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Proactive Property Group
Commercial Rent Reviews: How to Avoid Overpaying Your Landlord
If you have a commercial rent review coming up, the outcome can materially impact your profitability for years.
Getting it wrong can lock in unnecessary costs — getting it right can protect margin and cashflow.
Why rent reviews catch tenants out
Rent reviews compound — a bad outcome impacts every year that follows
Landlords usually control the process, timing, and valuation narrative
Most tenants only focus on rent, not total occupancy cost
Missed notices or poor preparation reduces negotiating leverage
What Is a Rent Review?
A commercial rent review is a mechanism in your lease that allows the rent to be adjusted at set times during the lease term.
The method and frequency of the review are defined in the lease — and the outcome can significantly affect your costs for years.
When Do Rent Reviews Typically Occur?
Rent Reviews usually occur:
At fixed intervals (e.g. every 2–3 years)
On lease renewal or exercise of rights of renewal
Following assignment or change of tenant
As triggered by CPI or fixed annual increases
Common Types of Rent Reviews in NZ Commercial Leases
Rent is adjusted to market levels, usually with reference to comparable premises
Often involves valuers and negotiation
High risk if not prepared properly
Rent increases in line with a fixed annual percentage
Can compound quickly over long leases
Rent increases in line with CPI movements between rent review dates
Can compound quickly over long leases
Rent linked to business sales performance
Common in retail and hospitality
The issue is rarely which rent review applies — it’s how the clause is interpreted, timed, and negotiated.
That’s where most tenants lose leverage or lock in unnecessary cost
Common situations we see
You receive a rent review notice with tight response deadlines
The landlord’s proposed rent feels aggressive or unjustified
CPI, market, and ratchet clauses interact unexpectedly
You’re unsure whether to challenge, negotiate, or accept
Common Mistakes Tenants Make During Rent Reviews
Waiting for the landlord to drive the process
Assuming the proposed rent is “market”
Focusing only on rent, not total occupancy cost
Missing notice dates or procedural rights
Accepting valuers’ positions without challenge
These mistakes compound over time and can materially affect profitability across the lease term.
The Long-Term Cost of a Poor Rent Review Outcome
A rent review doesn’t just affect the next year — it sets the base rent for every year that follows.
Then a simple example (no maths overload):
A $15,000 increase
Over a 6-year term
Equals $90,000+ in additional occupancy cost
Before CPI, OPEX, or incentives are considered
This is why rent reviews should be treated as a strategic negotiation, not an administrative task.
How we help tenants manage rent reviews
Define
- Review lease clauses and review mechanism
- Analyse timing, notice requirements, and constraints
Develop
- Assess market evidence and comparable rentals
- Identify negotiation leverage and downside risks
- Model financial impact across the lease term
Deliver
- Negotiate directly with the landlord or their agent
- Achieve a defensible, commercially sound outcome
- Document agreed terms clearly
What this delivers
Reduced occupancy costs over the lease term
Greater certainty for budgeting and forecasting
Stronger negotiating position for future renewals
Less distraction for management and boards
We regularly manage rent reviews for retailers, franchise networks, hospitality groups, and service businesses across New Zealand. Our role is to level the playing field and protect tenant interests.
Refer to...
Lease Management Services