Which type of lease is common in retail centers and malls?

A percentage lease is particularly common in retail centers and malls because it aligns the interests of both landlords and tenants. In this type of lease, tenants pay a base rent plus a percentage of their sales revenue. This structure benefits landlords by allowing them to earn more as the tenant's business grows, creating a mutually beneficial relationship.

Retail centers and shopping malls often attract a variety of tenants who may experience fluctuating sales, especially during seasonal changes or economic shifts. By implementing a percentage lease, property owners encourage tenants to operate successfully while sharing the financial risk. This arrangement can be especially advantageous for retail operations where sales performance directly influences profitability.

In contrast, net leases, gross leases, and modified gross leases primarily provide more predictable and stable rental calculations based on fixed amounts rather than tying rent to sales performance. Hence, they are less suited for environments where sales may vary widely, such as retail.