How to Build Internal Growth into a Lease
Many property owners have been able to obtain above-average increases in rental revenues by using methods that focus on tenants' needs and their financial ability to pay higher effective rental rates. These methods include percentage rent, rent bumps, and expense sharing and recovery.
“Percentage-rent” clauses in retail store leases enable the property owner to participate in store revenues if such revenues exceed certain preset levels. A retail lease's percentage-rent clause might be structured so that if the store's sales exceed, for example, $5 million for any calendar year, the lessee must pay the landlord 3 percent of the excess, in the form of additional rent. The extent to which lessees will agree ...
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