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Leasing & Property Management term

Percentage Lease

A lease common in retail where rent is based on a base amount plus a percentage of the tenant's gross sales.

Why Percentage Lease matters on the exam

This term belongs to Leasing & Property Management. The questions below are real items from Freehold's bank that use it - each one cites its source.

Exam questions using Percentage Lease

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A percentage lease, in which rent is based partly on gross sales, is most commonly used for:

  1. Single-family rental homes
  2. Industrial warehouses
  3. Retail stores in shopping centers
  4. Agricultural land
Show answer & explanation

Retail stores in shopping centers — Percentage leases combine a base rent with a percentage of the tenant's gross sales, aligning the landlord's income with retail performance. They are standard in shopping centers and malls.

Source: PSI National Real Estate Exam Content Outline §8 Leasing & Property Management

A lease that specifies scheduled rent increases at set future dates over the lease term is called a:

  1. Percentage lease on retail space
  2. Graduated (step-up) lease
  3. Gross lease
  4. Subordinated ground lease
Show answer & explanation

Graduated (step-up) lease — A graduated or step-up lease builds in predetermined rent increases at specified intervals, letting both parties plan for rising costs without renegotiating the lease every time.

Source: PSI National Real Estate Exam Content Outline §8 Leasing & Property Management

Which lease type is most commonly used for multi-tenant office buildings where the landlord manages shared building services for all tenants?

  1. Triple net lease with tenant-paid expenses
  2. Ground lease on the underlying land
  3. Gross or modified gross lease
  4. Percentage lease tied to gross sales
Show answer & explanation

Gross or modified gross lease — Multi-tenant office buildings commonly use gross or modified gross leases so the landlord can centrally manage and pay for shared services like common-area maintenance, then bill one rent figure.

Source: PSI National Real Estate Exam Content Outline §8 Leasing & Property Management

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