Insider has several outdoor clients who have railroad leases, that is, leases for billboards which are located in railroad rights of way.  Here are the advantages of railroad leases.

• Easy access. Most railroad sites are easy to access and build because the ground is cleared and vegetation free.

• Great locations. Many railroad leases are for billboards adjacent to stoplights or intersections.  Stopped traffic is a perfect place to put a sign.

•   Favorable zoning treatment.  Some sign ordinances regulate billboards by zoning district but fail to assign railroad rights of ways to a zoning district.

• Multiple sites.  Railroads control huge swaths of land within rights of way.  If you develop a good relationship you may be able to build 20 or 3o sites.

Here are the disadvantages of railroad leases.

• Cost.  Railroads know the value of their sites.  The railroad leases Insider has reviewed cost 20-35% of gross revenue.

• Short Term.  Most railroad leases are short term or year to year.  Railroads want the ability to ask you to move in case they need the right of way.  Few railroads exercise this right but it’s a risk.

• Lower Valuation.  Paul Wright of Signvalue estimates that billboard on a railroad lease may sell for a 15-20% discount from a regular billboard.  A more expensive, short term lease means a lower billboard value.

Paid Ad