Commercial and professional leasing: which benchmark to use?

Verified 01 January 2023 - Directorate for Legal and Administrative Information (Prime Minister), Ministry of Economy

The benchmark of a commercial or professional lease is an element that allows the lease to be revised, with the aim of increasing or decreasing the rent.

Commercial lease

Commercial Rent Index (CLI)

The benchmark is the index from which the tenant or lessor can revise the amount of rent.

In the context of the review of commercial rents, the benchmark used is the commercial rent index (ILC).

The ILC is aimed at commercial tenants and craftsmen who carry out a commercial or craft activity. They must be registered in the National Register of companies (RNE). Traders are also registered at SCR: titleContent.

ILC may not be used for contracts for the following activities:

  • Industrial (factories, factories)
  • Exercised in office buildings
  • Exercised in logistics platforms, such as warehouses.

The commercial rent index applies to new commercial leases which are to be concluded or open leases.

Several elements are taken into account in the ILC calculation :

  • Consumer price index excluding tobacco and rent, at 75%
  • Construction cost index, at 25%

Indices are calculated for each quarter and are published by theInsee: titleContent.

To calculate the commercial rent index, the calculation model is as follows:

New Rent = Current Rent x (New LCI/LCI for the same quarter last year)

Rent index for tertiary activities other than commercial and craft activities (ILAT)

For the revision of commercial leases, it is also possible to use the index of rents for tertiary activities other than commercial and craft activities (ILAT).

It covers the following activities:

  • Liberal and tertiary (e.g., medical or architect's offices)
  • Rental of office space (for non-commercial and non-artisanal activities)
  • Logistics warehouses

Just like the ILC, theILAT is published for each quarter by Insee.

For his calculation, the following elements shall be taken into account:

  • Development of non-tobacco consumer prices and rents on all households, up to 50%
  • Construction cost price of 25%
  • Gross domestic product (GDP) in terms of value, 25%

The ILAT calculation is as follows:

New rent = Current rent x (new benchmark/rent benchmark for the same quarter of the previous year)

Rent may be adjusted automatically, up or down, for each annual or triennial period.

The rent is then adjusted according to the changes in the index chosen, on the anniversary date of the entry into force of the lease on the basis of the index for the same quarter.

However, the automatic rent adjustment must be provided for by an escalation clause (or sliding scale clause).

Please note

Since September 2014, theCCI is no longer a benchmark for commercial leasing. It is the activity concerned that determines whether the ILC or ILAT can be used as a benchmark for the revision of commercial leases.

Business Lease

The conditions for renewal of the professional lease are freely determined by the lessor and the lessee.

Therefore, the lessor and the lessee must to indicate in the contract the reference index to be applied when reviewing.

The index chosen must be related to the activity of one of the parties or to the object of the contract.

The lessor and the lessee may agree to revise the rent of the business lease either by the construction cost index (CCI), either according to the index of rents for tertiary activities (ILAT).

The index cannot be based on the general level of prices, the general level of wages, or the Smic: titleContent.

What to consider for the ILAT calculation shave the following:

  • Development of non-tobacco consumer prices and rents on all households, up to 50%
  • Construction cost price (CCI), up to 25%
  • Gross domestic product (GDP) in terms of value, 25%

Depending on the index chosen, the calculation is as follows:

New rent = Current rent x (new benchmark/rent benchmark for the same quarter of the previous year)

For professional leases that promote rental investment, social housing ownership and the development of land supply, the CCI can be used as a benchmark.

If the lessor and the lessee have not revision clause, the amount of rent shall remain the same throughout the duration of the contract.

However, if the lease contains a review clause but no review date, the date that applies is the anniversary of the conclusion of the lease.