Indexation

Indexation refers to the regular adjustment of rental payments based on an agreed‑upon economic index, most commonly inflation indicators such as the Consumer Price Index (CPI) or a national statistical office’s inflation rate. In commercial real estate, indexation ensures that rental values remain aligned with current market conditions and that the purchasing power of rental income is preserved over long‑term lease periods. For landlords, indexation protects asset value by mitigating the impact of rising operating costs and inflation on long‑term rental contracts. For tenants, it provides a transparent and predictable mechanism for rental adjustments, as the index and adjustment formula are clearly specified within the lease agreement. This transparency helps both parties budget accurately and maintain stable cash‑flow planning. In the CEE commercial real estate market—where iO Partners operates—indexation is a standard lease component across office, industrial, and retail sectors. Annual indexation is the most common structure, though some contracts may apply semi‑annual or multi‑year adjustments depending on the asset type and negotiation terms. Indexation clauses typically define the reference index, the calculation method, the adjustment frequency, and any limits such as caps or floors. For investors, consistent indexation contributes to long‑term asset performance and enhances the predictability of rental income streams. For occupiers, understanding indexation helps inform strategic decision‑making when evaluating total occupancy costs, lease flexibility, and long‑term commitments. As iO Partners focuses on delivering data‑driven solutions across leasing, investment, and strategic advisory services, indexation remains a key consideration in ensuring fair, sustainable, and market‑aligned lease structures.