If you have other questions that have not been answered here, please feel free to contact us.
Our clients are 95% public and private landowners, building owners and public entities, including local governments and schools. The remaining 5% consists of financial institutions like banks and investment banks, consulting groups, attorneys, small tower owners, and appraisers who need consulting or valuation services. You can see examples of our clients on our Who We Serve page. With the exception of two expert witness situations on eminent domain of towers, we have not worked with large tower companies or wireless carriers. Our focus is solely on the landowner (the “Lessor”). Unlike other consultants, in cellular lease negotiations, we never accept any compensation from anyone other than the property owner.
The average cell site lease rent varies depending upon the type of lease that it is (and the type of tower that it’s tied to). By this, we mean that a ground lease typically pays less than a rooftop lease which typically pays less than a tower collocation lease. We recently did a blog post about the average lease rate for all leases in given locations within the US.
The answer is that it depends upon the uniqueness of the subject site. By that we mean whether the carrier could just as easily find other properties nearby to lease. Lease rates for cell towers can run from as low as $100 a month to $15,000 a month for very unique properties. The average lease rate (considering all cellular leases in the U.S.) in our database is around $900/mo. The type of lease, and the location of the cell site, highly impact the valuation. We have dealt with leases on both ends of this spectrum and all between. For more information on how we help you determine the fair market value of a cell tower lease using our proprietary cell tower lease rate database.
Lease rates are dependent upon many factors. Some carriers or tower companies pay more than others do from the get go. Zoning regulations affect lease rates (and vary from one municipality to another). The current economic climate is also a factor, as is the longevity of the lease (eg. a 50 year lease is more valuable than a 20 year lease). The number of carriers using the cell site will also contribute to the net rental payment. But the most important factor of all is the “uniqueness” factor. This is calculated by evaluating whether or not there is comparable land (competition) nearby which could accommodate the carrier/ tower company just as easily. The uniqueness factor also considers the proximity of your land to other cell sites. When carriers first search for land on which to build cell sites, they utilize a “search ring” – an area within which boundaries cellular signals can effectively be handed off to the next tower. Better positioned lands affect the final value of the lease, and contrary, to what most people think, the best land isn’t necessarily the highest. In addition to all the factors above, the type and terms of the lease are also considered when calculating its total value.
In new cellular lease negotiations, landowners rightfully question whether or not the wireless carrier’s proposal is in their best interest or “fair.” Escalation rates range from 1% to 8% per year, although most people don’t see anywhere near the up side of that range. If you examine the last 10 years, you will see that that the consumer price index (a measure of inflation) has averaged 2.3% per year. This means that to maintain the same value of your lease you would need to receive annual escalation of at least 2.3%. From 1990 to 1999, the average CPI was 3.1% per year. Over the last 100 years, it has averaged 3.2%. Recently, the wireless carriers have been pushing hard to reduce the escalation rates of their leases, offering 7.5% over five years or 2% per year. Your decision to push for a higher escalation should depend upon how unique your property is (or is not) and what you are asking for in terms of lease rate and other financial terms. In other words, escalation, lease rate, signing bonus, revenue share payments, option payments, and other lease terms should not be considered in isolation, since they are all factors in determining the overall fair market value of your lease. If you need help figuring out what to ask for, contact us. we are experts in evaluating ALL components of a proposed lease.
Many landowners believe that they should have the right to terminate the lease, since the wireless carrier does. Unfortunately, most wireless carriers will not grant the landowner the right to terminate under any circumstances – and they won’t engage in cellular leases with landowners who insist upon it.
Today, most proposed cell tower leases contain right of first refusal clauses that limit the Lessor’s (e.g., the landowner’s) right to sell the property or the lease without giving the Lessee (e.g., the tower owner/wireless carrier) the right to match the offer. The wireless carriers have a legitimate concern about third parties buying out their leases via a cell tower lease buyout. (Link to cell tower lease buyouts page) However, in most leases, the language in the Right of First Refusal is overly broad and could end up being very restrictive in the event of a regular sale of the property. This language should be narrowly drafted so as only to include the sale of the lease itself and only to companies that own or operate towers or that buy leases.
