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Valuer-General Victoria and Municipal Group of Valuers

Specialist Property Guidelinesfor Outdoor Advertising Signs

August 2011

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For more information about DSE visit www.dse.vic.gov.au or contact the DSE Customer Service Centre on 136 186

For information about the Municipal Group of Valuers visitwww.mgv.com.au

Published by the Victorian Government Department ofSustainability and Environment, Melbourne, August 2011.

© This publication is copyright. No part may bereproduced by any process except in accordance with theprovision of the Copyr ight A ct 1968.

Disclaimer: This publication may be of assistance to you but the State of Victoria and its employees do notguarantee that the publication is without flaw of any kindor is wholly appropriate for your particular purposes andtherefore disclaims all liability for any error, loss or otherconsequence which may arise from you relying on anyinformation in this publication.

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Victor ian Statu tory Revalua t ion

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Valuer- General Victoria and Municipal Group of Valuers

Guidelines on Valuation Methodology forOutdoor Advertising Signs

Introduction

These guidelines are to be used when valuing Outdoor Advertising Signs (OAS) for rating andtaxation purposes.

The guidelines need to be used in conjunction with the Genera l Pr ovisions for Special ist

Guidelines, which refer to the general requirements, legislation and procedures relating to allstatutory valuations.

Definition

A definition for a Sign  is contained in the Victorian Planning Scheme Provisions1 as follows:

An advertisement and any structure built specifically to support it.

Victorian Planning Provisions Clause 73 Outdoor Advertising Terms lists terms which may be used in this planning scheme in relation to outdoor advertising.

Industry Terminology

An acceptable classification for Outdoor Advertising Signs (OAS) is summarised below:

Freeway signs or billboards are part of an advertising group that is more commonly knownas ‘outdoor advertising’.

Outdoor advertising is essentially all types of advertising that reaches consumers while theyare outside the home. This is in contrast to broadcast, print or internet advertising, whichmay be delivered to viewers out of home but are usually for home or office viewing. Outdoorproducts are divided among three primary categories – billboards (large format and posters),street furniture and transit.

Over the past decade, the shape and form of the outdoor medium has changed. Previouslyoutdoor advertising was associated with billboards, but now encompasses a wide range of

'out-of-home' formats to reach consumers where they live, work, play, drive, shop andcommute.

Outdoor products come in a number of poster sizes, formats and other configurations. Theycan be used to broadcast messages through large format billboards or target specificaudiences, such as shoppers and travellers.

More than 95 per cent of revenue generated from outdoor advertising is covered by one ofthe following formats:

La r ge Fo rm a t  

Super sites and ‘spectaculars’ are the largest of the billboards. Located primarily onmajor highways, freeways or principal arterials, they offer high-density consumer

exposure (mostly to vehicular traffic).

1 Victorian Planning Provisions Clause 73 Outdoor Advertising Terms.

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Poster s

Posters are another common form of billboard advertising, located mainly in commercialand industrial areas on primary and secondary arterial roads. Posters are a smallerformat than bulletins and are viewed principally by residents and commuter traffic, withsome pedestrian exposure.

More outdoor campaigns are placed on 24-sheet posters, the traditional billboard, thanany other form of OAS.

At 6.0m x 3.0m, the 24-sheet poster can be found in both city and regional markets. Citysites include major and secondary arterial roads, most railway stations and suburbancommercial areas. In rural markets, sites include highways and key locations within built-up areas. Many sites are illuminated.

Six-sheet posters, a scaled down 24-sheet poster measuring 3.0m x 1.5m, are alsoavailable in some markets.

T rans i t

Posters located on buses, trams, taxis etc.

St r eet Fu rn i t u r e  

 

 bus and tram shelters, kiosks, phone booths, seating

 

internal/external shopping centres

 

street signs

  illuminated street poles

A planning permit is required to use the land for an OAS and a building application isneeded to put up the billboard structure. Approval for a sign is usually a protracted processdepending on the site and the traffic.

The property owner usually receives rent under a leasing agreement that lasts the length ofthe approval.

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Victor ian Statu tory Revalua t ion

Additional Victorian legislation and cases applicable to outdoor advertising signs

The following Acts are also relevant to this topic:

  Local Gover nm ent Act 1989  (Sections 154 and 156)  Plann ing and Env i r onment A ct 1987  

Other relevant material:

The Outdoor Media Association (OMA)

The Outdoor Media Association is the peak industry body which represents most ofAustralia's outdoor media display companies and production facilities and some mediadisplay asset owners.

The association operates nationally and prior to July 2005 traded as the Outdoor AdvertisingAssociation of Australia (OAAA). It was first incorporated in 1939.

The OMA charter is to serve its members by promoting the industry and developing

constructive relations with its primary stakeholders. Its core functions are marketing andresearch (including audience measurement), government relations and regulatory affairs,media relations, and member services.

