What percent of gross sales should go to rent?

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.

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Lease of Retail Store with Additional Rent Based on Percentage of...

Kings New York Lease of Retail Store with Additional Rent Based on Percentage of Gross Receipts - Real Estate

Name: Kings New York Lease of Retail Store with Additional Rent Based on Percentage of Gross Receipts - Real Estate
Brand: US Legal Forms
Rating: 4.87 (434 reviews)

Category:

Leases - Commercial

State:

Multi-State

County:

Kings

Control #:

US-00818BG

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This form is a commercial lease of a building and land for the operation of a retail store with a set amount of rent along with a percentage of the gross receipts of the store as additional rent.

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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.

Due to its structure, a percentage lease is most commonly used when negotiating with a retail tenant, especially if that tenant is going to be joining in on a multi-tenant retail space like a mall or shopping center. The draw behind this lease type is that it can be mutually beneficial to both the landlord and tenant.

Under this scenario, the Percentage Rent in a letter of intent is written as Tenant to pay Landlord ten percent (10%) of Tenant's Gross Sales at the Property. For example, if the tenant leases 5,000 square feet and first year annual Gross Sales were $1,500,000, tenant would pay landlord $150,000 in Percentage Rent ($

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. It is a term used in commercial real estate.

Percentage leases can also benefit the property owner because they have the ability to choose the type of businesses and companies that are placed within the retail space. Accordingly, strategic leasing can attract more customers to the space, which gives the landlord the opportunity to negotiate a percentage of sales.

Percentage leases are commonly executed in retail mall outlets. This type of lease agreement is most common for businesses with notoriously large sales volumes, but even a small business that wants to set up shop in a mallto take advantage of the high volume of foot trafficmay be subject to it.

Tenants in percentage leases pay a base rent plus a percentage of their monthly or annual revenue. As a result, the base rent is typically reduced even further compared to a net or gross rent payment. In addition to negotiating the base rent, a breakpoint may be negotiated by the landlord and tenant.

How to Calculate Sales Per Square Foot. 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.

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Kings New York Lease of Retail Store with Additional Rent Based on Percentage of Gross Receipts - Real Estate

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What percent of gross sales should go to rent?

What type of tenant uses a percentage lease most often?

What is an example of a percentage lease?

What type of lease calls for an additional percentage?

Who benefits most from a percentage lease?

What are the terms of a percentage lease?

Which type of lease is most likely to have percentage rents?

What's the difference between a percentage lease and a net lease?

How much should rent be as a percentage of sales?

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What are gross receipts?

Why would a tenant agree to pay additional rent based on percentage of gross receipts?

Is there a specific percentage used to calculate the additional rent?

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