Billboard Lease Agreements: Key Considerations for Landlords and Tenants

Statistics report over 340,000 billboards in the US and almost 8,000 in digital format. The overwhelming majority of those are built subject to a billboard lease or license agreement. The average billboard will pay a landowner more rent per square foot than any other kind of real estate investment without increasing operating expenses. The location of a billboard and its proximity to public space can multiply its value, revenue stream, and ground rent. The billboard lease provides unique advantages to property owners by creating an additional income stream, increasing potential resale value, and maximizing utility in vacant or underused property. For outdoor advertising tenants, leasing property may lower initial capital outlay and provide greater flexibility over time.

Thoughtfully crafting agreement terms in billboard leases can anticipate landlords' and tenants' unique challenges. If the parties do not adequately negotiate and draft these provisions, even seemingly innocuous provisions may have long-term consequences.

Equally important as the lease itself, parties must consider if a location and the type of billboard they want is suitable on the property and feasible to construct within the restrictions and limitations that vary from one municipality to the next, applicable zoning codes, and state/federal regulations. Among the many negotiable lease terms to be considered are duration, payment and renewal terms, early termination, construction issues, violation of regulations, potential third-party subleasing or assignment, and each party's respective obligations at termination. Real estate counsel must understand the impact of these and a myriad of complexities for the viability of the transaction in the future.

Listen as our panel discusses critical considerations for counsel negotiating billboard leases on behalf of landlords or tenants.