Why rent reviews are usually mishandled
Most managers run rent reviews as a compliance tick — a letter goes out on the date, the tenant responds, a number gets agreed in the middle. The number that gets agreed is almost never the number you should have agreed on.
We treat each review as the single most leveraged revenue moment in the lease. $5,000 a year across one tenant let alone multiple tenants directly impacts an owner’s equity. The work to do the review properly costs a fraction of what’s at stake and we continually think of opportunities to increase owner equity through more favourable lease terms (length and income). So we do the work.
The NZ rent review landscape
Commercial leases in New Zealand typically anchor reviews on one of four mechanisms, and each requires a different preparation:
- Fixed (typically 2–4% per annum) — predictable but capped. The negotiation usually happens before lease signing, not at review.
- CPI (Consumers Price Index) — common in ADLS-MED leases. Be careful: many CPI clauses carry a floor and a cap that gets overlooked.
- Market — the most strategic and most negotiated. Comparables are everything.
- Hybrid (CPI with a market cap, or a fixed-then-market structure) — increasingly common and easy to misapply.
We track which review type applies to every tenancy in the portfolio, calendar the deadlines centrally, and prepare for each one based on its own mechanism.
Market reviews — how we actually prepare
Comparables research is where most reviews are won or lost. We track Auckland’s office, retail and industrial precincts separately — CBD has different dynamics from the fringe, which has different dynamics from Penrose or East Tamaki. Generic per-square-metre benchmarks, while useful as a guideline, don’t help; specific recent transactions in the same precinct, with the same lease structure, do.
Before each market review we pull together an outgoings build-up the tenant can stress-test, a comparables pack with the source data, and a pre-review valuation when the stakes warrant it. The strongest negotiating position is usually: “We would accept X, and here is the data that supports X plus ten percent.”
CPI reviews — protecting the floor
CPI reviews look mechanical and often get treated that way. They don’t need to be. Many CPI clauses include a cap, a floor, or both — and when CPI moves outside those bands (rare but real), the cap or floor protects whichever side it’s drafted to protect.
We read each CPI clause closely, apply the correct quarterly index, and surface the floor or cap when it matters. For longer leases we model expected CPI paths so the owner sees what the next two or three reviews are likely to deliver.
Beyond the review — annual revenue strategy
A rent review is one event; a property’s revenue trajectory is a longer game. Each year, for every asset in the portfolio, we look at:
- Tenant mix and lease length stagger — you don’t want every lease expiring in the same year.
- Concession management — fit-out contributions, rent-free periods, OPEX caps. Each one is a real cost. Each one is also a real negotiation chip.
- Break rights and renewal options — when to remind a tenant they have one, when to quietly let it pass.
- Vacancy positioning — when to hold for a premium tenant, when to discount for speed.
- Lease re-gearing — extending term in exchange for a refurb contribution or a softer rent.
Mid-term renegotiations
Sometimes both sides want to renegotiate mid-term — a downturn, an expansion plan, a vacancy risk on either side. We coordinate the framework: what the landlord gives, what the tenant gives, who carries the legal cost, what gets documented in a deed of variation. Side letters are not a substitute.
Office, retail and industrial — they don’t move together
One of the quieter mistakes we see is owners assuming their sector behaves like the whole market. It doesn’t. Auckland office, prime retail, fringe retail, industrial and large-format all sit on different rent cycles, different demand drivers and different vacancy norms. A market review in industrial in 2025–26 is a very different conversation from one in suburban office. We brief each review against the right reference set, not a generic Auckland number.
What you can expect from us
Reviews managed end-to-end. A pre-review brief from us 90 days out. A comparables pack before any market review. A counter-proposal strategy if the tenant disputes. And documented agreement at the end — not a verbal understanding, not a margin note on a lease photocopy. Where a review heads to arbitration or expert determination, we manage that process too, in coordination with your solicitors and an appointed valuer.