How does the length of a lease affect a property's marketability?

The reasoning behind the choice that shorter leases may reduce marketability and property value is rooted in how lease duration influences potential buyers' and tenants' perceptions of security and investment return. Generally, a longer lease term provides more stability and predictability regarding rental income, which is appealing to investors and buyers. When a property has a shorter lease, prospective buyers may view it as a riskier investment. They might need to renegotiate the lease more frequently, leading to potential vacancies or alterations in rental rate. This uncertainty can lead to a decrease in demand, which in turn diminishes the property’s overall marketability.

Moreover, short leases may indicate that the property's rental value is headed for a decline or that tenants are not willing to commit long-term, further signaling potential issues to investors. Thus, compared to longer leases that offer a secured income stream and stability, shorter leases can lead to decreased attractiveness in the market, ultimately affecting property value negatively. The perspective that shorter leases provide less assurance of consistent rental income aligns with why this choice is the most accurate.