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In commercial property management, crafting lease agreements that align with landlord and tenant goals is crucial for long-term success. One creative approach is the percentage lease, which benefits both parties by tying the tenant’s rent to their revenue.
Keep reading for a detailed look at the benefits of these commercial lease agreements and how property managers use them.
A percentage lease is a type of commercial lease typically used in retail businesses. In this type of lease, the tenant pays a base rent, which is typically lower than the market rate, plus a percentage of their monthly sales revenue.
The arrangement creates a partnership-like scenario between landlords and tenants, with the property’s success directly influencing the rent a tenant pays.
To effectively implement a percentage lease, property managers should consider the following:
Effective management of percentage leases requires ongoing communication and collaboration between landlords and tenants:
Percentage leases offer a dynamic and mutually beneficial leasing arrangement for landlords and tenants in the commercial sector. By aligning the interests of both parties, these leases create a partnership that can adapt to market changes and promote shared success.
For property managers, understanding how to structure, implement, and manage percentage leases is crucial for maximizing property revenue while supporting tenant businesses. With careful planning and open communication, percentage leases can be an effective tool in the commercial property management toolkit.
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