In Mind The Gap – Financing the Post Install Billboard Deficit Billboard Insider suggested that a new digital billboard should be able to get to full occupancy in about 4 months. An eastern out of home executive says it may take longer than 4 months to lease up a new digital and that 80% occupancy may be optimistic due to short term contracts…
I enjoyed reading your article on new construction. Overall, the logic is sound, but I’d push back a bit on the occupancy assumptions—expecting 80% occupancy by month four feels very aggressive.”
A lot depends on the operator. If it’s an established company with a built-in client base, they might be able to hit that mark. But if they’re newer to the business, or only have one or two boards in a market, I think a more realistic benchmark is 50–60% over the course of the first year—especially if they’re reporting financials to a lender on a quarterly basis.
Timing matters too. If the board goes up after the “big” advertisers have already allocated their annual budgets, that can be a major hurdle since you may be waiting until the next budget cycle to have meaningful conversations.
In our core markets where we control the inventory and know the demand, we have a good sense of what a new board can do. But in outside markets with more competition, we generally set expectations around 60%. Similarly, when we acquire a company with digitals, we typically underwrite to 60% with the potential to grow toward 75%—but that’s usually over a 2–3 year period.
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