How Can the Value of an On-Premise Sign Be Calculated?

Richard Bass is a certified appraiser in Sarasota, Florida. During his more than 30 years in business, he has testified in court as to how a sign’s value can be appraised. In a presentation for The Signage Foundation, Bass outline three case histories where the absence of a sign could be measured economically. Planners, Signs and A Community’s Economic Well Being (Powerpoint) – Rick Bass

In a 1995 case in Decatur, Georgia, a Days Inn was allowed to use an electronic message center for four years, although it was actually situated on a third party’s property. Property ownership changes occurred, so a payment needed to be determined. Three approaches were used: comparable sales, income and cost.

For the “comparison” method, the sign was compared to a billboard, based on outdoor-advertising prices. For the 49 months, the price was calculated to be approximately $1.6 million.

The “income” approach examined Days Inn’s income for the same time period: $8.4 million. The percentage of this attributable to the sign was calculated at 25%, which made it $2.1 million. Because half of the guests already had reservations (which meant the sign didn’t draw them in), the figure was reduced to $1.050 million. Adding a 10% for interest earned, the final figure became $1.2 million.

The “cost” approach considers how else the property could be used. Based on 238 units, the value of each motel room was set at $31,765. If they were all converted to apartments, their value would be $25,000 each. The value difference, $6765, multiplied by 238, becomes approximately $1.6 million. ┬áThe full story, with detailed calculations, appeared in the April 1999 issue of Signs of the Times magazine.

Posted in Blog: Rhetorical, Electronic Message Centers, Outdoor Advertising, Research, Sign Questions Answered, Sign Research Foundation, Signs' Advertising Value and tagged , , , , .

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