5G Expansion Reaches New Levels
Cell tower development in the United States has increased each year for the last three decades. With recent 5G expansion and new carriers such as DISH Wireless coming to the market, all create a need for more towers.
As of January 1, 2022, there were approximately 500,000 cell sites in the United States, with up to another 1,000,000 new sites to be added by 2030.
AT&T, T-Mobile and Verizon, you may be surprised, own just a small fraction of the cell towers nationwide.
Most cell site are not controlled by wireless carriers, but rather, by companies that specialize in the towers themselves, publicly traded companies like American Tower Corp., Crown Castle and SBA Communications. These companies are vertical real estate companies that lease space on their cell towers to wireless carriers needing to serve their customers in a particular geographic area.
Financial Impact of Tower Development
It, like most things, is becoming more expensive to build a new cell tower, with costs averaging $400,000 to $600,000. This cost can be even more, depending on where the tower is being installed and the type of tower required.
Cell tower companies, such as the those listed above, make their money by the number and types of leases/tenants (wireless carriers) they get on a cell tower, as well as the kind of equipment each tenant installs.
With the expansion of 5G and other upgraded equipment being added, tower companies are generating more revenues than ever before.
Considerations When Leasing Self-storage Property
If you do decide to lease out part of your self-storage property, expect to give up anywhere from 500 to more than 5,000 square feet, depending on the type of tower and equipment, and cell tower rent rates range from a few hundred dollars per month to tens of thousands of dollars per year.
The biggest cell tower rent rate mistake a self-storage company can make is trying to rely on “Market Rents”. There is no such thing as “Cell Tower Market Rents”.
#1 Mistake When Accepting A Lease
Each cell tower site has its own value, so there isn’t a set amount of rent you settle for. Unfortunately, many owners accept offers far below what they deserve. It’s estimated that the average cell tower agreement underpays by more than $1 million over the life of the lease.
Why do self-storage owners make bad cell tower lease deals? They treat the cell tower agreements like real estate transactions rather than the utility agreements which they really are.
If an oil company approaches you wanting to use your land, in determining a rental rate, would you focus on how much space the oil company is going to use, or how much oil they would be getting from your property?
The same is true for a cell tower company or wireless carrier using your land. They determine the worth of the cell site based upon how much utility/value they can garner from your property, so should you when structuring a cell site agreement.
If you have been approached for a new cell tower lease agreement, or have an existing one, don’t take on the cell tower companies without assistance. Remember, the cell tower companies have experts working for them, shouldn’t you?