You may own land on a highway or busy street. Whether the land is undeveloped or even has a building on it, you might have the perfect spot picked out to place a billboard. Nearby billboards might be renting for thousands of dollars a month and you might even be able to price out what it would cost to build a billboard on telephone poles or a steel monopole. You might know exactly the advertiser that would be willing to lease it. Sounds great, the only thing left is getting a permit to build one. Can you get one of those?
The short answer is no, you can’t. On almost every piece of property in America, you can’t build a billboard even if you want to. You cannot get a permit to build a new off premise sign (aka billboard) except in very rare cases.
The Highway Beautification Act of 1965
Lady Bird Johnson hated billboards and championed this legislation. She thought they were eye sores and Congress agreed. The law controls billboards within 660 feet of the right-of-way of a highway. Basically unless you have a certain zoning (generally some type of commercial) and have enough spacing between billboards, you cannot get a new permit. Cities, counties, and states are allowed to write their own billboard regulations which tie in with the Act. A couple of states, Alaska and Hawaii, ban billboards altogether.
Spacing is usually the killer for the wannabe billboard developer. A city or county might allow billboards on land which fronts an interstate highway running through it or a couple of its busiest roads, but only if they are 1500 ft. from the nearest highway billboard and 500 ft. from the nearest street billboard. However, when you get a map out and start looking for locations, you will find that there are no locations that fall within the spacing requirements. You may find billboards that are simply grandfathered in because they existed before the ordinance was written or revised; this makes it even tougher to find locations because even if a billboard is taken down, it might not open up any new locations from a spacing standpoint.
Some of the other ways that billboard ordinances effectively kill any new billboards include: requiring billboards to be in a very specific zoning, requiring them to be a certain distance from residentially zoned properties even if the parcel they would be built on is the correct commercial zoning, preventing any billboards from being built on highways designated as scenic, requiring them to be a certain distance from freeway exits, strictly limiting their size to make them commercially unviable, or requiring setbacks that are too large in order for them to be viewed. Finding a conforming location that allows a good billboard to be built is truly like finding a needle in a haystack.
Billboard Permits or Grandfathered Billboard Rights are Extremely Valuable
Obviously if you do have an existing location that is permitted, you have something of value. The government and its strict regulations are effectively stifling new competitors from competing against you. Legislation to make billboards easier to build is very unlikely and the regulations are likely to continue for the foreseeable future. Even when new cities are formed or new areas are developed, the county and newly formed city are usually ahead of the game with strict billboard ordinances already in place or ready to go on day one.
You should also stand to benefit from the laws of supply and demand. If supply cannot increase, you should benefit from an increase in demand in the form of higher prices for billboard advertising.
Of course, not every billboard is in a good location. Sometimes a permit has no value if the location is bad or declining, and no advertisers want to be there. Or if the billboard is on leased land, sometimes the rent the land owner is demanding makes it impossible to make a profit.
How Do New Billboards Get Built?
As stated before, it is impossible to get a permit to build a billboard. However, occasionally you will see a new one. There is probably a big back story on most of them, and the owner is probably not going to share with you exactly how they did it, but here are a few of the ways they get built:
- They Already Had a Permit – sometimes the new sign replaced an old sign that was already there. The owner may have been allowed to replace the structure with a new steel one.
- Needle in a Haystack Location – for whatever reason, someone was finally able to secure a ground lease or purchase a property that had a conforming location. Maybe the previous owner died or some really weird permitting, access, or title issues were able to be resolved.
- Trading Bad Locations for a Good Location – some cities have used this as a way to decrease the number of billboards. They put something in their ordinance or allow variances based on a trade-off. The billboard owner (typically a big company like Clear Channel, Lamar, or Outfront, but sometimes a smaller player) agrees to remove, for instance, 3 billboards in exchange for a permit to either upgrade an existing billboard to LED (which make way more money) or to build a new one. The billboards they remove will generally be in bad locations or have bad visibility.
- Lengthy Lawsuits – people have been suing municipalities forever trying to argue the constitutionality of billboard ordinances. Because of this, ordinances have gotten harder and harder to defeat from a legal standpoint. Virtually every loophole has been plugged and almost everything has been challenged over and over again in the courts. However, sometimes municipalities will cave and allow a billboard permit to be issued if they lose or think they might lose a court case over one.
- On Premise Signs – if the sign advertises a tenant that actually is there, it is regulated totally different than one for off premise signs. For instance, in Seattle, a billboard developer was able to put a large wallscape banner for Starbucks on a building near a freeway by setting up a Starbucks vending machine as a tenant at the property.
- Complete Speculation – if you can build a billboard that is not 660 feet from a highway, it doesn’t fall under the Highway Beautification Act. If someone is confident that a freeway will go in a particular spot but is not there yet, they might find a way to build a billboard that will eventually be seen in the future.
Very few people have successfully developed billboards in the United States the last ten years, but a few have and have been very successful at it. It is very tough, but that toughness makes existing billboards quite valuable.