AGE Advertising President Andy Goodman has 33 years experience siting and developing billboards.  We asked him what’s in a good lease.

4 things in a good out of home lease

(1). Amounts paid monthly rather than annually.  I think it’s easier to negotiate with a property owner to pay them monthly.

(2).  A 10% increase every five years to the property owner.  We’ve had plenty of conversations with city’s and property owner which want increases of 3% a year to the development agreement  or lease  amount and we have to tell them that the economics is just not there.

(3). The most important thing is that you protect the visibility triangle of your billboard.  We go out there and spend a lot of time trying to find the perfect location.  There should be clauses in a good lease that protect you visibility triangle from the property owner placing an on premise sign or a building or putting a cell tower on the property which impacts visibility.  Then there should be another clause in the lease which protect the visibility of the sign from what Caltrans or the city does with the right of way (e.g. planting a Eucalyptus tree or building a sound wall).  You need protection from that.  A termination clause that allows the billboard company to terminate at any time.  If the approach to my billboard disappears because an elevated off ramp is built next to the property I need to be able to get out of that lease.  That billboard is all about visibility.  Property owners have a difficult time understanding this.

(4). I like fixed payments.  I don’t like to do revenue share with property owners.  Most property owners have become saavy and would like a revenue share.  It’s very hard to do a revenue share with a property owner when you’re also doing a guaranteed development fee and rev share to a particular city.  I like to keep my leases to 15-20% of revenue on the billboard.  When you have to pay a property owner 15% and you have to pay a city 10% all of a sudden you’re dwindling down your margin.

Have a question on out of home site development and leasing?  You can contract Andy Goodman at andygoodman.age@gmail.com or by using the form below.

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