CPI Escalation: Inflation-Indexed Rent Bumps
CPI escalation clauses became dramatically more common in Florida commercial leases after the 2022–2024 inflation surge — shifting inflation risk dynamically between landlord and tenant.
How It Works
Year-over-year change in CPI (typically CPI-U, All Items, U.S. City Average) is applied to base rent. A floor and cap bracket the adjustment. Example: 2% floor, 5% cap. CPI runs 6.5% → tenant pays 5% bump. CPI runs 1% → tenant pays 2% bump.
Three Variants You'll See
- Fixed %: Simple — 2.5–3.5% annual. Predictable for both sides.
- CPI w/ Floor & Cap: Inflation-indexed but bounded. Standard for long-term retail and industrial.
- Stepped: Periodic jumps (e.g., 10% every 5 years) — used when initial rent is below market and parties want explicit mark-to-market timing.
Model Your Rent Escalation
Project total rent over term across fixed, CPI, or stepped escalator structures.
Open Rent Escalation Calculator →Frequently Asked Questions
What is a CPI escalation clause?
A CPI escalation clause indexes annual rent increases to the Consumer Price Index. Each year, base rent adjusts by the change in CPI from a base period — usually subject to a floor (minimum bump) and cap (maximum bump).
What is a typical floor and cap?
Common terms in Florida commercial leases: 2% floor, 5% cap. The tenant is protected from outsized bumps in high-inflation years; the landlord is protected from negative or near-zero bumps in low-inflation years.
CPI vs Fixed Escalator — which is better?
Fixed escalators (2.5–3.5% annual) are simpler and more predictable. CPI escalators with floor/cap are common in long-term retail and some industrial leases — they shift inflation risk between parties more dynamically.