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Category: Commercial rents

  • Commercial rents and inflation: understanding the ILC

    Commercial rents are not enough to explain inflation. They remain, however, an indexed cost that weighs directly on the margins and survival of many shops. To understand them, you have to start with the ILC, the French commercial rent index (indice des loyers commerciaux).

    What the ILC measures

    The commercial rent index, published by INSEE (the French national statistics institute), is the reference for revising many leases. Its composition combines mainly inflation and, to a lesser extent, construction costs. It therefore follows prices rather than creating them. This distinction avoids a shortcut: noting that a rent is high does not, on its own, demonstrate a cause of inflation.

    Why the subject deserves monitoring

    In the first quarter of 2023, the ILC reached an annual increase of 6.69%. Meanwhile, shop vacancy remains a visible phenomenon in many areas. Between the headline level, rent-free periods, negotiations and indexation, the market cannot be summed up in a single figure.

    For a retailer, the stakes are concrete: knowing your reference index, the review date, the lease clauses and the effect of an increase on your break-even point.

    FAQ

    Does the ILC automatically increase all rents?

    No. You need to read the indexation clause of the lease and check its reference index, its period and its conditions of application.

    What should you check on a commercial lease?

    The index, the review date, the last index applied, the service charges and the split of works.

    Sources

    INSEE, commercial rent index; Conseil national du commerce, 2025 shop vacancy data.

  • The ILC cap: what SMEs should check

    The temporary cap on commercial rent indexation limited increases for SMEs during the inflation peak. You still need to know whether the scheme covered your lease and whether it was applied correctly.

    How the cap works

    Faced with the rise in the ILC (the French commercial rent index), the annual revision of certain commercial rents was capped at 3.5% for SMEs during the period set by law. The Direction générale des entreprises (the French government’s enterprise directorate) indicated that hundreds of thousands of shops were concerned. The cap is not a deferral of debt: where the conditions are met, the increase that was set aside cannot be recovered later.

    How to check your rent schedule

    1. Find the indexation clause and the index used.
    2. Compare the increase applied with the cap in force at that date.
    3. Keep the revision notices and ask your adviser or accountant to check if there is a discrepancy.

    FAQ

    Did the cap apply to all businesses?

    No. Its scope depended in particular on the size of the business, the lease and the period concerned.

    Can the landlord recover the capped increase later?

    The temporary mechanism was not intended to create a deferred catch-up. Check your exact situation with a qualified professional, however.

    Sources

    INSEE, ILC; Direction générale des entreprises; Court of Cassation case law on the cap.

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