Lease renegotiation


#1

Purchased a building with a billboard in the front yard a couple of years ago(electronic one side and other side paper). Currently using the building for my business and collecting a lease payment from the sign company. The lease for the billboard expires in a few years and I want to find out market value to renegotiate new lease.
Current lease was $12,000 for first 5 years and $13,800 for last 5 years of contract. How can I find out going rate for similar billboard leases in the area? Don’t know how much revenue the sign company gets for the sign. I do know that the electronic side runs about 6.5 ads per minute. Also, the sign is located on a main street in town, which took advantage of a new sign ordinance that has since changed, so there will be no new electronic signs allowed on any city streets except for ours because it is grandfathered. I mention this because it seems that it would add some value.


#2

I’m sure Frank will have a better response than mine, but when I looked at a property that had a sign on it, I had a friend who owned a business call the billboard owner (Clear Channel) and ask for the going rate.

It was a sign on an interstate highway, two sided, telephone pole construction, vinyl (no digital side) and the kicker on this one is that the land had been annexed into a town about 4 years before and they no longer allowed new billboard construction in city limits. The rates were $2,400 per side for every 4 weeks. They let my friend know if the contract was for 6 months or longer, they could offer a discount. They then sent him a list of other sign locations in the area with the rates.

When in doubt, ask the local sign owners what the current rates are for their signs in the area.