Be Careful About Minimum Lease Inflators

Avoid out of home lease inflators in excess of 2%/year.  If your out of home lease increases by more than 2%/year, your margins will shrink because your out of home revenue growth will fail to keep pace with the increase in your lease expense.

Why would you ever agree to give your landlord an annual rent increase which exceeds inflation?

Take a look at this table which compares US inflation rates with out of home industry growth:

 

The inflation figures come from the US Inflation Calculator.  That site should be bookmarked by every out of home lease manager who wants to keep track of inflation.

The out of home revenue figures come from the OAAA.


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