What determines Cell Tower Lease Rates?

If you’ve been approached by a cell tower company or wireless carrier who have shown interest in leasing a part of your land, then you’ll no doubt have many questions.

Naturally, the majority of landowners will want to know how much rent they can receive from having a cell site on their land and the implications involved in a long term agreement.

If you’re considering having a cell site to be your next business venture, you’ll need to know the ins and outs of what determines a cell tower’s rental rates.

Rooftops generally pay better and here’s why

If you own a commercial building, you will reap the financial and functional benefits of having a rooftop cell site.

A rooftop site will usually earn landlords higher rental income per month because it has fewer expenses when being constructed, unlike a cell site, it is not required to build a tower to support its antenna facilities.

Consequently, there is a substantial amount of costs saved through wireless carrier personnel such as workers responsible for maintenance. Other costs saved are labor and materials and employees suffering accidents on the worksite.

However, there are a different set of challenges a rooftop site presents, primarily being the intricate process of installing a rooftop tower safety on a building with people living in it. To commence operations governing approvals need to take place.

Although difficult in metropolitan areas, once landlords receive the zoning approvals in their jurisdiction, they will then need to obtain a structural analysis to ensure the building roof can sustain the burden of a heavy cell antenna and the work involved, i.e. drilling, fittings and steel reinforcement work etc

Raw Land Sites are the norm

 

The majority of landowners live on Raw Land Sites where the development of a cell tower is required, the total amount necessary to install a cell tower and its components will be from 20’x20′ to 40’x40 square feet.

Raw land sites generally will generate lower monthly rents than a rooftop site because of the added installations needed. One of these costs is the equipment which includes electronic cabinets, power, telco cabinets, fences and much more.

The engineering requirements will also prove to be rigorous as the structure has to be built to a minimum height to hold the antenna being fitted. Antennas that are taller structures will be more effective for long-distance cellular coverage.

A wide array of towers can also be used, these types include flag, monopoles, guyed and so on.

Another factor is that Cell sites are usually situated on the outskirts of towns. Due to its more remote location, the demand for cellular coverage is lower compared to metropolitan areas as there is a smaller number of residents living in the area and fewer vehicles passing by.

Supply and Demand

Major metropolitan areas are prime targets for big wireless carriers as they contain a higher amount of inhabitants who live there, and the amount of rent you will receive will vary substantially.

Cell towers for example in large cities such as NY will typically generate more income than smaller cities like Missuola, Montana.

So how does the number of people living in an area affect monthly income for a landowner? Its quite simple, highly populated areas will require cell towers nearby to handle the enormous amount of consumer calls and internet traffic happening daily. Furthermore, cell towers are cheaper to maintain due to more cell sites being in one area.

How much is your Cell Tower Lease worth if you’re in a contract?

For cell tower lease buyouts, those that are tied up in a pre-existing contract will want to know how much their lease is worth.

The number of years remaining on the lease

If a lease is near its expiration date, a cell phone company will generally find themselves in a weak position. Cell sites will have to pay a substantial amount to find a location nearby to begin constructions for a new tower to keep up with the rigorous cellular demand.

A lease that is only a year or two from its expiration date, therefore, will be worth a lot more than if it had 30 years left.

Rent currently being paid and recognizing your cell sites value

The amount of rent a landlord receives per month will most certainly give him an advantageous position when making a deal with buyout companies.

If the buyout price is present in one payment, then a cell tower site with more than one carrier paying $4,000 a month will be worth more than a cell site which only has one carrier paying $1400 a month.

When cell sites have leases with multiple carriers it demonstrates its high worth, in areas located on city outskirts where the total number of cell sites is limited this becomes even more obvious.

Essentially Buyout companies are looking to buy leases as cheaply as possible; this is so they can charge enormous amounts to wireless carriers to use the tower.

As a result, it is normal for landlords to expect low-ball offers initially.

As a rule of thumb if a landowner receives a potential payment that is ten times less than what they earn on a yearly basis then it should be quickly refused.

Furthermore, if you have multiple buyout companies approaching you to buy your lease, this puts you in a position where you can sell to the highest bidder, giving you the best financial outcome possible.

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