How much is my cell tower lease worth? If you’re a property owner who has been approached about signing a new lease or an existing leaseholder who has an opportunity to extend or sell your cell site lease, this is a critical question. While you’re probably looking for a straightforward dollar amount, the reality is one doesn’t exist. Cell site lease rates vary, but there are some standards that should always be considered when calculating the value of your cell tower lease.
How attractive is your site?
The old saying “location, location, location” holds true here—plus a few other things. Desirability in this context is defined by high demand for wireless coverage coupled with scarcity of locations. Rural settings with small populations secure lower rental prices than heavily populated, urban areas that require solid network capacity and coverage. If the site is in an area where zoning laws make it particularly difficult to build a tower, the value of the lease may increase.
How’s the competition?
When many landlords are offering alternative sites, the odds of landing a premium rental rate are lessened. This is often the case in commercial areas where sites share similar characteristics and are located side-by-side. If your neighbor’s land is just as attractive as yours, and he is competing for that lease, your negotiating power can be threatened.
Is it a cell tower, or are antennas being added to an existing structure?
Rental rates are typically higher if a carrier doesn’t have to spend hundreds of thousands of dollars to build a new cell tower from the ground up. Adding antennas to a structure is more cost-effective for them, and that can mean more money for the leaseholder.
Is it a brand new lease or an extension of an existing lease?
Rental rates tend to be higher with renewals or extensions because if the lease falls through, the wireless provider may need to replace it with a new tower to uphold service. A single tower used by just one tenant costs around $316,000 to build and maintain over a ten-year period according to analysts at Nomura Equity Research. It is in the carrier’s interest to work with an existing lease as opposed to starting fresh. So, if you’re a cell site leaseholder with the chance to renew, it is crucial that you understand your position and use it to your advantage.
To pull all this information together with a practical example—let’s say antennas were installed on the roof of a hospital, which is the only non-residential structure in a densely populated residential area. Now the lease is up for renewal. The site is attractive, competition is low, service was established through an antenna-add, and it’s an extension of an existing lease. This is a formula for a lease that should command a high rent.
Cell tower advisory services are invaluable when it comes to determining the real value of your cell site lease. The experts at The Filo Group have been involved in thousands of wireless transactions and have a deep understanding of the highly nuanced telecom industry. This level of knowledge is essential to the process of cell tower lease valuations. Let us put our expertise to work for you and ensure that no money is left on the table in your cell site lease transaction. Contact us for a free consultation today.