Indexation of rental fees - every year subject for shopping centre managers
The beginning of the year for shopping centres is the time for indexation of rental fees. How much it will improve the financial results of the real estate?
The Eurostat's communication published yesterday shows that the HICP index rose in the period from January 2016 to January 2017 by 1.8 percent. By this value the rental fees in shopping centres can generally be increased.
However, analysing the HICP indicators for detailed price indices, generally one should expect the deterioration of net operating income of commercial real estate (NOI). The index of energy prices increased in this period by almost 10 percent (in the case of Poland the growth increased somewhat less than 7 percent ) .
This leads to the conclusion that rents are rising slower than energy prices, and other energy derivative operating costs of shopping centre.
The results of Polish shopping centres may also be affected by an increase in insurance premiums in 2016 (more than 10 percent in total).
Magdalena Szczepanek, Legal Counsel. Graduate from the Faculty of Law and Administration, Rzeszów University. Since 2010, the lawyer at Causa Finita Law Firm. She deals with the process of commercialization of commercial real estate, lease agreements negotiations.
Causa Finita Commercial Real Estate Law Firm specializes in real estate law and comprehensive support of investment processes covering primarily commercial real estates - shopping centres and hotels.
autor: Magdalena Szczepanek, legal counsel at the Causa Finita Commercial Real Estate Law Firm