A commercial tenant pays $1,000 base rent plus a percentage of costs. What is this lease type?

In this scenario, the lease type described is a percentage lease. A percentage lease typically involves a base rent amount plus an additional payment that is calculated as a percentage of sales or revenue, which is common in retail environments. This structure aligns the interests of the landlord and tenant, as the rent increases with the tenant's sales, providing both parties with a mutually beneficial arrangement.

Though the answer indicated was a net lease, net leases generally involve the tenant being responsible for paying additional costs such as property taxes, insurance, and maintenance on top of the base rent, rather than a percentage of sales. This means that while the tenant may have additional financial responsibilities, they are typically fixed costs rather than variable ones based on revenue or sales performance. Thus, the answer that explicitly identifies the characteristics of a percentage of costs alongside a base rent points to a percentage lease as the correct classification for the lease type in question.