Detailed lease for store space within a shopping center, with an option for rent as a percentage of gross sales.
Massachusetts Shopping Center Lease Agreement - percentage rent option
State:
Multi-State
Control #:
US-808LT
Format:
Word;
Rich Text
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How to fill out Shopping Center Lease Agreement - Percentage Rent Option?
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FAQ
A percentage lease is a type of lease where the tenant pays a base rent plus a percentage of any revenue earned while doing business on the rental premises. It is a term used in commercial real estate.
Rental agreements usually run from month to month and self-renew unless terminated by the landlord or tenant. Leases, on the other hand, typically last a year. Your choice will depend on how long you want the tenant to stay and how much flexibility you want in your arrangement. 4. Rent.
A percentage lease is a type of lease where the tenant pays a base rent plus a percentage of any revenue earned while doing business on the rental premises.
A common method for determining percentage rent is to use a natural breakpoint. A natural breakpoint is calculated by dividing the base rent by an agreed percentage. The percentage rent payable by a tenant will then be equal to this percentage multiplied by the amount by which gross sales exceeds the breakpoint.
Commercial tenants should be able to spend 5% to 10% of their gross sales per foot on rent. Your gross sales divided by the location's square footage will give you sales per square foot. For example, you estimate your business will make $300,000 per year in total sales, and you are looking at a 1,500 square foot space.
To calculate, simply divide your annual gross income by 40. Another rule of thumb is the 30% rule, meaning that you can put 30% of your annual gross income in rent. If you make $90,000 a year, you can spend $27,000 on rent, and so your monthly rent should be $2,250.
Here's how to calculate the leased percentage: current number of units occupied + (number of units with signed leases yet to move in) / total number of units 100%.
A percentage rent provision provides that if the tenant achieves a certain amount of gross sales in a given year, they will pay a percentage of such gross sales to the landlord as additional rent.
Percentage of Sales Taken For example, a percentage lease might require a tenant to pay 7% of all sales that exceed more than $25,000 in sales in any given month. Seven percent is a common percentage lease figure, so if a landlord wants to charge you 10% or 12%, be leery.