What type of lease calculates the tenant's rent as a percentage of their sales?

A percentage lease is specifically designed to calculate the tenant's rent based on a percentage of their sales revenue. This type of lease is commonly used in retail settings, where landlords might want to align their income with the tenant's business performance. It allows for a base rent to be established, often lower than market rates, paired with a percentage of sales over a certain threshold, incentivizing the landlord to support the tenant's success.

The structure of a percentage lease makes it appealing for businesses that might have variable income, as it can lead to a more manageable monthly rent during slower sales periods. This arrangement fosters a partnership dynamic between landlord and tenant; as the tenant succeeds and grows in sales, the landlord also benefits by receiving higher rental income.

In contrast, the other types of leases—such as a fixed lease, gross lease, and net lease—do not typically incorporate sales figures into rent calculations. A fixed lease establishes a set rent amount with no variation, while gross leases often include utilities and operating expenses in the rent. Net leases shift some of the property expenses, like property tax or maintenance, to the tenant but do not connect rent to tenant sales.