Commercial leases generally contain an initial rent and then a
mechanism for regularly reviewing the rent. The rent reviews are
generally annual and if the lease contains an option for a further
term then there is generally a mechanism for reviewing the rent at
the commencement of the second and subsequent terms.
The most common types of commercial rent reviews are set out
below:
Percentage increase – It is common for a lease to contain
a mechanism for increasing the rent by an agreed percentage each
year. It is in the landlord's interest for that percentage to
be high (perhaps 4% or 5%) whereas a tenant will usually seek a
lesser percentage (such as 3%). Percentage rent increases can be
useful for a tenant seeking to budget their lease for the term
