“What Does CPI Have To Do With My Rent?”
That’s a fair question that tenants ask about all the time as the Consumer Price Index (CPI) measures the price change of consumer goods and service, in which real estate is not included.
The answer is yes. It does affect your rent that is one of the income sources of your landlord. And it doesn’t matter if your rent is gross or triple net, or whether it is a residential or commercial property.
Why? Let’s do the math. (Don’t panic and don’t grab the calculator, because we don’t really need it.)
Let’s assume that your landlord needs a certain amount of consumer goods and service every year. If the prices of bread, milk, utility and haircut increased by 1% in 2015 comparing to 2014, to buy the same goods and service, your landlord will have to pay 1% more. As the rent is one of his/her incomes, your landlord may want to raise it by 1% to make sure there is enough money in his/her pocket to maintain the same living level.
Be aware that the market is the crucial fact in price adjusting and make sure to ask if the rent comes with an annual adjustment.
Our experienced commercial agents are ready to take on your questions and help you find the right property for your business, investment, etc. Look into properties represented by our commercial agents by going to www.abgcommercial.com.
ABG Commercial – Associated Brokerage Group | 307 Cambridge St. Cambridge, MA 02141 | 617.492.9900