RETAIL LANDLORDS & TENANTS · FREE TOOL
Percentage Rent Breakpoint
Natural breakpoint, overage rent, and whether the deal triggers percentage rent at all.
Retail deals with percentage rent live or die on the breakpoint. Natural breakpoint is base rent divided by the overage rate — this shows you where it lands, what the overage check looks like at your sales level, and how far sales have to fall before the clause stops mattering.
Your numbers
Pre-filled with realistic DFW-market estimates. Change anything — results update as you type.
Retail overage rates commonly run 5–8% depending on use.
Every input is saved in the link — text it to a partner and they'll see the exact same scenario.
NATURAL BREAKPOINT
$2,000,000
$24.00/SF on 5,000 SF at 6.00% overage
Annual base rent
$120,000
Annual gross sales
$1,800,000
Overage rent this year
None — under breakpoint
Total rent (base + overage)
$120,000
Occupancy cost as % of sales
6.7%
Retail healthy range is roughly 8–12%
Sales needed to trigger overage
$2,000,000
Sales are 10% below the breakpoint — percentage rent never triggers unless sales grow meaningfully. The clause is upside protection, not income.
| Year | Projected sales | Breakpoint | Overage rent | Total rent | Occ. cost % |
|---|---|---|---|---|---|
| Year 1 | $1,800,000 | $2,000,000 | — | $120,000 | 6.7% |
| Year 2 | $1,854,000 | $2,000,000 | — | $120,000 | 6.5% |
| Year 3 | $1,909,620 | $2,000,000 | — | $120,000 | 6.3% |
| Year 4 | $1,966,909 | $2,000,000 | — | $120,000 | 6.1% |
| Year 5 | $2,025,916 | $2,000,000 | $1,555 | $121,555 | 6.0% |
Want this as a clean one-page PDF you can send to your lender?
Branded, dated, every input and output laid out. Downloads instantly and lands in your inbox so it's easy to forward.
Questions people ask
What is the natural breakpoint in a percentage rent lease?
Annual base rent divided by the overage percentage rate. If base rent is $240,000 and the overage rate is 6%, the natural breakpoint is $4,000,000 in annual sales — the tenant pays percentage rent only on sales above that.
What's the difference between a natural and an artificial breakpoint?
A natural breakpoint is derived from the base rent and overage rate. An artificial breakpoint is a negotiated dollar threshold — usually set below natural in strong retail or above natural as a tenant concession.
What overage percentage is typical for retail in Texas?
Most DFW retail deals run 5–8% of gross sales above the breakpoint, varying by use — restaurants and service retail tend higher, big-box anchors lower.
How is occupancy cost ratio used?
Total rent (base plus overage) divided by gross sales. Most retail uses can't sustain much above 10–12%; if the ratio runs hot, the base rent is probably too high for the sales the location can produce.
Numbers are a starting point.
Thirty years in DFW and Austin means I know which of these assumptions the market will actually support. Send me your scenario and I'll tell you straight.
Other tools
BUYERS & INVESTORS
Quick Deal Screener
Cap rate, cash-on-cash, DSCR and break-even occupancy in about 45 seconds.
BUYERS & OWNERS
Mortgage & Amortization
Full payment breakdown, year-by-year amortization, balloon balance, and what extra principal actually saves you.
TENANTS
True Occupancy Cost
What that quoted rate actually costs you — after load factor, NNN, free rent and escalations.