Local commercial factors (facteurs locaux de commercialité)

The facteurs locaux de commercialité (local commercial factors) cover everything around the premises that makes a business attract more or fewer customers there: the importance of the town, the district and the street, the precise location, the distribution of other trades in the vicinity, transport links, the attractions or constraints of the spot for the activity in question. They are the fourth of the five elements of the rental value of a bail commercial (French commercial lease).

The notion is relative: the same change may favour one business and harm another. The creation of a pedestrian zone benefits a clothes shop and may hurt a builders’ merchant whose customers come by car. That is why the text speaks of the interest “for the business in question”.

Where the rule comes from

Article R. 145-6 of the French Commercial Code provides that the local commercial factors depend mainly on the interest, for the business in question, of the importance of the town, district or street in which it is located, of the site itself, of the distribution of the various activities in the vicinity, of transport links, of the particular attraction or the constraints the location may present for the activity concerned, and of the changes these elements undergo on a lasting or temporary basis.

A material change in them during the expired lease is a ground for uncapping (article L. 145-34). The Cour de cassation held in 2025 that this change must be such as to have a favourable effect on the tenant’s business.

In a valuation report

The local factors serve at two points. For the rental value, they justify the choice of comparables and the adjustments between the premises being valued and each comparable: same street or side street, sunny side, proximity to an anchor store, footfall. For uncapping, I establish what has changed between the commencement of the lease and its renewal, with dated data: population of the municipality, footfall counts, opening or closing of retailers, commissioning of a tram line, creation of a car park.

The report distinguishes lasting changes, which alone are taken into account, from temporary ones such as roadworks.

Example

A pharmacy has rented premises in a street in BREST since 2013. Between 2013 and 2022, the population of the urban area barely moved, but a tram stop opened 40 metres away, a medical practice with six doctors set up next door and two vacant shops reopened. I document these facts and assess the rental value at €480 per m² of weighted area instead of €360 for the 2013 comparables. It is for the judge to say whether the change is material and favourable to the pharmacy.

Not to be confused with

The prices commonly charged in the neighbourhood, the fifth element of article L. 145-33, whose rise does not by itself justify uncapping.