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2019 Cell Tower Lease Rates | 5 Things To Know

By Nick G. Foster

January 4, 2019

1. How Much Of An Option Payment Should You Ask For?

In 2019 the request by tenants to be granted an option to lease your property is a common one.  Ideally granting no option, is better than granting an option. An option ties up your land for an agreed upon period of time in exchange for flat rate. Often tenants are proposing multi-year options and offering to pay landlords pittance. Sums as small as $500.00 for one year. In T-Mobile’s lease template they propose an option fee of $100.00 for one year. That comes out to $8.33 per month to tie up your land. I am not sure if T-Mobile is aware that today’s economy operates in 2019, not 1919. This brings us to our second point…

2. Tenants Need To Have Skin In The Game.

2019 cell tower lease rates

If the prospective tenant will not agree to pay you a multi-thousand-dollar option fee in exchange for tying up your land for a minimum of one year, than how serious are they?

It typically costs hundreds-of-thousands of dollars to construct a cell tower, so another few thousand dollars payable to YOU the landlord is a drop in the bucket to legitimate developers.

Beware companies who are looking to tie up your property for little or no money. This is called speculative development and is almost always a waste of your time.

2. How Much Rent Should You Charge Your Tenant?

Cell tower and cell site lease rates continue to rise year after year. Typically, we are seeing higher rental rates on rooftop in urban markets and lower rental rates to lease raw land in rural areas.

Rates vary depending on the following variables: (i) the site build, (ii) who the contract is with (ie: Verizon or American Tower Corporation) and (iii) how many other options are in the area for the tenant.

When constructing a new site, a developer typically identifies a few candidates, however, they usually have their sights set on one location. The other two are typically back-ups in case the first location falls through.

To truly understand your leverage in the negotiation you need an expert on your side who can view your property the way the cell tower industry views it. Contact Airwave Advisors to learn more about what your property is worth.

3. How Often Should Your Rent Escalate?

We continue to see tenants present cell tower lease agreements to landlords with ridiculously low rent escalators. Lately I have viewed contracts presented with no rent escalator or the rent going up every five years by only  5%!

As Mr. Wonderful on NBC’s Shark Tank says…

Inflation has historically trended at 2-3% annually. The whole point of a rent escalator is to maintain the value of the dollar paid from the tenant to the landlord over the course of time.

Why should you accept a rent escalator that is less than the annual rate of inflation? The value of the dollar you receive next year should be equal to or greater than the value of the dollar you receive today.

4. How Long Of A Contract Should You Agree To?

Over time tenants have become more aggressive with the terms they present to Landlords. Years ago, tenants would present contracts that were a maximum of 20-25 years, which is a very long time. Now we are seeing some tenants get as bold as to present 100-year lease agreements. Basically, you would be selling that piece of land to your tenant and they would pay you monthly payments until either they voluntarily terminate their agreement, or you pass away.

It is important to keep in mind that term in cell tower lease agreements locks in the landlord only.

The tenant typically has the right within the termination provision of the cell tower lease to terminate the contract with 30 days’ notice. So really what your tenant wants from you, is to remove your ability to renegotiate a better deal for you decades into the future. Meanwhile they are not giving you a guarantee in rent, instead they can walk away in 30 days’ notice and that income disappears.

When we view Crown Castle’s 8-K filing from Q3 of 2019 their average lease renewal term for 2019 was a total of 30 years. By no means show a property owner agree to renew or start a new lease for greater than that amount of time. Ideally the less amount of time the property owner agrees to, the better off the property owner is.

5. What Else Should I Need To Know?

A lot. You are about to enter into a multi-decade agreement with a cell tower company that does cell tower leasing for a living.

To create leverage on your side, you need more information and a cell tower lease expert in your corner to advise you of pitfalls and what is market with cell tower leasing. Give us a call today to discuss your cell tower lease opportunity further.

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13 Comments

  1. Jo A on May 24, 2019 at 2:53 pm

    My parents have agreed to a cell tower lease on their rural property in northern WI. I’m afraid they have agreed to a very small financial gain. What can I do to make sure they are not being cheated by a cell company that will reap huge gains from this tower?

    • Nick Foster on May 28, 2019 at 11:07 am

      Hi Jo,

      The only thing you could have done is contacted us BEFORE they sign. Once they have signed the cell tower lease agreement, it is too late to make changes to the agreement. Once the agreement is signed, the only business decision to consider is selling the agreement or collecting the rent.

      All the best,

      Nick G. Foster

  2. Randy moore on May 13, 2019 at 10:36 am

    I have a 30 acre piece of land in Barbour county wv. My uncle owed this property before me. He was contacted by a cell tower company the name of which I do not know. It is the highest point in the county this land is located. How would I proceed to find a company that would be interested in my property? Your cooperation would be appreciated.

