Avoid lease inflators in excess of 1-2%/year or your cashflow margin will erode.  That’s the lesson of the chart below which compares US annual inflation with US out of home advertising growth since 2000.

• Inflation and out of home revenues increased 1.6%/year  and 1.2%/year, respectively since 2008.
• Inflation and out of home revenues increased 2.2%/year and 2.9%/year, respectively, since 2000.

Sources:  www.usinflationcalculator.com, www.oaaa.org

One way to avoid a guessing game over what the correct inflator is to agree to a lease rate which is a fixed percentage of your gross revenues.

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