The OMA is governed by a Board of Directors which is elected by the membership.

The OMA website is www.oma.org.au.

Other useful sources: 

  APN Outdoor – www.apnoutdoor.com.au 

  Eye Corp Ltd – www.eyecorp.com.au 

  Claude Group – www.claudegroup.com.au 

  Independent Outdoor Melbourne – www.iom.net.au 

  Outdoor Advertising Advisory Paper and Checklist at www.afa.org.au 

  The Advertising Standards Bureau atwww.advertisingstandardsbureau.com.au 

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Victor ian Statu tory Revalua t ion

Identification of properties

Australian Valuation Property Classification Codes (AVPCC)

To appropriately categorise outdoor advertising signs in a municipality, refer to the AustralianValuation Property Classification Codes (AVPCC) available at

http://www.dse.vic.gov.au/valuation.

The following codes apply to outdoor advertising signs:

  Static Non Electric Advertising Sign (no lighting) – 290

  Static Non Electric Advertising Sign (with external lighting) – 291

  Electronic Stadium/Street TV Relay Screen/Scoreboard – 293

Outdoor advertising signs that fit into the category of billboards – large format and posters -are considered to be separately rateable because the tenants have exclusive occupation of

the sign and are considered to be a separate occupancy. These include Self- stan din g PoleSign s, Brid ge Fixed Sign s, Roof- m oun ted Sign s an d Wall Fixed Sign s.

Outdoor advertising signs that fit into the category of Transit and Street Furniture are notconsidered to constitute a separate occupancy for the purpose of rating. These includeBus/ Tr am Shelter s and Vehicle Moun ted Signs. 

Within these categories further consideration should be given to the following items:

  number of panels (e.g. single, double)

 

size of poster (e.g. 6-sheet, 24-sheet)

  dual printing (i.e. are the front and rear sides of the sign used fordisplay?)

 

illumination – luminescent technology allows illumination of thesign/poster

 

LED Screen – enables interaction with consumers

 

Bluetooth – allows downloads of images and music.

Valuers need to be aware that signage can be short-lived due to changing circumstances suchas varying road patterns affecting traffic flow (or even change of traffic lights) and thereforeprominence of a sign; or a new building constructed or growth of trees that block or impacton the visibility of the sign. In short the rental returns are directly related to exposure and ifthe exposure is reduced, so is the rent.

The majority of outdoor advertising signs are within 15km of the Melbourne GPO.

Most prominent locations are high volume toll ways, freeways and primary (main roads), forexample City Link (Western Link), City Link (Monash Freeway), West Gate Freeway, Kings Wayand Punt Road. 

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Victor ian Statu tory Revalua t ion

Types of fixed outdoor advertising signs are as follows:

Sel f - stan d in g Po le Sign s

Br i dge Fixed Sign s

Roo f - m oun ted Signs

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Victor ian Statu tory Revalua t ion

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Wall Fixed Sign s

Bus/ Tr am She l te r F ixed Sign s

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Rental questionnaire and property information – specific requirements applicableto outdoor advertising signs 

In addition to the general requirements for rental information, the following is a guide to thespecific information required for outdoor advertising signs. 

P r o p e r t y D a t a

1.  Address/Unit number

Self-standing pole and pole height metres

Rooftop

Building wall

Bridge

2.  Base of Outdoor Advertising Sign

Other

3.  Tenant ID

L a n d L e a s e D e t a i l s

1.  Commencement date

2.  Lease term

3.  Rent review method

4.  Date of last rent review

5.  Ground rent per annum $

6.  Outgoings paid by: Owner Tenant

7.  Outgoings amount per annum paid by tenant $

8. 

Outgoings amount per annum paid by owner $

9.  Does the owner have content control?

10.  Who owns the sign infrastructure? Owner Tenant

11.  Estimated cost of construction

12.  Year of construction

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Property inspection – specific requirements applicable to outdoor advertisingsigns

Inspect outdoor advertising sign and categorise the type of OAS i.e. self-standing pole,attached to a building, structure etc..

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Victor ian Statu tory Revalua t ion

Methodology

Site value (SV) and capital improved value (CIV)

If a self standing pole occupies a portion of a parcel it is considered to be a separateoccupancy and should be valued accordingly. If the OAS is attached to a building then thesite value and capital improved value attributed to the tower may have to be apportioned in

accordance with Section 2 (3) of the Valuation of Land Act. Refer to Occupancy in theGener al Provi sions for Special ist Gui delines .

The i n f o r m a t i o n i n t he f o l l ow i ng exam p les a r e no t i nd i ca t i v e o f any m a r k et i n f o r m a t i o n ,

t he ren ts and r a tes a r e fo r exam p le pu r poses on ly .

