What does an index lease tie the rent amount to?

An index lease is designed to adjust the rent amount based on a specific economic indicator, commonly the Consumer Price Index (CPI). This means that the rent can fluctuate in accordance with inflation or deflation, allowing it to reflect current economic conditions. Such leases provide a mechanism to ensure that the property's rental income maintains its value over time, which can be particularly important in a changing economic environment. By tying the rent to the CPI or another standardized factor, landlords and tenants can both anticipate and manage cost implications over the length of the lease. This dynamic is particularly beneficial in long-term lease agreements, where fixed rents may become less desirable as economic conditions shift.