We are about to sign a lease on a commercial building are the rates increase
Every year? We will be signing a ten years lease they want a 2.5 percent increase every year!!
It’s very common for yearly rate increases to be built-in to commercial property leases – 2.5% is actually fairly conservative. Rate increases are typically built-in to compensate for annual inflation and yearly increases in rents in a particular area. If you didn’t build in yearly rate increases, it would be much harder to get a long-term lease and you’re rent would probably increase substantially whenever you renewed your lease.
For more information on leasing commercial property, be sure to check out our Ultimate Guide to Lease Commercial Real Estate.
Hope this helps,
I agree with Dock, from having worked in industrial real estate for 5 years, yes, it does increase year over year. Are you working with an agent? I would recommend working with a commercial real estate agent before signing anything. (And yes, I’d highly suggest an agent who specializes in commercial and not residential)