    • Nick Foster on May 17, 2019 at 7:59 am

      Hi Randy,

      Your best bet is to check out our article “Cell Tower Locations” which provides you direct links to contact the carriers.

      Best of luck,
      Nick G. Foster

  3. sam on May 4, 2019 at 5:16 pm

    hello may 4, 2019 i have 2.5 acre property in fresno city ca if you want rent lease for phone tower use you can call me any time 5592441281 sam . a&at start install his tower too. thanks

  4. Paul M Zeppa on March 30, 2019 at 5:34 pm

    Hello to you
    From: Paul M Zeppa

    I have a shopping mall location at 7774 west Sahara ave, las vegas, nv 89117. this is the corner of West Sahara and Buffalo in Las Vegas, Nv. I will be pulling permits for the site location for a 80 Ft tower or try to get to 100 ft if i can? i was going to reach to your company to see if you were interested in the location for a cell tower site at my location-I am the owner, land owner with a shopping mall on the location-There is a Large parking lot at the back of the shopping mall and i have interest in a development of a radio-Cell tower build out? Is you company interested as SBA sites has reached out to me and expressed interest in my site also?

    Regards

    Paul

    • Nick G. Foster on August 7, 2019 at 8:18 am

      Hi Paul,

      We do not provide any services focused on bringing new sites to property owners. Our services are for property owners who have existing cell tower lease agreements and for property owners who have been contacted by carriers or tower companies to install cell towers on their property.

      Good luck with your location.

      Nick G. Foster

  5. Adam Adwon on March 11, 2019 at 10:02 am

    I am an appraiser working on an appraisal of a large multi-use property that includes a cell tower on its outskirts. I am seeking information on cell tower lease rates in the metro Oklahoma City and Tulsa Oklahoma areas. (Subject is in OKC but I am in Tulsa and as long as I am asking, I wanted to see about the availability of obtaining comparable rental information for Tulsa as well.) Do you (1) have any lease comparable information for metro Oklahoma City or metro Tulsa? (2) Is it available to appraisers such as me? Thank you. My telephone number is 918-742-7311.

    • Nick Foster on April 4, 2019 at 11:25 am

      Hi Adam,

      We typically do not provide cell tower lease rates to appraisers. Unfortunately we cannot assist you in your request.

      Nick G. Foster

  6. David on January 18, 2019 at 5:17 am

    We own 40 acres with 1-2 acres of flat mountain top access. We already have road access to the top of the mountain overlooking a large valley with historically bad cell service. We would like to explore our options of renting the space to help with the cost of the land. How would you suggest we proceed?

    Thank you!

    • Nick Foster on January 18, 2019 at 7:30 am

      Hi David,

      Check out our article “Cell Tower Locations” that has links within the article where you can contact the carriers directly.

      Good luck,

      Nick G. Foster

  7. LMS Property on January 12, 2019 at 7:37 pm

    I have a communications tower located on my residential property. A internet company is now claiming they bought the tower one year before I purchased the real estate on which the tower is located. Besides showing me a canceled check and a bill of sale that they paid for the tower, what other legal documents should they have to convince a court judge that they do in fact have a right to ownership. I went to the county courthouse to look at all records that may have been legally filed like easements, lease assignments or any other assigned property rights and there was nothing on record. Only my warranty deed for property was found in the legal books.
    I also sent them a demand letter asking that they provide proof of general liability insurance and to show that I was added on their insurance policy since they claim that the tower sitting on my land belongs to them. They have declined to show me their liability insurance to cover any damages to me or my property.

    1. Can you offer me any information on what other evidence they should provide to show legal ownership.
    2. Isnt it required to have general liability insurance? If so and they dont have proof…to whom can I report the company for not having the insurance?

    • Nick Foster on January 14, 2019 at 7:45 am

      Hello,

      If the internet company bought the tower and produced a bill of sale, they should also have a land lease with the property owner (that would allow them to occupy space on your land). Cell towers transfer ownership all the time, the question is what is the agreement in place between the property owner and the owner of the cell tower?

      In regards to insurance, you would have to check your state law to see if a company is required to carry a CGL insurance policy. To the best of my knowledge, a CGL insurance policy is not required by most state laws, instead it is typically required in a contract between a property owner and the the cell tower owner.

      I hope this helps. Your situation sounds difficult to understand without first understanding the relationship between the property owner and the cell tower owner.
      Nick G. Foster

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Nick Foster Airwave Advisors

About Nick G. Foster

Since founding Airwave Advisors® in 2014, Mr. Foster has added value to over 400 clients ranging from the State of Nevada, City of Beverly Hills, to Habitat For Humanity. Mr. Foster focuses on cell tower lease renewals, buyouts, new lease negotiation, and cell site lease management. Prior to starting Airwave Advisors® Mr. Foster founded and led the Cell Site Services Group within nationwide commercial real estate services leader Cassidy Turley (now known as Cushman & Wakefield).

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