Six retail federations in France (Alliance du Commerce, CAMF, CDCF, FFF, FNH and Procos) have called for an extension of the 3.5% cap on indexation of commercial rents, which was introduced for one year as part of the "Purchasing Power" law of August 18, 2022, but is due to expire shortly.
Indeed, they believe that rising real estate costs represent an immediate danger to retailers due to the multiple challenges they face, such as pressure on consumption levels, energy price rises, wages/supply costs, as well as the failure of many networks or stores.
These federations are calling for the 3.5% cap to be extended for at least another year, and for it to be applied to all leases indexed to the commercial rent index (CIR), regardless of the size or nature of the operator. At present, this system only applies to very small and medium-sized businesses, leaving out larger companies (particularly those in a network) facing sharp increases in their rental charges.
The Confédération Nationale de l'Equipement du Foyer (CNEF) has come out in favor of discussions with the Ministry of the Economy and Finance to extend the ILC cap beyond April 1, 2023, or other solutions to reduce inflation in this area, such as spreading additional increases over three years. She stressed the precarious situation of retailers outside SMEs.
In conclusion, the retail federations believe that the sharp rise in the commercial rents index has exerted excessive economic pressure on retailers, as rents and property charges can represent up to 20% of a retailer's sales. They call for an immediate cap on the indexation of commercial rents at +3.5% for at least one more year, and for urgent action as this summer's extension mechanism needs to be up and running.
