Lease Escalator

A lease escalator is a clause that raises the rent in a colocation or wholesale lease by a fixed percentage or an index-linked amount each year. In data center contracts the escalator usually applies to the monthly recurring charge for space and committed power, while metered electricity is billed separately. Fixed escalators in the low single digits, often around 2% to 3% a year, are common in long wholesale leases, whereas shorter retail contracts may be repriced at renewal instead. Index-linked clauses tie increases to consumer price inflation, sometimes with a floor and a cap. Because wholesale terms often run 10 to 15 years, the escalator compounds into a material share of lifetime rent and is a standard point of negotiation alongside term, renewal options and expansion rights.