Are you a landowner who is interested in having a cell tower built on your property for increased rental income? If so, you probably want to know what the average rate is for a cell tower lease.
How much could you receive?
Landlords have been receiving as little as $100 to over $156,000 on monthly rent from big wireless carriers such as Verizon Wireless, Sprint Corporation, T-Mobile US, US Mobile and Cricket Wireless. Top Cell phone tower companies meanwhile such as Crown Castle International, SBA Communications, AT&T and American Tower can range from $3,600 per year to well over $60,000 per year.
With such a contrast in cell tower lease rates, it can be complicated to find out what your tower is worth. Landowners wishing to maximize their potential earnings long term could benefit from hiring a cell tower expert during negotiations.
The following are the factors you need to consider.
Ground Lease agreement and potential expansion
Ground lease negotiations begin with the amount of land required to start construction of the cell tower; this also includes access and exit points for the wireless operator. Rent prices will be affected by the amount of land needed.
Cell Tower Lease rates can also change if there is an agreement for expansion. Expansion occurs when additional equipment is needed on the property, which would take more space. Modifications to current equipment are also included.
Square foot value
Cell tower lease rates continue to increase year after year and depending on whom you ask will determine what answer you will get. Wireless Carriers and Cell Phone Towers will generally say the rental income of your cell tower will depend on square foot price.
Square foot pricing is a very simplistic way of pricing a cell tower and can be readily accepted by unsuspecting Landlords who receive a set figure. However, while this sort of pricing is common in commercial real estate, it should not be applied to cell phone towers.
Supply and Demand
Is coverage good or bad in your area, and does it meet the demand of its cell phone users? If coverage is weak, the need for better coverage will rise.
If coverage is inadequate, Wireless Carriers will quickly realise due to Customer cellphone complaints. These complaints will make Wireless Carriers find existing cell tower sites to begin negotiations for occupation. Consequently, this puts the landlord in a better position to negotiate a higher rental price, as coverage demand exceeds supply sites.
Rooftop Cell Towers on Commercial Buildings
If you are a landlord of a commercial building, an option would be to have a rooftop cell site. Rooftop sites usually pay landowners higher monthly rent as cellular carriers are not required to build cell towers to support their antennas.
Wireless carriers save money by not paying for tower maintenance and employees wages. Transmission tower workers who install and modify cell tower equipment can prove expensive due to the hazardous nature of the job.
The location of commercial buildings can also prove profitable to building owners, as generally they will be situated in metropolitan areas. Metropolitan areas are ideal for rooftop sites, as there are plenty of tall buildings to choose from for wireless carriers.
The installation of rooftop sites, however, can be problematic because of the construction itself.
Heavy equipment can compromise the structural integrity of the building, making it harder for Wireless carriers trying to gain jurisdictional zoning approval. The installation of rooftop sites, therefore, allow Commercial building owners to negotiate higher amounts of rent.
Cell Tower Lease Buyouts
Perhaps you already have a cell tower and have been approached by a cell tower lease buyouts company? If you have considered a lease buyout, you will probably want to know what’s the worth of your current lease.
Rent currently being paid and Lease expiration date
Depending on how much rent you receive each month will determine your buyout payment.
The payment of the buyout lease will be a lump sum based on the amount of rent you receive every month. A contract with only one year remaining, therefore, is far more valuable than one with ten years.
If your area has coverage demand, this may attract local landlords to have cell phone towers built on their land. With the increase of new landlords, wireless carriers have more options and will have more bargaining power in negotiations for your lease buyout.
Another variable would be the type of location; urban areas have been shown to have higher rental rates for rooftop towers compared to rural areas. Highly populated Metropolitan regions generally do not have a lot of spare lands available for cell towers to be built, making rent prices go up.
An example of cost differentiation would be Manhattan NY, where building owners can demand up to $4,000 a month in rent. Another state charging high rent would be San Francisco; cell tower lease rates are around $3,000 per month. In contrast, states like Los Angeles only charge roughly half of San Francisco; similarly, Idaho charges a relatively small amount of $1,400 per month. In highly congested areas cell towers are more efficient as they can handle more phone calls and internet traffic while effectively being cheaper to run.
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