The downside of a longer-term lease to the landlord is not much, other than that it ties up the property for a longer period of time, so if I wanted to sell or reposition it, I'm making a long-term commitment and have to live with that, good or bad. A landlord who believes the market will continue to go up may want to do a shorter lease because they're leaving money on the table. It makes sense for you to lock in now if rates are not going to rise.

The downside to the tenant are, if I lock in on a long-term lease and rates go down, I'm stuck with a higher rent. And if the space won't work down the line, I'm stuck. But if you know what you need and are comfortable in the space, it's better to lock in and know what you've got.

GlobeSt.com: What about shorter-term leases?

Saywitz: There's more flexibility for both sides. On the tenant side, there's flexibility if you grow or don't need all the space. If the market should change, you could negotiate sooner than later if needed. If the market continues to go up, you will just pay more. Tenants who didn't lock in for a longer period of time in the last three to five years will pay the price for doing it. There's a competitive advantage to locking in rental rates: if you're a manufacturer or distribution company, and your neighbor is locked in with a low rate, they can be more competitive than you if you have to renegotiate at a higher rate. For the landlord, you may not want to lock in if you have a lot of moving pieces. But there are situations where it may not make sense to have a tenant in the building. It comes down to flexibility and risk.

GlobeSt.com: How does the delivery of new inventory affect the way each group views lease terms?

Saywitz: Tenants in a new development, whether office or industrial, will likely not be interested in a short-term lease because many have a proforma that they have to answer to, so a short-term does nothing to satisfy those criteria. A developer who is keeping the product would not entertain a short-term lease. For developers looking to lease up space because they're selling the product, they wouldn't want a short-term lease because that scares potential buyers: improvements cost more the when you have to turn over space often, so why do that and then have to do it again in three to five years? From a tenant's perspective: why would they want to do a short-term lease on new development? Why would you want to move in three years if it's new space?

Tenants need to find existing space that requires minimal improvements in exchange for not asking the landlord for a lot. From a landlord's perspective, what is your long-term play for the building? If you're keeping it, you will probably want a long-term lease. If you're keeping it or remodeling, do short-term leases. For buildings that might be renovated, it may be OK to do short-term leases. Tenants should look at those spaces. But in this market, it's hard to have your cake and eat it too if you're a tenant. It's tough to find a short-term lease and low rent.

Your strategy should be, if you're a tenant, start early, be prepared, know what you want and do not vacillate. You can't kick tires; no one will talk to you and get serious with you unless you're ready to act on a transaction. So, if you're willing to move on a transaction, that will get you action. You need to move so you're not just stuck with one option. For the landlord, figure out what your strategy is. Are you holding it for the long or short term? Will you remodel and sell or not? And wait a little longer to get the right fit—you don't have to take the first guy who walks in the door.

GlobeSt.com: What else should our readers know about this?

Saywitz: Some tenants are used to doing three-year leases, and I say why? They say it's because they've always done it, but that's dumb. I say, “You're here. If you do a longer lease, you could negotiate lower rent.”