The methodology used to increase rent over the term.
The escalation type determines how quickly rent grows over the lease term and how predictable future costs will be. A 3% fixed annual escalation on a 10-year lease increases rent by 34% over the term. CPI-linked escalations introduce uncertainty, as inflation spikes can cause unexpected cost increases. Identifying the escalation type is essential for accurate financial modeling and straight-line rent calculations under ASC 842.
Found in the "Rent Adjustments," "Escalations," or "Annual Increases" section. May be embedded within the rent schedule exhibit. Look for terms like "fixed percentage," "CPI," "step-up," or "fair market value."
Lextract uses vision AI to read your lease PDF natively (scanned or digital), then multi-pass AI validation identifies and extracts the escalation type. The AI searches for all pages of the document, then assigns a confidence score based on document quality and extraction certainty. Fields with lower confidence are flagged for human review.
The three primary types are: (1) Fixed percentage increases (e.g., 3% per year), (2) CPI/inflation-linked adjustments, and (3) Fixed dollar step-ups (e.g., $1/RSF per year). Some leases use fair market value resets at renewal or combine multiple methods.
Fixed percentage or fixed dollar escalations provide cost certainty, which most tenants prefer. CPI-linked escalations with a cap and floor offer moderate protection. Open-ended CPI escalations without caps can result in significant cost spikes during inflationary periods.
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