The differences in the ownership structures of downtown retail districts and shopping centers may give rise to varying space allocations and rental contracts found in these markets. The value-enhancing aspects of percentage leases are examined and the mechanisms of tenant mix, risk sharing and rent discrimination through which this value is created are explored. The use of percentage leases may lead to superior returns by allowing a rent structure that approaches perfect price discrimination. Risk sharing through the use of percentage leases may also create value for the property owner and lead to lower rents for tenants.