What is typically a key factor in determining the variable scale lease rate?

Determining the variable scale lease rate often involves assessing the volume of business conducted by the tenant. This factor is significant because a tenant’s business performance directly impacts their ability to pay rent. In scenarios such as percentage leases, where rent is tied to the tenant's sales figures, understanding the business's volume allows property managers to set appropriate lease rates that align with the tenant's revenue potential.

This focus on the tenant's business activity not only aids in ensuring that the rent is fair and competitive but also fosters a mutually beneficial relationship between the landlord and tenant. If a tenant is experiencing significant sales, the resultant lease structure can adjust accordingly, reflecting their success and allowing the landlord to optimize income based on the tenant's performance.

While other factors like the overall condition of the building, proximity to transportation hubs, and local real estate trends can influence lease negotiations and market values, they do not directly correlate to the tenant's capacity to generate revenue in the same way that understanding their business volume does.