Cell Tower Lease Rates are a mystery for many property owners and with good reason. There is a lack of information available to property owners which in turn negatively impacts owners in negotiations. We want to turn the tables in your favor and share with you some industry secrets. So how are cell tower lease rents determined in the first place? To answer your question we want to walk you through a few factors that influence lease rates.
1. Desirability
Linked closely to the law of supply and demand, desirability means how bad does the cell phone company want your property. If your property meets their needs and there are no comparable properties nearby, then there is a really good chance we can increase rents much higher than their initial offer. If your property is similar to nearby properties, then the cell phone company may have other options nearby and rent higher than their initial offer will be more challenging to secure.
In new cell tower construction typically a cell phone company creates what is called a “Search Ring”. The Search Ring is created to identify a few properties to provide their radio frequency engineers options with real estate. Often we hear property owners say, “I have the best property in town…” when if they rode in a car along with the radio frequency engineer, as we have many times before, they would realize that they unfortunately do not have the best property. We also hear, “I don’t know what my lease is worth?”. The only way to know for sure how desirable your property really is to the carrier is to have your opportunity reviewed by cell tower experts such as Airwave Advisors.
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.
Sam H., President of Cal-Sorrento LTD
2. Capital Improvement Costs
Like any development project whether it be to construct a new house or an office building, costs are a heavy factor. In the case of constructing a new cell tower a cell phone company has many costs to consider. The company will need to hire an architectural and engineering vendor, site acquisition agents, and a construction contractor. Then comes into consideration the cost of the design. Are they proposing to install a rooftop cupola or a faux monopalm? A guyed tower or FRP screened signage? Did we lose you?
The cell phone companies have been constructing cell towers for over 30 years and there are now many designs solutions available to meet their needs. To truly understand the costs of the capital improvements associated with each design and how it impacts your property give us a call to discuss further.
3. Common Misconceptions
The following are common misconceptions of factors that do not influence lease rates:
Square footage – Occasionally a cell tower representative will try and justify a lower lease rate based on price per a square foot. This tactic is often used on property owners familiar with lease rates with office, industrial, or retail leases. While the idea translates from the wireless to real estate industry it is not really how your tenant calculates the value of the property.
Population Density – Although urban locations generally demand higher lease rates than rural location that is more to do with supply and demand than population density. Rural locations typically present cell phone companies more options and flexible zoning laws. Urban locations can often be difficult to construct cell towers in due to buildings obstructing coverage and stricter zoning laws. This can often leave less options available to the carrier in urban locations.
What your neighbor is receiving for rent – Often a property owner who is unfamiliar with cell tower lease rates will call a friend or a friend of a friend who has a cell tower to see what they are getting for rent. Cell phone companies like this method of valuation because it puts the property owner at a disadvantage because (1) the property owners sample size is typically small and (2) if the friends signed bad deals at low rents the property owner will think he got a good deal.
4. Conclusion
To truly understand the value of your cell tower opportunity you need to contact cell tower lease experts such as Airwave Advisors. With years of experience leasing cell towers for the top carriers in the industry we know exactly what the cell phone companies are looking for. This unique insight gives you a huge advantage in negotiations tipping the scales of negotiations in your favor.
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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).
Do you represent land owners in all 48 lower states in these negotiations? Do you work on a percentage or flat fee?
Hi Al,
We have helped out property owners across the United States. Please give us a call to discuss our fees.
All the best,
Nick G. Foster
We own a condo which the building has 55 units, which is located in Madeira Beach FL. We were told that a leasing company would like to put up a cell tower and would pay our association $40,000.00. How large are the towers that they will be putting up ? It is all commercial property and surrounded by other condos.Their doesn’t seem like much room to put a tower on the sides of the building.Any information would be helpful and pictures would also be a big plus.
Hi Lisa,
The proposed tenant will need to provide you plans, photos, etc. Every site design is different. If you are the board, request the details you are looking for from the tenant. If you are not on the board, have your board request. The board needs to make sure they engage experts, such as us, to ensure they get fair terms in the transaction.
All the best,
Nick G. Foster
I received a call from Verizon concerning a proposal to put a cell tower on my property. I was told that they would email the proposal a few weeks ago. However, I have not received a proposal as of yet. Its possible that they sent it to the wrong address. I did not get the contact information from the representative I was very busy at that time and assumed that they would send the proposal to my email address. Do you know how I can find this contact?
Hi Linda,
If Verizon wants to lease your property you will hear from them again. They will either mail you another letter, or send someone to stop by and knock on your door. If you don’t hear from them again, they may have moved on to other opportunities.
All the best,
Nick G. Foster
In negotiation with Verizon on a proposed tower. Please call me.
Hi Donald,
I just sent you an e-mail. Let’s discuss today or tomorrow if you are available.
All the best,
Nick G. Foster
What rates do you charge for advice?
Hi Joan,
We don’t list rates online as rates change over time. If you would like the most recent rate for our services, please give us a call at (888) 443-5101.
All the best,
Nick G. Foster
I am presently in discussion with Capital Telecom, LLC about leasing property for a 250ft tower
What is your fee schedule for reviewing and advising the lease?
Thanks
Frank
Hi Frank,
Please give us a call at (888) 443-5101 to discuss your opportunity.
All the best,
Nick G. Foster
I serve on an association board. We have a water tower that supplies around 600 residents. We are located in central Illinois approximately 1 mi west of interstate 57 just north and west of Paxton, Il. I would appreciate more information on your service. My number is 217-493-2865. Thanks
Hi Perry,
Thank you for the post. Does your water tower have any cellular tenants at present?
Nick G. Foster
My site was illegally acquired and a 2G , 3G and 4G towers were built on site . there was no lease agreement since 1981. How can I determine the Lease Rental and How can I determine the compensation payable backdated since 1981 ?
Hi Paul,
Interesting situation. I just sent you an e-mail, lets discuss further.
Nick G. Foster
I’m curious of your thoughts on Ubiquity CE renting rooftop space at Sears and Kmart locations? Thanks in advance.
Hi Mark,
Ubiquity CE was formed by Sears as a was to re-position their real estate portfolio (bring in cash flow on many vacant buildings). Their challenge I think is two-fold (i) Sears and K-Mart buildings are typically not the highest elevation in a given area. With that in mind, a cell phone company may construct a taller cell tower on the shopping center owner’s land or go across the street to the building with a higher roofline. (ii) It is a wait and see strategy. Carriers when looking for a new location will knock on doors of properties of interest to them. Ubiquity CE soliciting carriers in the reverse likely will not work because that is not how the industry operates.
In short, we shall see if the idea works over time. My guess is their data center strategy has a shot, the rooftop strategy will be a passive play that may work here and there, but is not enough to float a real estate portfolio.
Thank you for the comment Mark!
Nick
“Ubiquity CE soliciting carriers in the reverse likely will not work because that is not how the industry operates.
In short, we shall see if the idea works over time. My guess is their data center strategy has a shot, the rooftop strategy will be a passive play that may work here and there, but is not enough to float a real estate portfolio.”
i tend to agree. It does look like they plan on being one of the premier national data center operations in the United States. It would be quite an amazing accomplishment if they were to succeed.
Thank you for the endorsement Larry. Give us a call back whenever you have more questions. All the best!
I contacted Airwave Advisors immediately after being called about a cell tower placement on my property. I received very helpful and professional information and advise from the individual at Airwave Advisors. I would recommend anyone contact them. Cell tower placement can be an ever changing set of circumstances that can best be advised by a professional.