I was wondering if someone could provide some suggested land lease terms for the following area.
South Texas
Pop. 60,000 +
1st Location
Traffic count for area is 13,000 right before an exit off a loop to main road for the city leading to city’s only mall. Only two other billboards on this stretch of loop approximately 1 mile before this location.
2nd Location
Same city with a traffic count of 31,000 on the largest street in the city.
There is basically only two billboard advertisers in this town, Lamar and another local company with not that many signs. SIgnAd is also beginning to erect some billboards.
I am looking for suggestions as far as monthly lease rate and percentage revenue from the boards as well as term length. I was going to try for $1,000/month with 15% revenue, no higher than 20%, and 15 year lease with 15 year option.
Lamar currently has rates for 14x48 of $2,250/month and 10’6"x36’ for $2,140.
Your minimum guarantee of $1,000 per month sounds high to me, although I have no actual knowledge of the particulars of that market. A traffic count of 13,000 or 31,000 would not normally equate to numbers this high unless there are some incredible demographics to go with it. I would have guessed a base amount of about half that. It all revolves around the actual revenue you will get. The rates you have quoted sound high for that type of market. I would call the landowners of some of the other signs you see and ask how much they are receiving. Many landowners will freely give you this info. if you just ask. Remember that we are going into a recession, and ad rents are going to decline in the near term – some pretty significantly.
Frank,
That was supposed to be a $1,000/year. I believe I was thinking ahead about the monthly rental rate when I was typing. I didn’t know if I should bother with a guaranteed amount or just stick with a percentage of revenue. Also, what is the longest period of time you have given yourself to get sign permits and have the sign constructed before the lease would terminate.