What is turnover rent? A plain-English guide for landlords
Turnover rent (also called percentage rent) is commercial rent tied to a tenant’s sales. The tenant usually pays a base rent plus a percentage of any turnover above an agreed threshold — called the breakpoint.
It lets a landlord share in a shop’s success, but only works if the tenant’s turnover is reported and can be trusted — which is the hard part most centres still do on paper once a year.
If you run a shopping centre, turnover rent is one of your most powerful levers — and one of the most painful to administer. Here’s exactly how it works, with a worked example, and how landlords collect the turnover figure it depends on.
How turnover rent works
Most turnover-rent leases have two parts:
- Base rent — a fixed amount the tenant pays regardless of sales.
- Percentage rent — a set percentage (often 5–10%) of the tenant’s turnover above a threshold known as the breakpoint.
The breakpoint is often the “natural” breakpoint — the base rent divided by the percentage — so percentage rent only kicks in once the shop is trading strongly enough to cover its base rent at that rate. Some leases set a negotiated breakpoint instead.
🧮 A worked example
A fashion tenant on $100,000 base rent, 8% turnover rate, trading $1.5m a year.
| Base rent (per year) | $100,000 |
| Turnover rate | 8% |
| Natural breakpoint ($100,000 ÷ 8%) | $1,250,000 |
| Annual turnover | $1,500,000 |
| Turnover above breakpoint | $250,000 |
| Percentage rent (8% × $250,000) | $20,000 |
| Total rent for the year | $120,000 |
The tenant’s occupancy cost is $120,000 ÷ $1,500,000 = 8% — a healthy ratio. If the shop grows, the landlord shares in the upside automatically.
Turnover rent vs fixed rent
Turnover rent
- Landlord shares in a shop’s growth
- Aligns landlord + tenant interests
- Needs verified turnover reporting
- Common in shopping centres
Fixed rent
- Predictable, simple to administer
- No share of the upside
- No turnover reporting needed
- Common in standalone premises
How landlords collect the turnover figure
Turnover rent lives or dies on the turnover number. Traditionally, tenants self-report a figure — often once a year on a signed certificate — which is slow, disputable, and impossible to verify. Increasingly, landlords collect it straight from the source instead:
- From the till (POS) — the most trustworthy: sales are counted as they happen.
- From accounting or a bank feed — connected systems like Xero or Square report automatically.
- Manually — a typed figure, when nothing else is available (least verifiable).
This is exactly what turnover rent software handles — and where Beeplee focuses: verified turnover, collected automatically, with the rent worked out for you.