What clause should be included in a long-term lease to protect an owner from missing out on rising market rates?

An escalation clause is designed to allow for rent increases in line with rising market rates, ensuring that a property owner can benefit from increases in rental income over the duration of a long-term lease. By including this clause in a lease agreement, landlords can adjust rent levels based on specific indices or market conditions, such as the Consumer Price Index (CPI) or other benchmarks, which helps safeguard their investment against inflation and fluctuating market demands.

Having an escalation clause encourages a balance between long-term tenant stability and maintaining the property’s revenue potential in an evolving market. This provides a mechanism for adaptation without the need for renegotiating the entire lease, thereby protecting the landlord's interests over time. Other options, such as a termination clause or fixed-rate clause, do not provide the flexibility needed to adjust rental rates in response to market changes.