Which type of lease is most commonly used in large shopping centers?

The percentage lease is the most commonly used type of lease in large shopping centers due to its structure that aligns the interests of the landlord and the tenants. This lease type typically involves the tenant paying a base rent along with a percentage of their gross sales, which incentivizes both parties to maximize sales revenue. In large shopping centers, where foot traffic can significantly affect a tenant's sales, this arrangement allows landlords to benefit directly when their tenants do well economically.

This lease structure also helps reduce the financial risk for tenants, especially new businesses that may not have stable sales initially. By tying rental costs to sales performance, landlords can attract a diverse range of tenants, making shopping centers more dynamic and appealing to consumers. Furthermore, this approach fosters a partnership between the landlord and tenants, encouraging successful marketing strategies that can boost overall sales within the shopping center.

In contrast, other types of leases, such as gross, net, and graduated leases, have different structures and purposes. Gross leases typically involve a fixed rent that covers all expenses, making them less adaptable to the fluctuating income environments found in retail. Net leases place additional costs such as property taxes, insurance, and maintenance on the tenant, which might be more suitable for standalone properties. Graduated leases involve rent increases