Which type of lease is often more beneficial during times of economic inflation?

An indexed lease is often more beneficial during times of economic inflation because it adjusts rent according to a specific index, typically tied to inflation rates or the cost of living. This means that as inflation rises and the cost of goods and services increases, the rental payments will also go up in a manner that reflects those changes. This type of lease provides both landlords and tenants with a measure of predictability in terms of rent increases, helping tenants avoid potential financial strain due to rapidly rising costs.

In contrast, a straight lease maintains a fixed rental amount for the duration of the lease term, which can become less favorable in times of inflation since the rent does not change to reflect increased costs. A step-up lease has predetermined increases at specified intervals, which may not keep pace with inflation as well as an indexed lease can. While a percentage lease ties rent to sales performance (common in retail settings), it does not directly account for inflation unless the sales increase in line with price inflation. Thus, the indexed lease method offers the best alignment with economic inflation, protecting both parties' financial interests.