The short answer: the terms that matter most in a US retail lease are the ones that move total occupancy cost and risk: how rent is structured and what passes through to the tenant, the landlord's contribution to the build-out, percentage rent, the length of the term and the ways out, and what stands behind the tenant. The definitions below are a working guide; every lease defines its own terms, and your attorney should review the actual document.
How is rent structured?
Base rent (minimum rent). The fixed rent, usually quoted in dollars per square foot per year, with the structure attached: "per square foot, NNN" or "per square foot, gross."
Triple net (NNN). The tenant pays base rent plus its share of property taxes, insurance and common area maintenance. The most common structure in US retail.
Gross and modified gross. In a gross lease, the landlord's operating costs are included in the rent. A modified gross lease splits them, for example with the tenant paying increases above a base year.
CAM (common area maintenance). The tenant's share of the cost of running shared areas: cleaning, landscaping, lighting, security, repairs, management and similar items. What is included, excluded and capped varies by lease. Useful asks: a cap on increases in the costs the landlord controls, a clear list of exclusions, and the right to audit.
Pro rata share. Your square footage divided by the property's square footage. The denominator matters: whether it is all leasable area or only leased area changes what you pay when the center has vacancies.
Escalations. Scheduled rent increases, as a fixed percentage, fixed steps or an index.
Additional rent. Everything the lease makes payable beyond base rent, including CAM, taxes and insurance.
How does percentage rent work?
Percentage rent. A percentage of gross sales above a threshold, paid in addition to base rent. Most common in malls and some shopping centers.
Breakpoint. The sales level above which percentage rent applies. A natural breakpoint is annual base rent divided by the percentage rate: with $100,000 of base rent and a 5 percent rate, percentage rent applies above $2,000,000 of sales. With a natural breakpoint, the tenant effectively pays the greater of base rent or the percentage of sales. An artificial breakpoint is a negotiated figure instead, and changes that math.
Gross sales. The definition decides the bill. Negotiate exclusions such as sales tax, returns, employee discounts, gift card sales until redeemed, and online orders fulfilled elsewhere.
What does the landlord build, and who pays?
TI allowance (tenant improvement allowance). The landlord's contribution to your build-out, usually a dollar amount per square foot, typically paid after completion against invoices and lien waivers. Negotiate the amount and the payment terms in the LOI.
Delivery condition. The state of the space at handover. Labels such as "as is," "vanilla shell," "white box" or "cold shell" mean different things to different landlords, so the lease should list exactly what is delivered.
Work letter. The lease exhibit that splits the work between landlord and tenant, with standards and deadlines.
Free rent (rent abatement). A period with no base rent, and sometimes no pass-through charges, usually to cover the build-out.
Rent commencement date. When rent starts, often the earlier of your opening or a set number of days after delivery. It should reflect a realistic permit and construction schedule.
How long is the commitment, and how do you get out?
Term and options. The initial term, often 5 to 10 years for retail, and any renewal options, with how their rent is set.
Kick-out clause. A right to end the lease early if a condition is met, for example if sales stay below an agreed level by an agreed date. Landlords can have their own versions.
Co-tenancy clause. Remedies, such as reduced rent or a right to leave, if named anchors close or occupancy falls below a level. Most relevant in shopping centers.
Assignment and subletting. Whether and how you can transfer the lease, for example to a franchisee or a buyer of the business.
Relocation clause. The landlord's right to move you within the property, with terms that should protect your costs and visibility.
What does the landlord control about your use?
Use clause. What you are allowed to sell or do. Too narrow, and it blocks future changes to your concept.
Exclusive use. The landlord's promise not to lease to a competitor in the property.
Radius restriction. A limit on opening another store within a set distance, which can block your own expansion.
Continuous operation. An obligation to stay open during set hours, and the consequences of going dark.
What stands behind the tenant?
Personal or corporate guarantee. A promise by an owner or a parent company to cover the tenant's obligations. Caps, burn-offs and good-guy structures can limit it; see personal guarantees in US retail leases.
Security deposit and letter of credit. Cash or a bank instrument the landlord can draw on if the tenant defaults.
A Florida note
Florida repealed its sales tax on commercial rent, including local surtax, for occupancy periods beginning on or after October 1, 2025. Leases and budgets prepared before then may still show it.
Where these terms are decided
Most of these terms are settled in the letter of intent, before the lease is drafted. How to negotiate a retail LOI covers the order that matters, and our tenant representation work starts there.
Sources
Frequently asked questions
What does NNN mean in a retail lease?
NNN, or triple net, means the tenant pays base rent plus its share of the property's operating costs, typically property taxes, insurance and common area maintenance. It is the most common structure for US retail space.
What is included in CAM charges?
Common area maintenance covers the cost of running the shared parts of a property, such as cleaning, landscaping, lighting, security, repairs and management. What is included, excluded or capped varies by lease, so read the definition and ask for the history.
How is a percentage rent breakpoint calculated?
A natural breakpoint is the annual base rent divided by the percentage rate. With $100,000 of base rent and a 5 percent rate, percentage rent applies to sales above $2,000,000. An artificial breakpoint is a negotiated figure instead.
When is a TI allowance negotiated?
In the letter of intent. The landlord's contribution to the build-out is one of the main business terms, and it is much harder to add once the lease is being drafted.