7 Reasons Why YOU Should Consult A Cell Tower Lease Expert

By Nick G. Foster
May 7, 2014

Cell tower leases are a unique niche best suited for an expert…

1. Lease Forms

Cell phone companies do not use AIR (Industry Standard) forms and prefer lease agreements drafted on their own paper. Their paper with rights slanted heavily in favor of the tenant is drafted as a telecommunications agreement not a real estate agreement. While they do lease a specific area from a property owner, it’s important to understand their primary use is for telecommunications.

2. Apples and Oranges

With that being said, per square foot rental rate negotiations standard in office, retail, and industrial leasing, does not apply in cell tower leasing. If you are trying to nail down a cell tower rental rate on a per square rate, you will be leaving A LOT of money on the table. Also, it is common for landlords to call other landlords and ask what they are getting paid for their cell tower. This is another common mistake as every property is very unique and landlords without expert consultation often agree to below market rates thereby making bad deals. You need to know how to maximize cell tower lease rates!

Optimize Cell Tower Lease Rates…

[blockquote cite=”Sam H., President, Cal-Sorrento”]Nick was able to more than double the monthly rent we had previously negotiated for a cell tower on our property…plus a significant signing bonus! There are several aspects to these deals that only someone with a detailed understanding of the market can explain. [/blockquote]

3. Yes, there is a Market!

There are many factors that go into how high you can push cell tower lease rates. We will start with the difference of new vs. existing leases. With a new cell tower lease the cell phone company typically identifies three (3) candidates in what is known as a “Search Ring”. This gives the cellphone company other options if you or your client push rental rates too high. It is important to understand no matter how much you or your client love your property, there almost always are other options nearby.

4. Coverage Gaps

To understand how high you can push the lease rate before the tenant goes away you need to understand the tenant’s needs. What are the tenant’s coverage objectives? Why have they picked your property? What are they planning to construct? It is best to have their project ran by a cell tower lease specialist to help you determine the desirability and value of your property.

5. What is a trigger event?

With existing leases the opportunity for you or your clients to raise rents typically comes around with “trigger events”. These are events such as site upgrades, site expansions, or lease extensions. If a tenant is adding equipment, expanding their lease area, or asking for additional lease terms, it’s time to talk about increasing the rent. In addition to rent, this also opens the door for opportunities to renegotiate or add other terms in the lease (a relocation clause for example).

Maximize The Value Of The Lease…

6. Cell Tower Current Lease Value

The three most important variables to the value of a cell tower lease are:

(i) the current lease rate
(ii) the rent escalator and
(iii) the remaining term of the agreement

If you can increase the rent or the rent escalator, the value of the cell tower lease will be worth considerably more. If you or your client are thinking of selling a property with a cell tower lease you need to know the value of that lease. In addition to knowing the value of the lease it may make financial sense to sell the cell tower lease separately than the property.

For example if the property will sell at a 9% Cap Rate and you can sell the cell tower lease at a 7% Cap Rate you should sell the cell tower lease separately. Another example is if it is an owner-user building and buyers will not give full value for the cell tower lease, sell it separately. By packaging it in with the property your owner could be missing out on hundreds of thousands of dollars and if you are a broker you could miss out on thousands of dollars in commission.

7. Market Knowledge is Power

The only way to determine the true value of the cell tower lease is to contact a cell tower lease expert who trades cell tower leases. In the past twelve months we have sold over $2,000,000 in cell tower leases and the values have ranged from $175,000 to $375,000 per lease. If you have a tower with multiple leases on it the transaction is typically valued over $1,000,000.

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19 Comments

  1. N. Patel on December 18, 2018 at 7:28 pm

    I have inquiry from Tarpon Towers regarding cell tower on my property. I am not interested in reading a 30 page lease for a small piece of land. Is there a better way of handling this situation?

    • Nick Foster on January 4, 2019 at 8:29 am

      Mr. Patel,

      Unfortunately the wireless industry has drafted leases agreements that are very long, even to lease a small piece of land, at potentially a low rental rate. Please give us a call and we can discuss further.

      All the best,

      Nick G. Foster

  2. Dale Underhill on December 18, 2018 at 12:55 pm

    I have 8.6 acres of woodland that I would like to do a cell tower company lease. The address is 2182 Stone Ridge Lane, Winston Salem, NC 27107

  3. Char on October 1, 2017 at 12:32 pm

    I am interested in doing this. I have 4 acres of land in Alaska on the Kenai peninsula.

