Which type of lease is often used for commercial properties and is based on tenant's gross sales?

A percentage lease is commonly utilized in commercial real estate, particularly in retail settings. This type of lease structure allows landlords to benefit from the tenant's success by charging rent based on a percentage of the tenant's gross sales. This alignment of interests encourages landlords to support their tenants as increasing sales directly correlate with higher rental income.

In contrast, a fixed lease involves a predetermined rental amount that does not change over time, making it less flexible and not reliant on the tenant's sales performance. A net lease, typically seen in commercial leases, involves the tenant paying additional costs beyond the base rent, like property taxes and insurance, but does not directly link to sales figures. A variable lease might imply changes in rates but isn’t specifically linked to sales metrics as the percentage lease is.

Hence, the percentage lease stands out as the one that incorporates a direct calculation based on the sales performance of the tenant, facilitating a mutually beneficial arrangement. This reflects the relationship between the tenant's business success and the landlord's rental income, making it a strategic choice for certain commercial property arrangements.