Valuer-General Victoria and Municipal Group of Valuers. Specialist Property Guidelines for Outdoor Advertising Signs

Transcription

1 Valuer-General Victoria and Municipal Group of Valuers Specialist Property Guidelines for Outdoor Advertising Signs August 2011

2 For more information about DSE visit or contact the DSE Customer Service Centre on For information about the Municipal Group of Valuers visit Published by the Victorian Government Department of Sustainability and Environment, Melbourne, August This publication is copyright. No part may be reproduced by any process except in accordance with the provision of the Copyright Act Disclaimer: This publication may be of assistance to you but the State of Victoria and its employees do not guarantee that the publication is without flaw of any kind or is wholly appropriate for your particular purposes and therefore disclaims all liability for any error, loss or other consequence which may arise from you relying on any information in this publication.

3 Valuer-General Victoria and Municipal Group of Valuers Guidelines on Valuation Methodology for Outdoor Advertising Signs Introduction These guidelines are to be used when valuing Outdoor Advertising Signs (OAS) for rating and taxation purposes. The guidelines need to be used in conjunction with the General Provisions for Specialist Guidelines, which refer to the general requirements, legislation and procedures relating to all statutory valuations. Definition A definition for a Sign is contained in the Victorian Planning Scheme Provisions 1 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 known as outdoor advertising. Outdoor advertising is essentially all types of advertising that reaches consumers while they are outside the home. This is in contrast to broadcast, print or internet advertising, which may be delivered to viewers out of home but are usually for home or office viewing. Outdoor products 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. Previously outdoor 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 and commute. Outdoor products come in a number of poster sizes, formats and other configurations. They can be used to broadcast messages through large format billboards or target specific audiences, such as shoppers and travellers. More than 95 per cent of revenue generated from outdoor advertising is covered by one of the following formats: Large Format Super sites and spectaculars are the largest of the billboards. Located primarily on major highways, freeways or principal arterials, they offer high-density consumer exposure (mostly to vehicular traffic). 1 Victorian Planning Provisions Clause 73 Outdoor Advertising Terms. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 1 of 12

4 Posters Posters are another common form of billboard advertising, located mainly in commercial and industrial areas on primary and secondary arterial roads. Posters are a smaller format than bulletins and are viewed principally by residents and commuter traffic, with some pedestrian exposure. More outdoor campaigns are placed on 24-sheet posters, the traditional billboard, than any other form of OAS. At 6.0m x 3.0m, the 24-sheet poster can be found in both city and regional markets. City sites include major and secondary arterial roads, most railway stations and suburban commercial 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 also available in some markets. Transit Posters located on buses, trams, taxis etc. Street Furniture 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 is needed to put up the billboard structure. Approval for a sign is usually a protracted process depending on the site and the traffic. The property owner usually receives rent under a leasing agreement that lasts the length of the approval. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 2 of 12

5 Additional Victorian legislation and cases applicable to outdoor advertising signs The following Acts are also relevant to this topic: Local Government Act 1989 (Sections 154 and 156) Planning and Environment Act 1987 Other relevant material: The Outdoor Media Association (OMA) The Outdoor Media Association is the peak industry body which represents most of Australia's outdoor media display companies and production facilities and some media display asset owners. The association operates nationally and prior to July 2005 traded as the Outdoor Advertising Association of Australia (OAAA). It was first incorporated in 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 and research (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 Other useful sources: APN Outdoor Eye Corp Ltd Claude Group Independent Outdoor Melbourne Outdoor Advertising Advisory Paper and Checklist at The Advertising Standards Bureau at Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 3 of 12

6 Identification of properties Australian Valuation Property Classification Codes (AVPCC) To appropriately categorise outdoor advertising signs in a municipality, refer to the Australian Valuation Property Classification Codes (AVPCC) available at 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-standing Pole Signs, Bridge Fixed Signs, Roof-mounted Signs and Wall Fixed Signs. Outdoor advertising signs that fit into the category of Transit and Street Furniture are not considered to constitute a separate occupancy for the purpose of rating. These include Bus/Tram Shelters and Vehicle Mounted 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 for display?) illumination luminescent technology allows illumination of the sign/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 such as varying road patterns affecting traffic flow (or even change of traffic lights) and therefore prominence of a sign; or a new building constructed or growth of trees that block or impact on the visibility of the sign. In short the rental returns are directly related to exposure and if the 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), for example City Link (Western Link), City Link (Monash Freeway), West Gate Freeway, Kings Way and Punt Road. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 4 of 12

