With rising inflation across most sectors, it is no surprise that cell tower lease buyout rates have risen in 2023, while lease amendments rates have declined. However, unlike average house rentals and mortgages, there is not as much data available for cell tower lease rates nationwide. As a result, owners of both commercial and residential real estate may wonder what to expect when acquiring or selling a cell tower lease. Fortunately, cell tower brokers like Nexus Towers have the extensive knowledge and market research to help get you the best possible rates and structure the best deal for you whether it be a lease buyout or acquisition!
In any case, you probably have a lot of questions about cell tower lease rates in 2023 and beyond. For example, where can you find cell tower lease rate data? How can a consultant or broker help you get the best deal on a cell tower lease acquisition or buyout? Finally, how are cell tower lease rates calculated? In today’s guide, we will answer all of these questions and more, so let’s get started!
How Cell Tower Lease Rates Are Calculated
It probably goes without saying that there are many, many factors to consider when it comes to cell tower lease rates. However, it is important to understand some of the primary factors that affect the price of cell tower leases. This way, you can enter a potential deal with as much information as possible.
Location
The location of your land or rooftop space is by far the most important factor when calculating cell tower lease rates. Why? Because your location will determine how much demand wireless carriers have for service in the area, as well as the availability of other spaces (i.e. your competition). If there is high demand and few or no other spaces, you can probably negotiate a higher lease rate. Alternatively, if the demand is not so high and there are other potential areas to install cell towers in your area, you will likely get a much lower rate.
Wireless Carrier
No wireless carrier will tell you exactly how they calculate their own rates, as they prefer that you go into potential negotiations with as little information as possible. This way, they can give you a low-ball offer and get use of your land or rooftop for a fraction of its real value. Additionally, some wireless carriers have larger consumer bases and service areas than others. Bigger companies will likely command higher rates, while local providers will have limited budgets. The type of cell towers and antennas installed can vary from one provider to another, which can also have an effect on the final lease rate.
Square Footage
When you lease land or space to a wireless carrier, the contract specifies exactly how much space can be used for the cell towers and antennas. Naturally, the more space you lease to the carrier, the higher the lease rate (generally speaking). However, this does not mean that you should lease away half of your property just to get a higher rate. Moreover, most carriers will only lease the minimum amount of space needed to install and maintain their towers. Therefore, while square footage does affect the lease rate, trying to leverage square footage to get a better rate is not always the best option as you may be unknowingly giving away expansion rights
Expansion Rights
In many cases, wireless carriers will eventually need to install more than one cell tower or antenna. When specifying the square footage in your lease you want to ensure that you do not give away expansion rights. The reason for this is that when a carrier wants to add additional equipment, and therefore take more square footage, you the landlord should be compensated. Future upgrades and expansions can affect your rates, as long as it is written in the lease agreement that the rate can be increased based on these factors. This gives you the opportunity to negotiate a higher price, as you are allowing the company to put even more equipment on your land.
Local Ordinances
While this is related to your location, the laws dictating what you can and cannot have on your land can determine how much you could potentially get from a cell tower lease. For example, if a wireless carrier is only able to install one antenna with a relatively small range on your rooftop, they will pay very little for the lease. On the other hand, if the local ordinances are relatively lax, a wireless carrier may be able to install better equipment that can meet higher demand in the area. Again, the ratio of demand to land availability is one of the biggest factors, so learning about local ordinances and how they affect your ability to take advantage of high demand in your area is extremely important.
Residential vs. Commercial Zoning
The type of land you own (residential vs. commercial) can have a substantial impact on the lease rate. Generally, wireless carriers prefer to put their towers in commercial zones. It is easier to zone these types of areas and often allows towers to reach more people in densely populated areas. However, you can still get a good rate for a residential rooftop cell tower lease, as long as local laws allow you to do so.
Finding Cell Tower Lease Rate Data
Now that you know some of the most important factors that go into cell tower lease rates, it’s time to discuss the actual data. Unfortunately, cell tower lease rates are not made public. There is no central database that collects all of the lease rates nationwide or even the data in a given state or region. Thus, it is very difficult to give an exact number or “average” cell tower lease rate, especially when rates can vary widely for two locations in close proximity to one another. For example, you may have one cell tower that pays $100 per month to the landowner, and just a few blocks down the road, another cell tower that pays out $5,000 per month to the landowner.
For this reason, individuals who are interested in leasing their land to a wireless carrier or even looking for a lease buyout often contact consultants or brokers. Cell tower consultants and brokers have collected private data based on their existing clients and knowledge of the market. This way, you don’t need to do any guess work when trying to find the real value of your property during a cell tower lease negotiation or buyout.
Using A Cell Tower Consultant To Obtain The Best Lease Rates
You should never go into a cell tower lease negotiation alone. It may feel more comforting to go in with a lawyer, but a lawyer will not have the information you need to get a better rate. Consequently, you should definitely consider reaching out to a cell tower consultant to help you get the best possible rate and avoid getting ripped off by wireless carriers or other interested parties. Cell tower consultants have the expertise and understanding of cell tower leases to ensure that you can get the most out of any deal on the table.
Are you a property owner who has been approached by cell tower companies? Are you looking for a cell tower lease buyout? If so, be sure to contact the experts at Nexus Towers today!
