Informations Rapides · 29 March 2024 · n° 84

In Q4 2023, the Commercial Rent Index rose by 5.22% over a year Commercial Rent Index - fourth quarter 2023

The 2008-776 Act on modernization of the economy of 4 August 2008 created the quarterly Commercial Rent Index (CRI). The 2022-357 decree of 14 March 2022 amending the 2008-1139 decree of 4 November 2008 specified the formula for calculating and publishing the index. The CRI is published at the end of the third month following the quarter under review.

Up to and including the third quarter 2021, the quarterly Commercial Rent Index (CRI) consists of a weighted sum of indices representing the variation in consumer prices, the prices of new construction and the turnover of retail trade.

The index for consumer price changes is the monthly consumer price index for consumption excluding tobacco and rents (CPI), computed for all households residing in the mainland and the overseas departments, published by INSEE. The calculation of the quarterly commercial rents index is based on the average of this index over the last twelve months.

The index for the price change of new construction is the quarterly “Cost of Construction Index” (CCI) published by INSEE. The calculation of the quarterly Commercial Rent Index is based upon the average of this index over four consecutive quarters.

The index for the change in the turnover of retail trade is the monthly retail trade turnover index, adjusted for seasonal and working days (RTI) published by INSEE. The calculation of the quarterly Commercial Rent Index is based on the average of this index over the last twelve consecutive months. In 2016, INSEE improved the method of computation of the turnover retail trade index, using exhaustive information from VAT data instead of a sample of firms. In order to continue the computation of the CRI without any break due to this change in the method, in conformity with the application decree, a chain-linking coefficient was applied to the new monthly series of turnover retail trade index. The connection point is December 2015, the coefficient value is 0.945 (value of December 2015 of the old series/ value of December 2015 of the new series on 2 June 2016).

The three components used in the calculation of the quarterly commercial rent index are weighted according to the following formula:

Quarterly Commercial Rent Index = 50% mCPI + 25% mCCI + 25% mRTI

From the fourth quarter 2021 onwards, the index of turnover in retail trade (RTI) is no longer used in the formula, the Commercial Rent Index is based only on the CPI (mCPI) and CCI (mCCI), with respective weights 0.75 and 0.25.

The quarterly Commercial Rent Index is not revised.

Uses

In accordance with 2014-626 Act of 18 June 2014 (article 9), which amends section L. 145-34 of the Commercial Code, two indices may be used for the purpose of escalating or revising rents for Service and Trade activities:

- The Commercial rent index for trade and craft activities;

- The Tertiary activities rent index for activities other than trade and craft activities.

Next issue: end of June 2024.