Percentage Rent Natural Breakpoint By Daniel H. Stoner, Esq. . Understanding the world of industrial leases can be intimidating for both property managers and renters. One of the most vital elements of these leases is the rent structure, which can substantially affect a business's financial health. Let's look into the principle of portion lease and natural breakpoints in industrial leases. What is a Commercial Lease? A commercial lease is a legally binding contract in between a property owner and a renter to lease industrial residential or commercial property. Unlike residential leases, industrial leases are normally more complicated and customized to the specific requirements of the business. They outline the terms under which the occupant can inhabit the area, including the period of the lease, the month-to-month rent, and any extra expenses or duties. Overview of Rent Structures in Commercial Properties Rent structures in business leases can vary commonly, but they typically fall under three main categories: Fixed Rent: This is an established amount that the renter pays regularly, usually monthly or annually. Fixed lease offers predictability for both the property owner and the tenant. For instance, a renter may agree to pay $5,000 monthly for a retail space, regardless of their sales performance. This structure is simple to manage but does not represent variations in the renter's business performance. Percentage Rent: This is a variable rent based on a percentage of the occupant's gross sales or revenue. A portion rent lease, which is common in the retail space, is where the proprietor and tenant share the business's success. For example, an occupant might pay a minimum lease of $3,000 monthly plus 5% of any gross sales over $50,000.