7 Types of fixed outdoor advertising signs are as follows: Self-standing Pole Signs Bridge Fixed Signs Roof-mounted Signs Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 5 of 12

8 Wall Fixed Signs Bus/Tram Shelter Fixed Signs Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 6 of 12

9 Rental questionnaire and property information specific requirements applicable to outdoor advertising signs In addition to the general requirements for rental information, the following is a guide to the specific information required for outdoor advertising signs. Property Data 1. Address/Unit number 2. Base of Outdoor Advertising Sign 3. Tenant ID Land Lease Details 1. Commencement date 2. Lease term 3. Rent review method 4. Date of last rent review Self-standing pole and pole height Rooftop Building wall Bridge Other metres 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 Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 7 of 12

10 Property inspection specific requirements applicable to outdoor advertising signs Inspect outdoor advertising sign and categorise the type of OAS i.e. self-standing pole, attached to a building, structure etc.. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 8 of 12

11 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 separate occupancy and should be valued accordingly. If the OAS is attached to a building then the site 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 the General Provisions for Specialist Guidelines. The information in the following examples are not indicative of any market information, the rents and rates are for example purposes only. Example A One Self-standing Pole 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 selfstanding pole. Rentals can vary depending if the owner stipulates control over the content of material advertised. 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 the advertising material. Capital improved value Self-standing Pole and Infrastructure Total Gross Rent Less Outgoings Net Rent Council Rates EAV $100,000 pa $100,000 pa $25,000 pa $75,000 pa $5,000 pa $80,000pa CIV by Summation Site Value $ 300,000 Pole $ 200,000 CIV* $500,000 Assessment SV CIV NAV Carrier A $ 300,000 $ 500,000 $ 80,000 * Note : The maintenance costs associated with the sign can be high due to the continual 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 other current market rents to suggest otherwise, the passing rents should be adopted. The EAV must be a minimum of 5 per cent of the CIV. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 9 of 12

12 Example C Roof-mounted on existing building with a shop on the ground floor, office on the second floor and OAS on the rooftop. Site value Based on zoning and usual land considerations $250,000 Capital improved value Shop Office Billboard - Total Gross Rent Less Outgoings Net Rent Council Rates EAV $80,000 pa $40,000 pa $80,000 pa $200,000 pa $15,000 pa $185,000 pa $8,000 pa $193,000pa Cap Rate 6.5% CIV $ 2,969,230 CIV Rounded $2,950,000 Vacancy Allowance $50,000 CIV $2,900,000 Apportioned CIV - Shop $ 1,180,000 Apportioned CIV - Office $ 590,000 Apportioned CIV -Billboard $ 1,180,000 Assessment SV CIV NAV Shop $ 100,000 $ 1,160,000 $ 77,250 Office $ 50,000 $ 580,000 $ 38,500 Telco $ 100,000 $ 1,160,000 $ 77,250 Check Method The check method by summation is derived by ascertaining the CIV by direct comparison the deducting the cost of the structure to arrive at a site value. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 10 of 12

13 Sales and rental analysis When analysing rental evidence, ascertain if the owner has control rights over the type of material advertised. If this is the case then the rental is likely to be lower because the tenant is restricted by having to gain consent on advertising content. Determine if the rent includes any infrastructure in addition to the physical poles/signs. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 11 of 12

14 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 for illumination 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 CBD workforce, 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 onto advertising structures. Poster 24-sheet The 24-sheet poster (6m x 3m) is a large form of poster located mainly in commercial and industrial areas and primary and secondary arterial roads. Viewed chiefly by the occupants of cars and delivering exposure to both local residents and commuter traffic. More advertising campaigns are placed on this traditional billboard than any other form of outdoor. Poster 6-sheet The 3m x 1.5m reduction in size maintains the proportion of the 24-sheet poser which leads to economies in the production of artwork for mixed size campaigns. Located mainly in suburban neighbourhood locations they often serve as brand reinforcement at the point of purchase. Viewed by both pedestrians and car occupants 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 will have several posting dates during the month to even their workload and provide a variety of start dates to coincide with special advertising promotions. Usually first to fifteenth 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 4.5m up. Supersite Large x 3.35m illuminated poster sites. Dramatic size on major arterial roads and national highways. Standard size enables easy rotation of flexible face material from site to site and market to market. Guidelines on Valuation Methodology for Outdoor Advertising Signs August 2011 Page 12 of 12