What is a lease in which the rental rate changes based on business volume called?

A lease in which the rental rate changes based on business volume is referred to as a percentage lease. This type of lease is commonly used in retail settings where a tenant pays a base rent plus a percentage of their sales revenue. This arrangement aligns the interests of the landlord and the tenant since the landlord benefits directly from the tenant's business success. This flexibility can be advantageous for tenants, especially in the early stages of their business, as it allows for lower fixed costs when sales are low and a more manageable structure during growth periods.

In contrast, a fixed lease involves a steady, unchanging rental amount over the lease period, which does not account for fluctuations in business performance. A variable scale lease generally refers to a lease with varying rates, but it's typically associated with specific pricing tiers independent of performance metrics. An escalating lease involves increments in rent that are predetermined, often scheduled throughout the term, but does not necessarily link directly to business revenue. Thus, percentage leases offer a strategic advantage in the context of retail and commercial spaces as they directly correlate rental expenses with business performance.