Steel in the Air receives calls weekly from property owners who fear they have poorly negotiated their cellular leases. In some cases, we find that they are correct and in need of cell tower lease renegotiation services. The issue is compounded by the fact that thousands of cell site leases from towers built in the mid-90s are set to expire soon. Though the majority of current cell tower leases provide for multiple five or even ten-year terms, which are renewable entirely at the discretion of the wireless carrier or the tower company, many of the older cell tower leases don’t have automatic renewal clauses. That’s where we come in.
If you are party to a cellular lease that does not have an automatic renewal clause, then you’re probably in a good position to renegotiate. Depending on the location of the site and number of tenants using the tower, it’s possible that you could even ask for more revenue ‐ or take ownership of the tower to receive additional revenue from other tenants.
You can try to manage this all yourself; however, there is some risk that if you ask for too much that the tower company or wireless carrier might decide to relocate their tower or cell site, leaving you with no revenue. Or you may fail to negotiate the best deal and end up leaving money on the table every month. We have extensive experience renegotiating cell tower leases and can help ensure that the terms of your cell tower lease renegotiation benefit you, not the wireless companies. See our lease chart to see how much of a difference even $100/month can mean over the course of a cell site lease.
Wireless leases are tied to cell sites (cell towers or rooftop antennas), and the development or installation of cell sites is quite expensive. Because of the investment required to not only construct, but network new cell sites into existing operations, wireless carriers and cell tower companies typically add automatic renewal clauses to wireless leases. For instance, you might see a lease proposal that starts with an initial five-year period, followed by four automatic five-year renewal periods. This means that the lease will automatically renew, unless the wireless carrier or tower company decides to terminate the cell site. Each renewal period typically includes an escalation rate that can vary but averages out to be about a 3% increase of the initial lease rate. We are experts at negotiating fair market value for cellular leases; however, doing so depends upon many factors – including the expiration date. For instance, the closer a lease is to expiration, the more valuable it is likely to be, due to the investment described above. Many contracts – especially those written in the last five years – are airtight from a legal standpoint and don’t allow termination by you, the landlord. However, if the company is currently in default of the cell site lease, then you can use whatever legal remedies are available to you under terms of the lease and the laws of that state.
If your lease is with American Tower or Crown Castle, there may be an opportunity to renegotiate the terms of the agreement starting now. Both companies have expressed interest in extending their leases. Although they typically initially only offer a nominal up-front signing bonus, both companies will agree to rent increases starting now in many cases.