to terminate happens when the lease expires at any point after the pandemic happened, not exactly as the pandemic started. If you signed a 1-year lease in 2019Q3 and then realized that you're going to permanent WFH in 2020Q2, you let the lease expire in 2020Q3 and count yourself lucky. So the impact of this should be spread across the year following lockdowns/wfh, not all concentrated in 2021Q2.
If they signed a 12 month lease in Q2, then yes.
A 12 month lease for commercial real estate in SF?
That's not uncommon. Our office in North Beach was a 12-month deal. In fact, contracts tend to be longer (24 months or so).
I think that was the point. 12 months is atypically short.
Of leases 24 months long the average lease should be 12 months in right now (given steady state). I.e half of them expire in a year. Lets say that they realised this summer that things will be different then the effect should gradually start to show almost immediately.
I think that was GP’s point. We have a few one-year leases on small spaces, but most of ours are 5 year leases, usually with renewal options, sometimes with break options (for $$) at 3 years.
Or anything that‘s a multiple of 12. If the lease was signed in Q2 of any year, it will be up for renewal in Q2.
Around here commercial leases on office buildings are typically seven years.