Exam ple A – On e Sel f - stan d in g Po le Sign

Site Value

Ground Rent $45,000 pa Net Rent $45,000 pa

Cap Rate 15%Total SV $300,000

Note – A Ground Rent is a rent per annum for the use of the land to construct a self-standing pole.

Rentals can vary depending if the owner stipulates control over the content of materialadvertised. If the tenant does have to seek ‘permission’ from the owner each time the sign or billboard is changed then the rent would be less than if the tenant had full control over theadvertising material.

Capital improved value

Self-standing Pole and Infrastructure $100,000 pa

Total Gross Rent $100,000 paLess Outgoings $25,000 paNet Rent $75,000 paCouncil Rates $5,000 paEAV $80,000pa

CIV by SummationSite Value $ 300,000Pole $ 200,000CIV* $500,000

Assessment SV CIV NAV

Carrier A $ 300,000 $ 500,000 $ 80,000

* No te  :

  The maintenance costs associated with the sign can be high due to thecontinual exposure to weather.

 

The improvement costs (i.e. pole etc) are depreciated replacement costs.

 

In the event that passing ground rents are provided and there are no othercurrent market rents to suggest otherwise, the passing rents should be

adopted.  The EAV must be a minimum of 5 per cent of the CIV.

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Exam p le C – Roo f - m oun ted on ex ist i ng bu i l d ing w i th a shop on th e g round f loo r , o f f i ce on

the second f loo r and OAS on the roo f top .

Site value

Based on zoning and usual land considerations $250,000

Capital improved value

Shop – $80,000 paOffice – $40,000 paBillboard - $80,000 pa

Total Gross Rent $200,000 paLess Outgoings $15,000 paNet Rent $185,000 paCouncil Rates $8,000 paEAV $193,000pa

Cap Rate 6.5%CIV $ 2,969,230CIV Rounded $2,950,000Vacancy Allowance $50,000CIV $2,900,000

Apportioned CIV - Shop $ 1,180,000Apportioned CIV - Office $ 590,000Apportioned CIV -Billboard $ 1,180,000

Assessment SV CIV NAVShop $ 100,000 $ 1,160,000 $ 77,250

Office $ 50,000 $ 580,000 $ 38,500Telco $ 100,000 $ 1,160,000 $ 77,250

Check Method

The check method by summation is derived by ascertaining the CIV by direct comparison thededucting the cost of the structure to arrive at a site value.

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Sales and rental analysis

  When analysing rental evidence, ascertain if the owner has control rights over the type ofmaterial advertised. If this is the case then the rental is likely to be lower because thetenant is restricted by having to gain consent on advertising content.

  Determine if the rent includes any infrastructure in addition to the physical poles/signs.

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Industry information

  Fibre Optic Display

Use of electronic light transmitting fibres to create changeable copy displays.

  Illuminated 

Outdoor structure with internal or external electrical equipment installed forillumination of the message at night.

  Street Furniture

Produced in 1.8m x 1.2m or 1.5m x 1m sizes and often backlit. Targets include CBDworkforce, entertainment areas and railway platforms.

  Mobile Billboard 

Usually 6m x 3m (24-sheet) size mounted on a small commercial vehicle or a trailer.Available nationally, some with illumination and/or loud speakers for playing jingles etc.Used for retail promotion or special events.

  Poster

This is a term used for advertising messages printed on paper and posted ontoadvertising structures.

Poster – 24 - sheet

The 24-sheet poster (6m x 3m) is a large form of poster located mainly in commercialand industrial areas and primary and secondary arterial roads. Viewed chiefly by theoccupants of cars and delivering exposure to both local residents and commutertraffic. More advertising campaigns are placed on this traditional billboard than anyother form of outdoor.

Poster – 6- sheet

The 3m x 1.5m reduction in size maintains the proportion of the 24-sheet poserwhich leads to economies in the production of artwork for mixed size campaigns.Located mainly in suburban neighbourhood locations they often serve as brandreinforcement at the point of purchase. Viewed by both pedestrians and caroccupants as well as being used in rail transport locations.

  Posting Date

The date on which the posters of a showing are scheduled for display. Most plants willhave several posting dates during the month to even their workload and provide avariety of start dates to coincide with special advertising promotions. Usually first tofifteenth of the month.

  Spectacular

‘Specs’ are the largest, greatest impact of all outdoor media. Top highway and inner city

locations command the erection of these giant, modern, illuminated advertising vehicles.Ideal for customising messages with cut-outs and extensions. Size is from 15m x 4.5mup.

  Supersite

Large 12.66 x 3.35m illuminated poster sites. Dramatic size on major arterial roads andnational highways. Standard size enables easy rotation of flexible face material from siteto site and market to market.

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