Renewed Commercial Lease: Court Asked to Determine the New Rent

Summary of the judgment of the Versailles Court of Appeal (Commercial Division 3-1) – 15 April 2026, No. 23/07538

Background and parties

The company S.A.S. ETABLISSEMENTS SARRADE ET [S] (lessor, appellant) and SAS PICARD SURGELES (lessee, respondent) are in dispute concerning the renewal of a commercial lease for premises located in [Town 7]. The original lease, signed in 1983, was renewed on several occasions, with the most recent renewal taking effect on 1 April 2019. The parties were unable to reach an agreement on the amount of rent for this new period: the landlord claimed €82,000 per year, whilst the tenant proposed €55,203.44 per year (rent capped in accordance with the commercial rent index).

Proceedings and first-instance decision

In 2021, the landlord brought the matter before the commercial rent judge at the Nanterre District Court to set the rent for the renewed lease. Following a judicial expert assessment (2022), the judge delivered a judgment on 9 October 2023:

• Renewal of the lease confirmed as of 1 April 2019.
• Rent set at €55,500.21 per year (capped), rejecting the removal of the cap requested by the landlord.
• Costs shared 50/50 between the parties.

The landlord lodged an appeal, requesting a rent of €94,000 per year with a gradual increase over 5 years.

Arguments of the parties on appeal

• Landlord (Sarrade):
  • Removal of the cap justified: Significant changes in local marketability factors (creation of a tram line, establishment of a Lidl supermarket nearby, 21% increase in population within the catchment area).
  • Rental value underestimated: Weighted floor area of 293 m² (compared to 229.43 m² used by the valuer) and unit price of €350/m² (instead of €320 proposed by the valuer).
• Tenant (Picard Surgelés):
  • No significant changes: The developments (tramway, supermarket) would have no significant impact on its business (stable turnover).
  • Rent cap upheld: The rental value would not justify exceeding the legal cap.
  • Alternative claim: If the removal of the cap is upheld, application of a 10% annual increase cap (Art. L. 145-34 of the Commercial Code).

Decision of the Court of Appeal

1. Removal of the cap upheld:
   • The Court finds a significant change in local commercial factors (tramway, supermarket, population growth), favourable to the business of Picard Surgelés.
   • These factors justify setting the rent at the rental value (rather than at the cap).
2. Calculation of the rental value:
   • Weighted floor area: 229.43 m² (confirmed, despite the landlord’s objections).
   • Unit price: €320/m² (instead of the €350 requested), taking into account:
     • The condition of the premises (shop front, parking spaces not easily visible).
     • Local benchmarks (comparable leases between €204 and €502/m²).
   • Property tax allowance: €2,214/year (75% of the tax borne by the tenant).
   • No surcharge for subletting (subject to the landlord’s agreement).
   • Net rental value: €71,204/year (compared to €55,500.21 at first instance).
3. Other points:
   • Inadmissibility of the claim for payment of the rent differential (limited jurisdiction of the rent tribunal judge).
   • Appeal costs: Each party bears its own costs.
   • Article 700: Dismissal of both parties’ claims.

Conclusion

The Court partially overturns the judgment at first instance:

• Rent set at €71,204 per year (instead of €55,500.21), without smoothing.
• Removal of the cap justified by changes in the neighbourhood, but rejection of the other claims (payment of arrears, surcharges).
• This judgment serves as a reminder that the removal of the cap requires substantial evidence of the impact of local factors on commercial activity.