Renegotiating lease % of revenue?


#1

I am in the process of renegotiating my lease with one of the major sign companies and am trying to get an idea of what % of revenue I can get. In our past lease we were able to obtain 30% of revenue every year for 10 years. The sign on our property has always been filled and makes about $70K revenue a year for the sign company. In our new contract we are going to aim for 40%. Does this seem reasonable? Any suggestions or help would be appreciated. Thanks


#2

No, I don’t think 40% is going to work. Sign companies attempt to keep their ground rents in the 15% to 20% range, and while they may have allowed for bending the rules on your location to 30%, I doubt they’ll go to 40%. At 40%, you’ll be netting more than the sign company.