Cell Tower Lease Rates – How Much and Why?

Cell Tower Rent Rates – Existing Cell Tower Locations:

Cell tower lease rates are not calculated as you’d expect, learn why cell tower companies want our valuation process kept under-wraps.  Typical cell phone tower lease rates in your area may not matter at all and lead you down the wrong path. What a cell tower company will pay for the use of your land could be higher that you suspect.  This is especially true when they are asked to extend or sell their current lease. Many property owners have become accustomed to relying on “market rent” to determine the rate for leasing their properties to cell tower companies. However, reliance on market rent can cost a property owner hundreds of thousands of dollars over the life of an agreement. Cell tower lease rates do not correlate to real estate assets for the purpose of valuation. Wireless carriers and tower companies value these leases as telecom assets, and so should property owners.

We increase rents and get better overall leases for our clients

In addition, property owners who rely on figures, like their neighbor’s cell tower lease rate, may be cheating themselves out of revenue. A cell tower company will gladly tell you what they are paying other property owners in your area if it’s beneficial for them to do so, which is often the case. These companies are making billions of dollars in revenue each year simply from paying undervalued rents to landowners in areas like yours. Property owners would benefit from understanding that every cell tower site has a different value. For example, you can have two cell towers from the same company within two miles of each other that can have the same rent and basic lease terms, but the leases can have significantly different values. This is because the value of the land is not part of the equation. The proof that property owners are leaving money on the table, with regard to new cell tower leases and existing is reflected in the revenue being derived from the cell tower companies themselves. In 2012, the largest cell tower companies generated an average of over $2 billion in yearly revenue, each from subletting properties like yours. Property owners have a choice: Be undercompensated for their land or arm themselves with information that allows them to obtain fair value for its use.

Cell Tower Rent Rates – New Cell Tower Leases

Prior to a new tower lease, properties are evaluated for cell tower lease suitability. A cell site lease next step will be an engagement of the property by and through a cell tower site acquisition agent or a turf vendor. That agent of the tower company will typically have a low-ball starting lease rate in mind when they contact a property owner. So, what factors does that representative use to determine a lease rate for your property?

  1. The primary factor is what similar property owners have already agreed to. Site acquisition agents are local in nature, as they generally have years of experience in a locale or region where they are deployed to acquire a new cell tower location. They have guidelines and, more importantly, incentives to get the best deal for the tower company.
  2. An experienced and skilled site acquisition professional will have already examined the area and chosen the sites that best match the cell tower location requirements (area, space needed, etc.) provided by the wireless carrier or tower company.
  3. A good site acquisition agent should know whether a property selected will work under local zoning regulations, FCC & FAA requirements, and whether the site will be cost advantageous or prohibitive.
  4. Site acquisition agents will perform a competitive analysis of the targeted area to establish whether there are multiple properties that serve as options and that meet the cell phone carrier’s or tower company’s requirements.

With all this being said, these agents and representatives will not provide you with the information they have acquired. Why not? Because they work for the tower companies, and you should always remember that. This is where Vertical Consultants has experts on staff to assist you with locating sites for companies like AT&T, Verizon and Sprint, and who can tell you exactly what the site acquisition agent is looking for, as it relates to the construction of a new cell tower location and what their options may be. We can tell you everything they won’t tell you. Cell Tower Lease Rates

Cell Tower Lease Rates:  Directly Related To The Availability of Options

Like any basic negotiation, price is determined by supply and demand. So, below is what should a property owner know to make sure they are optimizing the value of  their site:

  1. Cell tower lease rates trend higher in more populated areas, some urban areas command completely different lease rates, even though they are similar in demographics, however, this not the only factor.
  2. Zoning and permitting requirements play a very important factor in the value of a site. The more liberal the permitting standard, the easier it is to find several sites that meet a cell phone carrier or tower company’s criteria. Subsequently, a cell phone carrier/tower company will need to pay more for a cell tower lease in an area that has more stringent standards than it would in one that has more lax standards, no matter the population of the area.

