Some (but not all) industrial real estate leases have a CPI Rent Escalation clause that calls for rents to increase each year in line with the Consumer Price Index.
While the Feds have historically targeted 2% for CPI, recent numbers show it just increased by 7.9%.
https://www.brookings.edu/blog/up-front/2022/03/11/inflation-in-america-experts-react-to-the-latest-cpi-release/
So industrial landlords that have this clause in the lease are going to see a sizeable increase in revenue, whereas their tenants are going to see a big jump in expenses.
What do you think they do, will they accept less profit or pass those expenses onto their customers?
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🙋 Chad Griffiths, MBA, SIOR
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