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Percentage Rents with Agency

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  • Joseph Williams

Abstract

type="main"> Retail leases often include a constant percentage rent above a breakpoint. Most breakpoints are restricted to a natural breakpoint, calculated as base rent divided by percentage rent. Frequently, breakpoints are much greater than sales when leases are signed. Both within and across categories of retail, percentage rents vary widely. On average percentage rents are lowest for large stores, like anchors, and highest for small stores with high operating margins. Retail leases with these and other common characteristics are shown to support second-best investments by landlords in their stores both inside and outside shopping centers. The second-best schedule of breakpoints and percentage rents is calculated explicitly.

Suggested Citation

  • Joseph Williams, 2014. "Percentage Rents with Agency," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(4), pages 791-828, December.
    • Handle: RePEc:bla:reesec:v:42:y:2014:i:4:p:791-828
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    File URL: http://hdl.handle.net/10.1111/1540-6229.12038
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    References listed on IDEAS

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    Cited by:

    1. Gokhan Guven & Eren Inci & Antonio Russo, 2022. "Competition, Concentration and Percentage Rent in Retail Leasing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(2), pages 401-430, June.

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