How is the rent of a commercial space updated in Mexico?

Unlike a residential apartment, the lease contract for a commercial space in Mexico is usually governed by the Commercial Code and by the clauses the parties freely agree on. That means rent indexation —annual or periodic adjustment— almost always depends on what the contract says, not on a legally imposed index. The most used reference is INEGI's INPC.

Why is the rent of a commercial space indexed?

A commercial contract is typically signed for 3, 5 or 10 years. Without an updating mechanism, rent quickly becomes obsolete in inflationary contexts. Both landlord and tenant have an interest in the update being predictable, transparent and public. That is why the most common is to tie it to the INPC.

INEGI's INPC as a reference index

The Índice Nacional de Precios al Consumidor is published by INEGI every two weeks and consolidates a monthly value. It is the official base for measuring inflation in Mexico and, due to its public nature, serves as a neutral reference for contracts.

A typical INPC update clause looks like:

"The monthly rent will be updated annually, on the anniversary date of this contract, multiplying the current rent by the factor resulting from dividing the INPC published by INEGI corresponding to the month immediately before the update by the INPC of the same month of the previous year."

That is, if the current rent is $40,000 MXN, the INPC for June 2026 is 138.5 and for June 2025 was 132.8, the factor is 138.5 / 132.8 = 1.0429. The new rent would be 40,000 × 1.0429 = $41,716 MXN.

Common variants

Cap

To protect against high inflation, tenants negotiate a cap: "the update factor cannot exceed 6% annually". If inflation exceeds 6%, the cap applies; if it is lower, the INPC applies.

Minimum band

The landlord, in turn, can ask for a minimum band: "the annual increase will not be less than 3%". This protects them in years of very low inflation.

Mixed INPC + exchange rate

In areas with foreign tenant flow (Polanco, Santa Fe, Riviera Maya) contracts in USD are seen, converted to pesos at the DOF exchange rate on the payment date. Indexation then mixes with currency risk.

Variable rent as a percentage of sales

In shopping centers and retail plazas, a fixed rent with a step linked to INPC plus a variable rent as a percentage of reported sales (typically 5%–10%) is common.

Step-by-step process for a clean update

1. Locate the exact update clause in the contract: index, frequency, anniversary date and cap.
2. Check the INPC on INEGI's website for the relevant months (the historical series is available in open format).
3. Calculate the factor with three or four decimals and notify the tenant in writing of the new amount.
4. Issue the new CFDI for the updated amount, with the corresponding VAT breakdown. Remember that commercial leases are subject to 16% VAT, unlike residential ones.
5. Keep evidence of the notification: email, courier or notary.

Practical case: a commercial space in Mérida

A space on Paseo Montejo rents for $55,000 MXN monthly plus VAT. The contract sets annual update by INPC, with a 7% cap. On the anniversary, year-on-year inflation is 4.6%. The new rent is $57,530 MXN + VAT. The landlord notifies 30 days in advance and issues the updated CFDI starting the month of the update.

Practical case: an industrial warehouse in Apodaca

An industrial warehouse signed for 10 years in Apodaca, Nuevo León, sets a rent in USD payable in pesos at Banco de México's exchange rate. Additionally, every five years a "market review" is performed to readjust the base amount if the price per m² of the industrial corridor has changed materially. The combination protects the landlord against long cycles.

Common mistakes

• Applying the update before the anniversary date: the amount overcharged can be claimed by the tenant.
• Forgetting to issue the CFDI with the new amount: complicates the deduction for the tenant.
• Mixing indexes (INPC with UMA or with exchange rate) without defining the formula clearly: opens the door to litigation.
• Not notifying in writing and just raising the charge in the next receipt.
• Assuming VAT is "included" when the contract does not say so: show the breakdown from the first receipt.

Tax aspects for the landlord

Income from non-residential leases is included in the regime of individuals with business activities or in the leasing regime, depending on the type of property and taxpayer. The tenant, if a legal entity, must withhold 10% of ISR and 2/3 of VAT when the landlord is an individual, issuing the corresponding withholding CFDI.

When it is worth reviewing the clause

When a contract has been in force for more than five years or when inflation clearly moves away from the historical range, it is worth sitting down to renegotiate the clause. A well-designed indexation prevents recurring friction and extends the contract's useful life.

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