Tower Genius’ How to Determine the Value of Your Land For a Cell Tower Lease...
Okay, so what exactly makes a cell tower lease great a great deal or a terrible deal? Forget about all the previous decade’s unprecedented advancements in wireless technology, the roll out of 5G networks and growing demand for cellular networks.
All you really care about is getting the best return for leasing your rooftop or ground space for a cell tower land lease or rooftop telecommunication lease and not getting taken advantage of by the swamp creatures who are employed as cell tower lease site acquisition leasing consultants you may be talking to about leasing a tower on your land.
The installation of cell towers requires land, usually a 100′ x 100′ area for a monopole or lattice cell tower. Guyed wire cell towers while cheaper to build for developers will encumber more of your land since they require three anchor points and can take up 5 or 10 acres of your property.
In most cases, the cell tower companies will lease your land and they do not buy your land in the United States. A word of caution, if you are approached to put a tower on your property and they are offering you a lump sum up front you need to look very closely at what they are proposing. If you have been approached by a cellular tower development company like American Tower, Crown castle, Vertical Bridge or SBA Communications, or by a wireless carrier like US Cellular, Verizon Wireless, T-Mobile, AT&T or Sprint, you need to quickly figure out what the proper value of your location is before your start negotiating. Don’t assume your attorney has the slightest idea of what the lease is worth even if they have seen a handful of these deals over their career. Seek the opinion of an industry professional who has seen thousands all over the USA. Or flip a coin, it’s up to you.
Here are some of the components of our “Secret Sauce” that help determine what your potential cell tower location should rent for.
Understand the Value of Your Specific Property of Building’s Location
- Location is a primary factor in determining the value of your particular real estate asset when determining how much leverage you have. Is your site going to lease for $500 per month or do you have a rooftop that can lease for $4,000 per month? Cell towers proposed in rural or suburban areas can have multiple available property sites but at a closer look the supply of properties can be influenced by the surrounding federal land vs. private lands, wetlands, proximity of roads and fiberoptic, topography, and of course zoning ordinances. Is there an abundance of land available in the carrier’s search area for the installation of cell towers or is the choice narrowed down to only a handful or less of possible properties?
- If you have a neighbor willing to lease to a tower developer for a low price, or there are 5 other rooftops of equal height in close proximity, the rental price will likely never exceed $500 to $1,000 monthly. They are going to almost always choose the path of least resistance in cell tower lease negotiations.
- Property in major metro areas that is in high demand will usually fetch a higher price as long as you are dealing directly with a carrier. Often times when approached by a tower developer you can not circumvent them since they are likely kicking back some favors to their local carrier brethren in-house. Yes, that’s the way it is.
Determine the Influence of Elevation of Land and Topography
- Early on while carriers were developing their networks they build towers on mountain tops and highest elevations to blast the signals as far as they could. Now with hundreds of thousands of macro cell sites deployed in the United States, and with 4G and 5G technology, coverage needs to be closer to the ground. Carriers want to cover gaps and specific areas to improve data capacity. Elevation and topography are important factors. They are more of a key factor when determining the value of an existing cell tower lease agreement nearing expiration that needs to be extended or amended. Questions that need to be asked are, can the tower be moved or relocated easily? What will it cost them to move? If the tower needs to be replaced, will they need a multi-site solution?
- If your rooftop is the highest rooftop in an area surrounded by residential homes, chances are you are sitting on a wireless goldmine. Don’t get bamboozled by carriers telling you otherwise.
- Having a high elevation does not equate with a cell tower lease being priced higher, but it can and must be evaluated on a case by case, site by site basis.
Interpret Local Zoning Cell Tower Zoning Ordinances and Evaluate Carrier Coverage Needs
- The Partners of Tower Genius LLC know a thing or two about cell tower zoning and land use when it comes be leasing and building cell tower. In fact, Kevin Donohue helped create the first cell tower ordinance in the USA where a wireless carrier sat down with a municipality to write an ordinance which was mutually beneficial and became widely adopted and is now used in about 80% of all wireless telecommunication ordinances in the United States today. Municipalities with difficult zoning regulations will usually cause cell tower lease rates to be higher.
How Does The New Cell Tower Fit Into The Puzzle Of Other Cell Towers in the Area?
Another determining factor how your site fits into the puzzle of the particular carrier’s coverage. What is it’s proximity to other towers? Is your tower with Crown Castle and is T-Mobile a tenant? How does that factor into the valuation if there is an American Tower site about a half mile away where Sprint is a subtenant? What about the 2020 merger? What about possible consolidation? Didn’t T-Mobile and American Tower recently decide to “cooperate”? What about AT&T? Aren’t they still fighting with American Tower? Yes folks, it’s a rooting tooting circus and you need to figure out the puzzle quickly if your are going to stand a chance.
- Local zoning laws dictate the spacing between two adjacent towers, but it doesn’t account for cell tower companies and their internal battles for market share.
- Carrier demand for providing voice and data services, and the tower companies need to show Wall Street that they can still be profitable will cause them to cannibalize each other. As new CEOs come and go they often try to implement dumb strategies that may work for a while, but eventually fail. And rogue cell tower companies who attempt to undercut the competition will eventually fail. What both forget is that without a reasonable and fair cell tower lease agreement they will not be able to maintain a viable network. Carriers and tower companies who have a business model of leasing for lowest rents possible will not succeed in the long term.
- If you’re negotiating your own cell tower lease agreement don’t expect the other side to tell you what the optimal rent and business terms should be.
Are you sick and tired and frustrated dealing with representatives of Crown Castle, American Tower, SBA Communications, Blackdot, Md7, Lyle Company or other usual suspects? Or have you gotten the sense that they may be feeling the same way about you? Do you feel shortchanged or that you are at an impasse and just not making progress in your discussion year after year? Do you need a second opinion before you cash out of your cell tower lease or renew an expiring lease? If you need an expert, remember that the rental price is only one component of a cell tower lease agreement. Tower Genius typically recommends two to three dozen modifications of the average proposal that crosses our desks. We can help. We’ve seen thousands of these deals.
