New Landlord for My Place of Business 

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Rent increases

In the past, the increasing cost of operating a building was covered by an increase in rent when the lease was renewed or when a new lease was created for a new tenant. Most landlords protect themselves from unpredictable changes in real estate by including an escalation clause in a lease agreement. The clause allows a landlord to raise rent if the cost of maintaining or operating the property increases. Most landlords will negotiate the escalation clause with you.

Some examples of escalation clauses include:

• Regular increases in rent over the course of the lease
• Pro-rated increases in taxes, heat, maintenance and other direct costs
• Automatically raising the rent according to the Consumer Price Index (CPI) or some comparable index of inflation

Note: The CPI generally overstates the impact of inflation, so you should not agree to pay more than a portion of the annual CPI increase, especially if the lease already contains increases for taxes and direct operating costs.

Commercial rents are generally measured by the cost per square foot of the space. Many landlords charge tenants separately for heat and electricity. There are at least five common ways to calculate rent, including:


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• Net-net-net or "triple net" leases

Triple leases pass on all the costs of operating the building, including repairs and maintenance to you as the renter. These types of leases are usually used for industrial properties.