Investment approach
Term and Indexation of a Commercial Lease in Spain
A non-residential lease in Spain has no minimum term and no automatic indexation: the contract decides, and the law only fills the gaps. Here is what that means for the price of the premises.
The parties decide the term and indexation of a commercial lease in Spain. The Ley de Arrendamientos Urbanos (LAU, the Urban Leases Act, Título III) applies only where the contract is silent. There is no minimum term for non-residential premises and no mandatory indexation. For a buyer that means one thing: the value of the income is written in the contract, not in the law.
How long a non-residential lease runs and what happens afterwards
A lease of non-residential premises rests on the will of the parties and, failing that, on Título III (art. 4.3 LAU). Título III contains no minimum term, no mandatory extension and no right for the tenant to stay once the contract ends.
If the term has expired and the tenant keeps using the premises with the landlord's knowledge, the Código Civil rule applies: after 15 days tácita reconducción (implied renewal) takes effect (art. 1566), unless a demand to vacate was made before then. Where the contract states no term, the lease is treated as concluded for the payment period: an annual rent means a year, a monthly rent means a month (art. 1581). A contract "without a term" with monthly rent ends at the end of the current month without any separate notice, and it gives a buyer very little.
The main exception in the tenant's favour is art. 34 LAU. If the premises have been used for retail trade open to the public for the last five years, and the tenant stated four months before the end of the term that it wanted to extend the contract by at least five years at market rent, the tenant is entitled to an indemnización (compensation) from the landlord. If the tenant opens the same business in the same municipality within six months, it is reimbursed for the move and the loss of clientele. If the tenant closes and the landlord or a third party opens the same or a similar business in that place, the landlord pays one monthly rent for each year of the lease, up to a maximum of 18 monthly rents. This is covered in detail in the article on traspaso and compensation for clientele.
How to price the term: the remaining term, not the contract term
What matters for valuation is the time left until the nearest date on which the tenant can leave. A ten-year contract with a right to exit in year five counts as five for the calculation. Worked example, not a forecast: rent of 48,000 € a year with no indexation.
| Time left until the tenant's exit date | Contracted income, € |
|---|---|
| 3 years | 144,000 |
| 8 years | 384,000 |
The 240,000 € difference at the same rent is the price of the term. The second variable is what happens after the exit date. For that you need the downtime calculation from the article on the vacant local (ground-floor commercial unit).
How indexation works and what to put in the calculation
Rent review by a price index falls under Ley 2/2015 on desindexación (de-indexation). Its art. 3.1.b brings the review of rents under urban leases within the scope of the law, and art. 7 allows a periodic review only where the parties have agreed to it directly. If the parties agreed on a review but did not name an index, the Índice de Garantía de Competitividad (IGC) applies: INE publishes it monthly, a negative value is treated as zero, and anything above 2% is capped at two.
That is why the wording of the contract matters most:
- Which index: general CPI (IPC), IPC a impuestos constantes (at constant taxes), IGC, or a fixed percentage.
- Which month is compared, and on what day the rent is reviewed.
- Whether there is a cap and a floor, for example "not below zero".
- What happens if the index is negative.
The range of outcomes is wide. INE reported annual CPI of 4.3% in August 2026 (release of 15 September 2026) and core inflation of 2.9%. INE's flash estimate of 29 September 2026 for September is 4.9%. These are facts as of today, not a forecast.
A worked example with three variants for a rent of 48,000 € a year:
| Variant | Year 1 | Year 2 | Year 3 | Total over 3 years, € |
|---|---|---|---|---|
| No indexation | 48,000 | 48,000 | 48,000 | 144,000 |
| 2% a year (IGC cap) | 48,000 | 48,960 | 49,939 | 146,899 |
| 4.3% a year (August 2026 CPI) | 48,000 | 50,064 | 52,217 | 150,281 |
Over three years the gap between the extremes is about 6,300 €. CPI indexation at high inflation puts pressure on the tenant: the rent can grow faster than the tenant's revenue. For a buyer that is a risk of the tenant leaving, not just a plus to income. How to account for it is discussed with an abogado and with the tenant before arras.
What to do when buying
Request the whole contract and look for four things: the date from which the tenant may leave, the indexation clause, the penalties and exit procedure, and the terms on assignment. Under art. 32 LAU a tenant running a business may assign the lease or sublet the premises without the landlord's consent, and the landlord is entitled to a rent increase of 10% on a partial sublease and 20% on an assignment or full sublease. How to read the contract itself is described in the article on property with a tenant in place.
Who this model does not suit
If you want predictable income without dealing with a tenant, a contract with a short remaining term and indexation "by agreement" does not suit you. Nor does it suit anyone who builds CPI into the model for the whole term without checking the contract. You can run the valuation of the premises together with the lease through the deal analysis, and DNPI's approach to commercial assets is described in the section on commercial property strategy.
Questions and answers
What is the minimum term of a commercial lease in Spain?
The law sets none: non-residential contracts live by the will of the parties (art. 4.3 LAU). Practice varies, and I found no reliable open statistics on lease terms in Barcelona.
Does the landlord have to index the rent to CPI?
No. Under art. 7 of Ley 2/2015 a periodic review is possible only where the parties have agreed to it directly; otherwise the rent stays the same.
What happens if the contract says "the rent is reviewed annually" with no index?
The Índice de Garantía de Competitividad applies. For a review it is never negative and never above 2%, so it can differ sharply from CPI.
Can the lease be terminated before the end of the term?
Only if the contract provides for it or the law gives a ground. The landlord may terminate for non-payment of rent or fianza (deposit), and on other grounds under art. 35 LAU.
