Topic
Turnover rent in commercial property
Turnover rent links rent to the tenant's revenue. It can make sense, but requires orderly reporting, calculation and control.
In brief
Turnover rent means the tenant pays rent calculated wholly or partly from turnover. The model is often used in retail, hospitality and businesses where rent should reflect activity in the premises.
Property managers need control of reporting periods, thresholds, percentages, minimum rent and documentation. The more tenants there are, the less enjoyable this becomes as a manual exercise.
What needs to be in place
Reporting routine
The tenant needs to know what to report, how often and in which format.
Calculation per lease
The percentage, threshold and minimum rent must follow the agreement, not memory.
Traceable documentation
Figures, approvals and billing data should be traceable afterwards.
Questions and answers
What is turnover rent?
Turnover rent is rent calculated wholly or partly from the tenant's turnover, usually according to rules agreed in the lease.
Why is turnover rent demanding to manage?
Because the calculation depends on reported figures, lease terms, thresholds and deadlines. If one link is missing, the billing data becomes uncertain.
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