Strategies for Cell Site Lease Negotiations
Property Owners typically begin cellular lease negotiations by researching comparable lease rates data. They may contact associates who have towers on their property, or they might attempt to search the internet for cell tower lease rates. They sometimes research county property records for recorded leases, only to find that the recorded documents are only short form leases and do not contain lease rate data. They may try to examine the Multiple Listing Service (MLS) to see if there are any cell tower leases listed – only to find that there are not. In doing this research, the typical landowner does not find much in the way of truly comparable data. Or if they do find comparable data, there are so few data points that it is difficult to draw any accurate conclusions.
"We can determine why the carrier or tower company is interested in your property and how you can use that knowledge to negotiate a better lease rate."
In cell tower lease negotiations, the party with access to the most comprehensive data almost always has the advantage. In most cases, this is the tower company or wireless carrier who initiates the lease. They know whether there are other properties nearby that will work for their purposes. They know what average lease rates are for specific markets. And they know what landowners will typically accept and what they won’t. The carrier or tower company will often play one landowner against the other in order to negotiate the cheapest lease. In some cases, they will even pretend to be negotiating with another landowner when in fact they are only negotiating with you.
Since the lease being negotiated with the cell tower company can exceed 25 years, it is imperative that landowners understand their relative strength (or weakness) in negotiations. The primary factor that contributes to the landowner having the upper hand in negotiations is whether their property is unique to the wireless carrier. If negotiations go poorly with the cell tower company, can they simply go to your neighboring property owners and negotiate a better lease? If so, then your strength in negotiations is limited. If not, then you can afford to push harder for better lease rates and better terms and conditions in the lease.
The uniqueness of your property is based on the following factors:
Zoning: We can discuss municipal zoning restrictions and ordinances with you, evaluate any local restrictions and determine if any other properties in your area are more or less suitable.
Topography: Contrary to public thought, higher land is not always better. However, topography does influence lease rates. A cell site needs to be able to “see” around its circumference in order to provide adequate coverage and connect to nearby towers. If the area surrounding your site is not flat, than the tower will need to be placed on a relatively tall location. This doesn’t necessarily mean that the tallest location is best.
Construction Costs: Is your property cleared? Is there power and telephone service near where they want to erect the tower? Do they need to build a road? Are there any culverts that need to be installed to reach the tower? All things considered equal, the tower company will negotiate to place the tower on the property that is cheapest for them.
Ease of Negotiation: If the tower company or wireless carrier negotiating for a lease perceives that negotiations will be difficult or time-consuming, they will search for another option. The site acquisition agent negotiating the lease is typically paid on a milestone basis, which means that they get paid only when the lease is signed. Thus, the faster they can get the signature, the sooner they get paid and can move onto other properties.
Proximity to Center of the Search Ring: Each tower site deployment begins with a search ring – a geographical area within which the wireless company has determined that they need to develop a cell site. These search rings are designed by radio frequency experts who work for the wireless carriers. The farther your site is from the center of the search ring, the less desirable it is to the wireless carrier. Since the search rings are typically proprietary to the carrier, they won’t often share this information with you. However, by evaluating the existing towers in the area, we can backwards engineer to determine what their network infrastructure deployment goals are.
Steel in the Air, Inc.’s experts know first-hand which factors are most valuable in determining the value of your particular property. Our proprietary cellular databases are second to none. Having worked for tower companies and wireless carriers in the past, we are familiar with the site acquisition process. We can give you the knowledge you need to assist you with negotiating a better lease. We can determine why the carrier or tower company is interested in your property and how you can use that knowledge to negotiate a better lease rate. We can assist you in figuring out when to push harder and when to accept their best counteroffer. And unlike our competitors, we won’t take 20% of your lease income going forward to do so. Our consultations for evaluating lease proposals for a new tower typically range from $1500 to $2000. We can also be retained on a contingency basis in some cases -where we only get paid based upon how we help you improve your lease.
Please contact us to see how we can help you with your cell tower lease negotiations. Don’t delay. Because the site acquisition agent is paid upon lease signature, they will move quickly to other properties if they perceive that you will take too long to decide.