Which lease is used in retail where rent is based on a percentage of gross sales?

• A. Graduated Stepped Lease
• B. Net Lease
• C. Percentage Lease
• D. Gross Lease

Answer: (C)

Rent that moves with how well the store sells is a percentage lease. In this setup, the tenant usually pays a base rent plus a portion of gross sales, or sometimes a pure percentage with a minimum base. This arrangement aligns the landlord’s revenue with the retailer’s performance, which is why it’s popular in shopping centers and malls where sales can swing with foot traffic and promotions. A typical feature is a breakpoint: sales below that level pay the base rent, while sales above it trigger the percentage charge. This is different from a gross lease, where rent is fixed and the landlord covers most operating costs; a net lease, where the tenant pays many expenses; and a graduated stepped lease, where rent simply increases at set intervals regardless of sales.