Other Factors That Influence Cell Tower Lease Rates The cell tower companies who contact a property owner may think that they have the benefit of knowing all of their options. The agent has reviewed the below factors in selecting your property, along with reviewing your actual site. Vertical Consultants can review the same information that a site acquisition agent is looking at and can level the playing field by being able to help you determine what an acceptable market rent rate should be for your cell tower lease. The following factors are items that are taken into consideration by a site acquisition agent/cell tower company:

  1. Construction Limitations– A site acquisition agent will conclude both if a site has suitable access and space necessary for construction of a tower. An optimal site will have level terrain, with minimal or no ground or airwave obstructions (i.e. tree cover); as the more obstacles, the more expensive it is for a tower company to construct on a site. A tower company/carrier will sometimes be willing to pay higher rent for a more suitable site, in order to avoid more expensive construction costs on a similar site. We have experts on hand who have built hundreds of sites, so we are capable of assessing what the cost will be for the construction of a tower on your property.
  2. Zoning/Permitting Restrictions– Prior to a cell phone carrier/tower company getting approval to build on a site, they must first get a conditional use permit or special use permit to construct their facility. Most local governments have permitting requirements that will establish parameters on where a tower may be constructed; therefore, one property may be able to skate through the approval process, while other very similar properties in the same immediate area may not. What does this mean for a property owner? If its property is one that works, that property owner may be able to ask for a premium when it comes to a cell tower lease rate. We can perform the due diligence to see what options a tower company/cell phone carrier may have so a property owner can take advantage of that information
  3. Access to Power and Telephone Service– All tower locations need utility and telephone service. As a result, the farther the distance to telephone service and power, the higher the price tag to the cell tower developer. So, a site acquisition agent will always factor this in what they can pay for rent.
  4. Ground Elevation– Elevation is important, but not the most important factor by far, as cost will always outweigh elevation. If you have the highest point in the city or county, that is not a guarantee you will be chosen. The cell phone carrier/tower company always has the option to build a taller cell tower at a lower evaluation, as it may be extremely expensive at the end of the day.
  5. Cell Tower Site Alternatives– All cell phone carriers build tower sites to fit inside their network. Cell towers are very similar to pieces of a puzzle that, at the end of the day, have to fit together. The cell towers are set up to “transfer traffic” from one cell tower to the other. The cell phone carriers have an exact “search ring” that they use when constructing a cell tower, so that it will be able to easily transfer phone traffic. These search ring areas can be as small as .25 mile to as large as 5 miles. We can work with you to determine what alternatives a cell phone carrier/tower company may have, as this will give you the information you need to optimize the value of your property.

What Is The True Value Of My Property? Vertical Consultants can assist you, the property owner, in leveling the playing field when it comes to dealing with site acquisition professionals, as well as with the cell phone carriers and or tower companies. We help you determine what fair rent should be for a cell phone carrier’s/ tower company’s occupancy and use of your property. Vertical Consultants can make a landowner aware of what alternatives a cell phone carrier or cell tower company may have in its immediate area, and what other locations they may have as it relates to the construction of a cell tower. Vertical Consultants can evaluate not only all of the factors listed above, but also delve into the specific issues that are relevant to the area where your property is located. We can assist you in making the best decision possible when it comes to leasing your property. While companies like “Steel In the Air” tell you, “We can’t guarantee that you will get a better lease as a result of using our services”, we can guarantee that you will. Vertical Consultants will work on your behalf to make sure that you receive such things as: 1) market rate rent escalators; 2) revenue sharing from the tenants sublet of the property; 3) proper reimbursement of all expenses associated with a cell phone carrier being located on your property; and 4) make you aware of the non-monetary concerns that should be addressed based on the location and type of cell tower equipment being installed on your property. Vertical Consultants will not only provide you expert consultation, but will work with you throughout the entire lease transaction, and we only benefit if you get a cell tower on your property. Yes, you read that correctly, we only truly benefit if you benefit. In fact, that’s our motto.  We’re that confident in the services we provide.

Are you an existing leaseholder and have been contacted by the tower company? Click the company that contacted you to find out what they most likely want to speak to you about:

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