In an article published on April 28, 2022 in GlobeSt.com, Sandy Buchko breaks down percentage retail rent and outlines how no one percentage works for each tenant within the industry.
“Percentage rent is often perceived to be of benefit to landlords to reward them for having a successful shopping center that draws a large customer base benefiting the tenants in the center,” explains Bucko. “In reality, percentage rent is of benefit to both tenants and landlords.”
Buchko further explains that some landlords may offer a startup tenant, a tenant reluctant to come to the shopping center or urban area, or a struggling tenant a percentage rent only deal. This deal is typically provided to a standard tenant for a short period of time and generally covert to a full rent triple net deal after a certain amount of years.
“Another way percentage rent may be calculated to assist tenants in start-up scenarios is to provide the tenant with a fixed rent with an artificial breakpoint as opposed to a natural breakpoint.
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