Incentive rate are including three forms of concessions:
rent free periods,
The incentive rate represents the weightof those concessions when compared to the total income that would have been obtained based on the headline rent over the secured length of the lease.
Secured lease for 9 years over 10,000 sqm at € 500 psqm with a rent free period of 12 months and capital payments of € 100 psqm.
Headline rent over 9 years = 10,000 x 500 x 9 = € 45,000,000
Concessions = (10,000 x 500 x 12/12) + (10,000 x 100) = € 6,000,000
Incentive Rate: M€ 6 / M€ 45 = 13.3%
The incentive rate is only calculated on new office lettings of at least 1,000 sqm.
The average incentive rate is obtained in each zone, sector and segment as a simple unweighted average of known economic rent, with the exception of the average for the Greater Paris Region which is weighted based on floorspace.
Every quarter, the incentive rate is computed on the last 12 months.