    • Nick Foster on October 4, 2017 at 9:06 am

      Hi Char,

      If you are interested in pursuing a cell tower, check out the carrier links within our article “Cell Tower Locations

      Good luck,

      Nick G. Foster

  4. Bob Olson on October 1, 2017 at 10:57 am

    We have little to no cell service in my area and wonder about leasing a portion of our land to put in a tower. Who handles all the permitting, etc? What else needs to be done to get started?

    • Nick Foster on October 4, 2017 at 9:10 am

      Hi Bob,

      If a carrier is interested in constructing a cell tower on your property they will pay for and handle all permitting activities. To get started you would need to receive interest by a wireless carrier in constructing a cell tower on your property.

      All the best,

      Nick G. Foster

  5. Mary Ann Dissinger on October 1, 2017 at 9:06 am

    Question: how do I go about getting information on renting out land to be used to build a
    cell tower on my farm land? The farmer next already has two towers on his property.
    My land is on a hill and is rented out as farm property. I have a CREP field so there will
    be no tower there.
    Who can I contact about establishing a cell tower on my property?
    The neighbor with the two towers receives rent from T-Mobile @ $1500 monthly.

    Any suggestions?

    • Nick Foster on October 4, 2017 at 9:11 am

      Hi Mary Ann,

      Check out our article “Cell Tower Locations“. We have links there where you can submit your property location directly to the wireless carriers.

      All the best,

      Nick G. Foster

  6. Kenneth Williams on July 4, 2017 at 6:43 am

    We have two billboard signs on our property the billboard company wants to use the existing easement and attach new telecommunication devices to their already existing structures please advise me, is this considered a new lease contract or an old Lease, how should we handle this situation Ken.

    • Nick Foster on July 5, 2017 at 12:38 pm

      Hi Ken,

      Thank you for the comment. I just sent you a direct e-mail. Please e-mail or fax me the documents for review and we can discuss further.

      All the best,

      Nick G. Foster

  7. John Waller on December 24, 2016 at 8:55 am

    I need to evaluate the options for a 100ft tower vs a 200 ft tower.
    A 200ft will likely lower my surrounding property value but presumably pay higher leases. How much more will extra 100ft pay? I have a 15 acre site in a crowded neighborhood. How can I locate other towers in my area.

  8. Timothy on August 11, 2015 at 9:40 am

    Would like to know, I have two cell towers on property, with the only tenants being the cell tower owners. No tenants at present. They are AT&T and US Cellular. I sold both leases in 2012, for 10 years of rent combined. But we have in our contract it says that we receive, 80% new tenants or towers on property.

    It’s going on 3 years with 0 tenants, we sold to TowerPoint Capital out of Atlanta, they just transferred leases to Melody Wireless out of California. Is there a percentage of how long it takes to get more tenants or towers on property or on towers. Really needing some extra revenue on property, is 9.2 acres. Thanks Tim Kellermann property owner/ tower landlord 7377 hwy bb union missouri , 63084 franklin county , thanks for the service .

    • Nick Foster on August 11, 2015 at 9:57 am

      Hi Tim,

      Thank you for your question. Adding additional tenants to cell towers may happen, or it may never happen. There is no percentage, or time metric, that can be applied in regards to adding additional tenants. However this brings up a good point though regarding selling cell tower leases.

      A property owner should only sell their cell tower lease in exchange for a lump sum payment. A property owner should disregard any sales pitch, and we do not recommend agreeing to, any language pitching potential upside with adding additional tenants. There is no guarantee that they will add additional tenants, and if anything you are giving up a percentage of your future rent.

      If a tenant contacts a property owner directly, before this deal, they receive 100% of the new rent. If a tenant contacts a property owner directly after they have agreed to a deal similar as this, they now have to give away 20% of their rent.

      If it sounds too good to be true, it probably is. I wish we had better news for you.

      Nick Foster

  9. Susan on August 29, 2014 at 12:13 pm

    I heard elevation plays a big part in cell tower location. Can u tell me what are the requirements?

    • Nick Foster on August 29, 2014 at 12:56 pm

      Hi Susan,

      The requirements differ in each area. In some urban markets the cell phone company may only need 30 – 50 feet in elevation. In some rural markets they will want to construct towers up to 200 feet. However sometimes higher is not always better (for example mid-rise buildings in major cities are often preferred over high rises). It really depends on the area and their needs. I hope this helps.

      Nick Foster

  10. Margie Vazquez on May 12, 2014 at 7:37 am

    I worked 10 years in this industry as Site Acquisition Manager for various of the top carriers in Puerto Rico. So if you need any assistance here on the Island, I will be glad to help you.

    • Airwave Advisors on May 12, 2014 at 7:52 am

      Thank you Margie. We will keep you in mind for Puerto Rico. Enjoy the weather!

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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).