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Category Rent Management

Zone A: Prime Frontage (Area & Rate)

Zone B: Standard Retail (Area & Rate)

Zone C: Storage/Office (Area & Rate)

Estimated Annual Turnover (Gross Sales)

Percentage Rent Rate (%)

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About

In the competitive world of commercial real estate, determining the true cost of a lease involves more than just a flat monthly fee. Retailers and landlords often utilize complex structures combining a Base Rent (fixed minimum) with Percentage Rent (based on gross sales). This ensures that the landlord shares in the success of the location while the tenant is protected during slower periods.

Furthermore, not all square footage is created equal. The Zone Pricing model assigns different values to different parts of a property. "Zone A" (storefront/frontage) typically commands the highest rate due to foot traffic visibility, while "Zone B" (mid-floor) and "Zone C" (storage/back office) are discounted. Accurate calculation of these weighted areas is critical for negotiating fair lease terms and forecasting operational expenses.

Formulas

The Total Rent is the sum of the Weighted Base Rent and the calculated Variable Rent (Overage).

Rent_total = (Area_A × Rate_A) + (Area_B × Rate_B) + Variable

Where Variable Rent (Percentage Rent) is calculated only if Sales exceed the Natural Breakpoint:

Variable = max(0, (Sales − Breakpoint) × %Rate)

Reference Data

Retail Category	Avg. Base Rent (% of Sales)	Breakpoint (Natural)	Typical Term	Zone Priority
Apparel / Fashion	8% - 12%	$300 - $500 / sq ft	5 - 10 Years	High (Frontage Critical)
Full Service Restaurant	6% - 9%	$400 - $600 / sq ft	10 - 15 Years	Medium (Ambience)
Quick Service / Fast Food	8% - 12%	$500+ / sq ft	10 - 20 Years	High (Access)
Grocery / Supermarket	1.5% - 3%	$600+ / sq ft	15 - 20 Years	Low (Destination)
Electronics / Gadgets	5% - 8%	$1,000+ / sq ft	5 Years	High (Display)
Home Goods / Furniture	8% - 12%	$200 / sq ft	10 Years	Medium (Showroom)
Personal Services (Spa/Gym)	10% - 15%	$150 / sq ft	5 - 10 Years	Low (Destination)
Jewelry / Luxury	10% - 15%	$2,000+ / sq ft	5 Years	High (Security/Display)

Frequently Asked Questions

Base Rent is the guaranteed minimum monthly payment regardless of business performance. Percentage Rent (or variable rent) is an additional payment triggered only when your gross sales exceed a negotiated threshold (breakpoint), typically calculated as a percentage of turnover above that limit.

Landlords often value the first 15-20 feet of a store (Zone A) significantly higher than the rear (Zone C). By splitting your square footage into zones, you might pay $100/sqft for the front but only $20/sqft for the back office. This weighted average often results in a lower total cost than a flat rate applied to the whole space.

The Natural Breakpoint is the sales volume at which the percentage rent amount equals the base rent. It is calculated by dividing the Base Rent by the Percentage Rent rate (e.g., $50,000 Base Rent / 5% Rate = $1,000,000 Breakpoint). You only pay percentage rent on sales above this figure.

Typically, no. CAM charges, taxes, and insurance (Triple Net or NNN) are added on top of the base and percentage rent. This calculator focuses specifically on the rent structure itself.