What is Overage Rent typically associated with?

Overage Rent is commonly understood as rent charges that are incurred beyond the guaranteed minimum specified in a lease agreement. This typically occurs in commercial leases where a tenant agrees to pay a base rent plus any additional rent based on the percentage of their sales exceeding a certain threshold. This arrangement benefits landlords, allowing them to gain additional income as the tenant's business grows, and encourages tenants to increase their sales as they only pay more when they genuinely prosper.

In the context of commercial real estate, Overage Rent structures can incentivize both parties and create a collaborative relationship where the landlord benefits from the tenant's success. Understanding this concept is essential for those involved in property management, leasing, or real estate investment as it reflects a common leasing strategy used to align the interests of landlords and tenants in commercial spaces.