Commercial rent increases are evaluated differently than residential rent increases in some ways. While both are creatures of contract, there are fewer laws governing the terms of commercial rents.
California Attorney and Real Estate Broker Chris Adishian answers the question, “Is there a limit to how much a Landlord can increase the rent on a commercial property?” at the South Bay Association of Realtors’ event, “Commercial Attorney Panel-Hot Legal Issues for Commercial Real Estate” on March 5, 2014.
Question: “For a commercial property, is there any maximum percentage that a landlord can increase rent?”
Answer: “Again, there’s no rent control on commercial properties. Again you’re talking about a different set of rules versus a residential, consumer-type situation. So you’re only going to be constrained by the language of your lease. Leases usually have some escalation provisions in them during the term, and then on renewal, it’s a negotiation point. Are you renewing at a certain percentage above the last rent? Or is it market rate? Or is it an agreed-upon rate at the outset that’s not market and not based on the last rent ,but just some rate that you picked 3 years earlier? But there’s no rules governing the amount of rent that can be charged or negotiated between the parties.”
Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.
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