Commercial Property Valuation Expert Reviews Public Ad Space Lease Dispute

Case Overview

This case involves a lease dispute over an outdoor advertising space. The owner of the billboard, a prominent outdoor advertising company, rented out a billboard to the plaintiff for an 18 month period. During the first 2 months of the lease, a local municipality zoned the property to build a tourist plaza. In response to anticipated foot traffic to the area, the outdoor advertising company increased the billboard rent but the plaintiff terminated the lease. An expert in commercial property valuation was sought to perform a rental market valuation and review case documents to determine whether or not the initial rental increase was reasonable for the billboard rental market.

Questions to the Real Estate expert and their responses

Please describe your experience as it relates to valuation of rental pricing for billboards.

I have 30 years of commercial real estate experience in both asset management and finance. During this time, I have overseen small office buildings, retail centers, industrial buildings (single user and multi-tenant), and apartment buildings. I have negotiated leases, I have prepared analysis for valuation that incorporated a survey of lease rates and I have reviewed appraisals of valuations that were based upon various types of rental rates, full service, modified gross, etc.

How would you determine whether or not the initial rental increase was reasonable?

Depending on the property type, the condition of the property, the location, and the market at the time, I believe a range of rates is probable. An exact rate conclusion would be difficult, but a reasonableness test is possible. Keep in mind it all depends on the property type, the condition, the location, and the market at the time.

About the expert

This real estate expert obtained his BS in business administration from the University of Southern California. He has formerly served as Vice President of the JP Morgan Chase Commercial Real Estate Group, as Vice President at Union Bank, and as Vice President and Portfolio Banker at Farmers & Merchants Bank. This expert currently serves as a a Real Estate Consultant at a Private Consulting Firm.