At Hamlin Cody, our Billboard lawyers have extensive experience handling transactions and litigation concerning billboards and other forms of outdoor and out-of-home advertising.
There are an estimated 368,000 billboards across the country. Over the years, we have represented billboard companies and people who lease their land to billboard companies. Whatever your status, it is important to understand some of the billboard lease basics. Our billboard lawyers have organized some of the important factors to understand when leasing a billboard.
A Formula for Ground Rent
There is no simple formula to determine the proper ground rent that Billboard companies “should” pay. As with other types of real estate, the three most important factors are location, location, and location. A sign on the Sunset Strip, Times Square in New York, the Kennedy Expressway near downtown Chicago, or the San Diego freeway near Los Angeles International Airport will command higher revenue and pay higher ground rent than the average sign.
- For Billboard Operators: We can help you to negotiate a ground rent that permits you to receive a good return on your investment in your plant.
- For Landowners: Even an average billboard will pay you more rent per square foot than any other real estate investment. We can help you to negotiate a ground rent that is likely to be the equivalent of adding one or more units to your property — and you won’t have any increased operating expenses.
- For Everyone: Keep in mind that in most locations it is very difficult to get a permit to build a new billboard. Once you have the permit, it is expensive to build a modern billboard. A new digital sign could cost several hundred thousand dollars to build. Building a new sign doesn’t automatically mean you will have enough advertisers to justify your investment. The most successful billboard companies have sales, facilities and art departments. While billboards produce good cash flow, it isn’t a passive investment where the money will flow automatically. .
Ground rent is important. At the same time, it is not the only issue. Here are some additional concerns.
- Term: Billboard leases are, in general, fairly long-term instruments. A new billboard is a big investment. It takes time to recover the investment and earn a fair return.
- Placement: Most billboard operators are willing to place their boards very close to a property line. That means there will be less interference with the use of the property.
- Visibility: A billboard must be seen to be valuable. Billboard operators need assurance that the landowner won’t plant trees and shrubbery that will grow to block the sign.
- Regulation: Surveys consistently show that about half the population are neutral about billboards, about a quarter like them, and about a quarter dislike them. Our less formal surveys, called voir dire during jury selection, bear out those percentages. For some reason, a large percentage of those who dislike billboards work for government agencies. The situation is improving, but regulations in many areas make it very difficult to build a new billboard.
- Operations: Unlike “Field of Dreams” (a movie starring Kevin Costner), if you build it, they may not come. Advertisers need to be sold on a location. Once sold, ad copy needs to be created and changed. Invoices need to be sent and collected. A successful billboard operation takes work.
Whether you are, or want to be, a billboard operator or want to lease your property to a billboard operator, this article will provide perspective. It is not designed to tell you how to lease your land to a billboard company. It’s not intended to tell you how to start or buy a billboard business. It is an overview designed to give you food for thought.
We Are Prepared to Guide You Through Your Billboard Lease
Our billboard lawyers have dealt with commercial development, sign plans, permits and entitlements, billboard leases, billboard easements, lease renewals, eminent domain, the California Outdoor Advertising Act, state and local regulations, and disputes over the ownership, control, and removal of sign structures.
We have the knowledge and chops to help you earn a good return on your investment. Whether you are a landowner or a billboard operator, we know the issues; we know the concerns most people have. We know how to listen to your concerns and how to address them. We have been working in the industry for decades, can guide you through your options, and help you improve your return on your investment. Hit Reply to schedule a Get Acquainted Call. Let’s find out if we are a good fit for one another.