What % rent increase is everyone offering for renewals?
I have 2 retail commercial properties leases ending in 3-4 months. We are currently negotiating renewal terms. with inflation and rising interest rates, what kind of terms is everyone offering?
[{"id": "i1b0x0c", "text": "What is there use (are they location dependent?)\nWhat's the market rent in your area? \nTIs &amp; LCs being proposed? \nHow's your DSCR?", "replies": [], "depth": 1}, {"id": "i1b0z3l", "text": "This is Highly dependent on the area. You need to look at other similar space and what new leases are going for. Raising something just because isnt a good reason. Compare to singular properties", "replies": [], "depth": 1}, {"id": "i1ba92c", "text": "Typically if the Lessor is smart there tends to be for example \u201c3% or CPI whichever is greater\u201d possibly on the second year and years after on a lease. If you can negotiate the CPI out from a Lessee\u2019s side and get a fixed increase that is big. Especially since the CPI has increased a lot. Also it depends if you are retail or on NNN (Lessee pays taxes, insurance, and Common area maintenance) as the lease terms change more.\n\nEdit: Like others said area is a huge factor in this", "replies": [], "depth": 1}, {"id": "i1bbbmw", "text": "3% (sometimes 2.5% depending on tenant) or CPI, whichever is greater, starting on Year 2 of the renewal.", "replies": [], "depth": 1}, {"id": "i1ccnnh", "text": "Washington DC.  3% annual.", "replies": [], "depth": 1}, {"id": "i1nyh01", "text": "My advice is to avoid CPI-based increases, because the CPI has nothing to do with commercial real estate, so it\u2019s a bad gauge. Look at other transactions in your your market, and specifically your sub-market. You may see that retail leases and renewals are trending at 10% increases in Minimum Guaranteed Rental (aka \u201cbase rent\u201d) every five years, or you may instead see 2.0% annual increases in base rent, or 2.5% or 3.0%.  In my market, 10% every five years is common in retail leases and annual (2.0%-3.0%) increases is common in office leases. In a hot submarket, try to keep your lease terms as short as possible so you don\u2019t get caught below market.", "replies": [], "depth": 1}]