We provide this service as part of being retained on a consulting basis. We do have a sizeable tower location database, but we don’t by any means know the terms of each and every cell tower lease.
It depends. If they are asking for an expansion of their cell tower ground lease area, then probably. If they own the tower and the upgrades are done within the original, agreed-upon footprint, the typical lease does not require that they pay you additional compensation for upgrading their equipment. On rooftop cell site lease modifications, the issue is more complex, and depends upon the specific modifications and the specific lease language. We have assisted many property owners in figuring out whether they can ask for additional compensation and, if due, have helped them get it.
So when should you renew your lease? The short answer is: do it when it’s worth your while. Are they giving you an increase in rent? Are they giving you a hefty signing bonus? Are they giving you a revenue share on current or future tenants? We have assisted a few hundred clients with American Tower lease extensions and another few hundred with Crown Castle lease extensions. We have consulted hundreds of property owners involved with lease negotiations with wireless carriers, as well. Call us or email us, let us know what they are proposing and in most cases, we will tell you not to accept it. If we think your situation can be improved by working with us, we will let you know how we pride our services.
So when should you renew your lease? The short answer is: do it when it’s worth your while. Are they giving you an increase in rent? Are they giving you a hefty signing bonus? Are they giving you a revenue share on current or future tenants? We have assisted a few hundred clients with American Tower lease extensions and another few hundred with Crown Castle lease extensions. We have consulted hundreds of property owners involved with lease negotiations with wireless carriers, as well. Call us or email us, let us know what they are proposing and in most cases, we will tell you not to accept it. If we think your situation can be improved by working with us, we will let you know how we pride our services.
Fortunately, this doesn’t mean that it’s impossible to add revenue sharing to your lease. If you have a lease and the tower company or carrier wants to extend it, you may be in the position to request that revenue sharing be added. We can help you gauge what percentage of the revenue you should ask for and, more importantly, whether you want it or not. Suppose that you could look into the future and determined that there would never be another wireless carrier leasing space on your tower; would you ask for a share of the revenue then? Conversely, if you knew that your site was likely to have another four carriers interested in it over the next 5 years, how hard would you push for revenue sharing? That is where we come in. Between our cell tower location database and our ability to review sites anywhere in the US, we can provide an educated guess on what the future tenant prospects are for your specific location. Then we can tell you, not only whether you should push for revenue share but, how hard you should push, and what the value of that revenue share would likely be over tim
In most cases, tower owners or wireless carriers aren’t required to pass on revenue that they receive from collocating space on their towers, even though it may seem like this is unfair due to an increase of traffic on your land. It is possible, however, to get more rent if more ground space is required for additional equipment or the deployment of new base stations. It’s also possible to negotiate more rent if or when your lease is close to its expiration date (in some cases even within 5-10 years).
Please see our Cell Tower Lease Buyout Guide. It will answer this and many other detailed questions that landowners have about cell tower lease buyouts and how to evaluate buyout offers.
Very unlikely. Lease buyout companies typically don’t have a single person on staff whose sole task is to market cell sites to wireless carriers. While they boast about how much revenue they have added to sites that they’ve purchased, 99% of this revenue would have been added whether the lease buyout company had bought the site or not. If you are selling because you want additional revenue from the carriers they promise to add to the site, DON’T. If you are selling because you want to sell your lease, go ahead and do so. However, please note that there are very few cases where it makes sense to actually give revenue sharing to the buyout company. You can get the same amount of money selling the leases without agreeing to revenue sharing as you would if you did agree to it.
If you are already engaged in a wireless lease with a wireless carrier or cell tower company, then your property currently exists in more than one database. Wireless carriers already know where you are and you will likely be the first landowner approached when they are ready to expand or augment their existing networks, because you have already been through the zoning approval process.
Cell site leasing is a complicated business. The only possible way marketing could be effective is in the case where the company who wishes to market your lease represents a wide base of wireless carriers who desire to expand their networks into your particular area. In addition, only tower owners can market cell sites, so if you are not the tower owner, nothing can be done.
Please see our Pricing page for a comparison of how we price our services compared to other wireless lease consultants.
Please see our page on what to do when you buy property with a cell tower on it.