2026-10-10 11:06

Supermarket Leases in Germany: Term, Indexation, Cost Allocation

New and enlarged food stores in Germany are generally let for 15 years; the rent is linked to the consumer price index but usually rises only after a threshold and often by less than full inflation. Costs are shared on a "double net" basis: the roof and structure remain with the landlord, and in our experience a new store's owner bears non-recoverable costs of 8–15% of the net rent. There is no single market standard: the economics of a property are set by the wording of the particular lease.

The term is 15 years, and the extension options belong to the tenant

Leases for new and enlarged food stores are mostly signed for 15 years. BNP Paribas Real Estate reports this term for enlargements, and it matches our experience of new builds (see Part 3 of the series German Prime Retail). On sites that a retailer considers strategic, 20-year leases also occur.

The extension options belong to the tenant, so a valuation takes into account only the remaining fixed term. The number and length of the options depend on the lease. The Netto discounter in Mannheim, for example, had three five-year options attached to its 15-year lease (see Part 7 of the series German Prime Retail).

The term holds only if the form is observed. A commercial lease for more than one year that is not concluded in text form is deemed to be for an indefinite period. Either party can then terminate it with roughly six months' notice (§§ 550, 578(1), 580a(2) BGB). Every amendment — even a rent increase — must therefore be made at least in text form.

Indexation requires ten years and usually starts after a threshold

Exhibit 1. The law demands a commitment of at least 10 years; the 10% threshold and the 65–75% pass-through come from the retailer's standard lease

Parameter	What the law requires	Example of market practice
Term	At least 10 years, a waiver by the landlord of ordinary termination for 10 years, or a right of the tenant to extend the lease to 10 years	15 years
Index	Consumer price index of Destatis, a state statistical office or Eurostat	German consumer price index
Threshold	Not set	Index rise of at least 10%
Share passed on	Not set; the clause must not raise the rent when prices rise without lowering it when they fall	65–75%, on average about 70%
Period without indexation	Not set	2–3 years from the start of the lease

Sources: Price Clause Act (Preisklauselgesetz, PrKG), § 2(3), § 3(1); Habona Invest, presentation of the Habona Nahversorgungsfonds Deutschland of 8 November 2023 (the "2/10/70" formula as an example of market practice).

Passing on 70% of inflation rather than all of it costs the owner €31,000 of rent a year by the tenth year (our calculation in a simplified model of annual growth, as in Part 11 of the series). If 70% of 2% inflation passes into the rent, €500,000 a year grows to €566,600 by the tenth year; with full pass-through it would reach about €597,500. In our experience, some clauses raise the rent only from the month after the landlord's written demand, so a threshold that goes unnoticed means rent lost for good.

The tenant bears most costs; the landlord keeps the roof and structure

Exhibit 2. Tax and insurance are usually recovered; roof, structure and GmbH accounting (about €8,000–12,000 a year) stay with the landlord

Item	Typical treatment	Comment
Property tax (Grundsteuer), insurance	Usually recovered	If the lease names them expressly
Property management	Only if agreed	In our experience, 2–4% of net rent plus VAT
Roof and structure (Dach und Fach)	Landlord	A standard-form clause can shift to the tenant only repairs within its sphere of use or risk
Car park and external areas	Varies	Surfacing, lighting, drainage
GmbH accounting and reporting	Landlord	About €8,000–12,000 a year for a single-property GmbH

Sources: Part 10 of the series German Prime Retail; BGH, judgments of 6 April 2005 (XII ZR 158/01) and 9 December 2009 (XII ZR 109/08); Gordon Real Estate Group experience.

In commercial leases, costs are allocated by the lease, not by statute: the Federal Court of Justice has upheld even a standard-form clause that passes management costs to the tenant without stating an amount. For a store let at €12 per m² a month, the valuation standards (Annex 3 to the ImmoWertV) come to about 11–12% of the rent (our calculation). They allow 3% of gross rent for management, 4% for the risk of rent loss and, where the landlord maintains the roof and structure, €5.85 per m² a year for maintenance, at 2021 prices and indexed. Every 10% of rent absorbed by costs takes 0.6 percentage points off a stated yield of 6.0%.

Implications for investors

1. Value only the remaining fixed term. The extension options belong to the tenant, and the term itself holds only if the lease and every amendment are made at least in text form.

2. Translate indexation into euros and watch the threshold. Passing on 70% of inflation rather than all of it leaves the owner €31,000 a year short in rent by the tenth year (our calculation).

3. Deduct costs before comparing yields. Every 10% of rent absorbed by costs takes 0.6 percentage points off a stated yield of 6.0%.

What to check:
• Find out who signed the lease — a group company or an independent merchant — and whether there is a group guarantee.
• Calculate the remaining fixed term without the tenant's options.
• Check the index, the threshold and the share passed on, and whether a threshold already crossed has been missed.
• Check the list of recoverable costs and the allocation of repairs: roof, structure, building services, car park.
• Request the full chain of amendments and make sure each one is at least in text form.

Sources: BGB §§ 550, 578, 580a; PrKG §§ 2, 3; BGH, judgments of 6 April 2005, XII ZR 158/01, and 9 December 2009, XII ZR 109/08; ImmoWertV, Annex 3; BNP Paribas Real Estate, Grocery-Investmentmarkt Deutschland, Q4 2025; Habona Invest, fund presentation (Die Fondsplattform, 8 November 2023); German Prime Retail series, Parts 3, 7, 10 and 11; Gordon Real Estate Group experience. Law as at October 2026.

Photo: Didier Weemaels / Unsplash

This page is general information and not investment, legal or tax advice.

Ilya Gordon