A new index of rent review commercial leases has been recently established by an agreement between several associations of owners and tenants. Compound for 50% of the index of consumer prices for 25% of the index of construction costs and 25% of the index of turnover of retail trade in value, this index, called index of retail rents "(ILC), is supposed to vary significantly weaker than the index of construction costs (ICC), which currently serves as reference material.
Illustration: between 2000 and 2006, the total cost of construction has increased by 32% while at the same time, the average revenue realized by retailers grew only 18%!
law to modernize the economy, recently published, allows the application of this new index. Application that will be possible only for certain commercial activities as determined by a decree issued.
Thus, for the business concerned, lessors and lessees may therefore choose to use the ILC in lieu of the ICC for both new leases for the triennial review rents of existing leases and to cap the rent on renewal of the lease. In practice, they should include a clause or an addendum to the contract provision. Failing this, the ICC will apply.
Accuracy: commercial rent index will be published quarterly by the INSEE. Copyright ©
SID Press - 2008
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