Cpi and Market Rent Escalation (In a Lease)

CPI stands for Consumer Price Index. Many leases indicate that rent prices will rise at the same rate as the CPI with adjustments made on an indicated basis. Some leases use other price indexes instead of the CPI. The Consumer Price Index usually publishes data for specific geographic regions. The leases that use the CPI as a measure should indicate which version of the index and which regional area is to be used in the measure. The changes in the price index for large cities, such as Los Angeles, are likely higher than those for less populated areas, like rural North Dakota. The lease should indicate when adjustments are made on the rent amount. Most leases indicate an annual adjustment at the lease's anniversary date. For example, if a monthly rent is $1,000 and the annual CPI is 4 percent, the new rent rate will be $1040.