What is market-related rent? It’s the rental a comparable property could reasonably achieve today, given its location, grade, size and lease terms. It is not the rate printed in your original lease, and it is not whatever the landlord says it is. It is a number you can actually calculate.
If you have already asked yourself whether you’re overpaying rent, this is the next question. What is the number you are actually being measured against?
In short:
- Market-related rent moves with supply and demand in your specific node, not with inflation
- The same asking rental can represent two very different total costs once operating charges, parking and incentives are included
- Escalation clauses can carry a lease above market even when the starting rental was fair
- You can check your own position in minutes using Galetti’s lease benchmarking calculator
A market-related rental is one that falls within the range currently being achieved by comparable properties in the same commercial node, for the same property type and grade.
It is not fixed. Office, industrial and retail rentals move independently of each other, and even within one node, an A-grade building and an older B-grade building will not command the same rental. A number that was market-related three years ago is not automatically market-related now.
This is also why market-related rent and inflation are not the same thing. Statistics South Africa reported annual consumer inflation of 5.0% in June 2026, up from 4.5% in May and the highest reading in two years. That figure describes the cost of a household basket of goods. It says nothing about whether office rentals in Rosebank or industrial rentals in Pomona are rising, falling or flat. Property-specific supply and demand set the number, not CPI.
The Factors That Actually Set the Number
A proper market rental assessment looks at more than the rand-per-square-metre figure on the lease. The main inputs are:
- Location and node. Rentals vary by precinct, and sometimes street by street within the same precinct.
- Property grade and condition. A-grade, B-grade and C-grade buildings do not compete for the same rental.
- Size and configuration. Larger footprints and efficient layouts are priced differently to fragmented or awkward space.
- Lease term and commencement date. A rental agreed five years ago reflects a market that may no longer exist.
- Incentives. Rent-free periods, tenant installation allowances and reduced deposits all affect the real cost, even when they never appear on the headline rental.
- Operating costs and recoveries. Rates, utilities, security and common-area charges can move the total cost well beyond the base rental.
- Parking ratios and charges. Often priced separately, and often overlooked in a straight rental comparison.
If you’re benchmarking market-related office rent specifically, the same factors apply, adjusted for office grade, node and parking ratio.
None of these factors work in isolation. A benchmark that only compares the base rental across two buildings is not a market assessment. It is a coincidence.
Why the Same Asking Rental Can Mean Two Different Costs
Two buildings can advertise an identical rental per square metre and still represent completely different value.
One might include generous parking, a rent-free fit-out period and capped operating cost increases. The other might carry the same headline rental with paid parking, no incentives and operating costs that rise independently of the lease escalation.
This is why a proper assessment looks at effective occupancy cost, meaning the base rental plus every recurring charge, less any incentives, expressed as a single comparable figure. Comparing headline rentals alone will consistently produce the wrong answer.
How Escalations Move You Away From Market Over Time
A rental can be entirely market-related on the day you sign, and still drift above market a few years later. This is what a fixed annual escalation does when it outpaces the rental growth actually happening in your node.
As an illustration: a rental starting at R120 per m², escalating at a fixed 9% a year, reaches roughly R184.60 per m² after five years. The same starting rental escalating at 6% a year reaches approximately R160.60 per m² over the same period. If the surrounding market has only moved 4% to 5% a year in that time, the 9% lease is no longer market-related, regardless of how competitive it looked on day one.
This is illustrative maths, not a quoted case, but the mechanism is real and it is the most common way businesses drift out of market without ever renegotiating anything.
Common escalation structures and what they mean for you
| Structure | How it works | What to watch for |
|---|---|---|
| Fixed annual percentage | Rental increases by an agreed percentage every year | Predictable, but can outpace the market if set too high at commencement |
| CPI-linked | Rental tracks consumer inflation | Follows the wrong index. CPI is not a property measure |
| Market-related review | Rental is reassessed against comparable evidence at set intervals | Fairest in theory, but the lease must define how the review is conducted and how disputes are resolved |
| Hybrid | Combines a fixed floor with a market or CPI adjustment | Can protect both parties, but only if the mechanics are clearly drafted |
| Stepped | Different fixed increases agreed upfront for different years | Useful for phased occupancy, but still disconnected from live market movement |
How to Check Where Your Rent Actually Sits
You do not need to guess at this. A proper check looks at:
- Your current rental, escalation clause and remaining lease term
- Comparable rentals currently being achieved in your specific node, for your property grade
- Your total effective occupancy cost, not just the base rental
- Whether your escalation rate is still tracking anywhere near actual market movement
Galetti’s lease benchmarking calculator gives you an initial read on this in a few minutes. For a full assessment across a single site or an entire portfolio, Galetti’s Corporate Real Estate Advisory team runs the same benchmarking process professionally, currently managing 1,769 client properties across 72 portfolios.
Frequently Asked Questions
Is market-related rent the same in every part of a city?
No. Rentals are set node by node, and sometimes precinct by precinct within the same node. A rental that is fair in one part of Sandton is not automatically fair a few streets away.
If my rental hasn’t changed, is it still market-related?
Not necessarily. If your escalation clause has been increasing the rental every year while the surrounding market has stayed flat or grown more slowly, your lease can move above market even without any change on your side.
Does a lower asking rental always mean a better deal?
No. A lower headline rental with higher operating costs, no parking allocation or no incentives can cost more overall than a higher headline rental with a stronger total package.
How often should market-related rent be reassessed?
Most commercial leases benefit from a review at least every 12 to 24 months, and definitely before entering any renewal or renegotiation.
Where This Leaves You
Market-related rent is a calculation, not an opinion, and it is one you can run yourself. Start with Galetti’s lease benchmarking calculator for an initial view of where your rental sits, or speak to Galetti’s Corporate Real Estate Advisory team for a full portfolio-level assessment.
