Percentage Rent Example
Description
How to fill out Shopping Center Lease Agreement - Percentage Rent Option?
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FAQ
The formula for calculating percentage rent with a natural breakpoint is: (Gross Sales ? Natural Breakpoint) x Agreed-Upon Percentage = Percentage Rent. (Gross Sales ? Artificial Breakpoint) x Agreed-Upon Percentage = Percentage Rent. Gross Sales x Agreed-Upon Percentage = Percentage Rent.
Percent rent is normally considered an additional rent term. For example, if a tenant has a base rent of $1,000 per month, and a percentage rent of 5% of income on an annualized basis, then the natural breakpoint is (12 x 1,000) / 5% = $240,000.
Generally, your business should budget 2% to 20% of sales for rent costs.
The formula for calculating percentage rent with a natural breakpoint is: (Gross Sales ? Natural Breakpoint) x Agreed-Upon Percentage = Percentage Rent. (Gross Sales ? Artificial Breakpoint) x Agreed-Upon Percentage = Percentage Rent. Gross Sales x Agreed-Upon Percentage = Percentage Rent.
For office leases, this rate is often quoted on a square foot per year basis, meaning that a 10,000-square-foot tenant paying a base rate of $20 per square foot will be paying $200,000 a year in base rent.