What is a type of commercial lease where rental fees are based partially on the gross sales made by the tenant on the premises?

A percentage lease is a unique type of commercial lease that ties the rental payment to a tenant’s sales performance. In this structure, the tenant pays a base rent plus a percentage of their gross sales that exceeds a predetermined level. This arrangement is commonly used in retail spaces, particularly in shopping malls or stores where sales volumes fluctuate. This type of lease benefits landlords, as they can potentially earn more as the tenant's business grows. At the same time, tenants may appreciate the structure as it can help align their rent expenses with their sales performance, making it more manageable during slower periods.

In contrast, flat leases involve a fixed rent amount with no additional considerations for sales performance, while gross leases typically cover all expenses within a single rent payment. Net leases require the tenant to pay additional costs such as property taxes, insurance, and maintenance on top of their base rent. Each of these alternatives significantly differs in terms of how rental costs are structured and linked to sales performance.