Q: Who are the carriers who could likely present me with a cell tower lease to be negotiated at my property?
A: Generally the wireless carrier will not present you directly with a cell tower lease. One of their wireless site acquisition or real estate managers will usually contact you first to gauge your interest level. You want to make sure before entering into a cell tower lease agreement with any of the wireless carriers doing business (ATT, Sprint-Nextel, US Cellular, Metro PCS, ClearWire, Verizon Wireless, Alltel, T-Mobile) or sign a contract with any of the large tower development or rooftop management companies (AAT, Crown, American Tower, SBA) that conduct your due diligence, but don’t wait too long.
Also if you’re lucky enough to be contacted by any of these firms, make sure that your you or your lawyer don’t negotiate yourselves out of a cell tower lease. Often times attorney’s start marking up a lease agreement just to get billable hours. If carriers have to waste a lot of time going back and forth they will move onto another site that’s willing to do business, and then you will wind up looking at the site instead of collecting rent from it.
Q: What should I look for in my cell phone tower lease?
A: A properly executed cell tower lease should protect your ground space rights, rooftop space rights and address subleasing / subletting issues that many cell site owners often time miss. It will also include tax language to protect you from assessments. Also, it is crucial to properly develop the site (height of tower and available ground space) to allow for expansion and collocation which will increase revenues on the cell tower. All cell tower lease exhibit drawings should be completed by a state licensed architectural engineering firm. I could write a list of a dozen things that seasoned real estate attorneys miss regularly on cell tower leases, but then where’s the fun in that?
Q: I don’t know anything about zoning or construction project management, should I even bother with getting a cellular site built on my building’s rooftop?
A: The carriers will not select your site if it is not feasible for development from a number of aspects, mainly zoning, and land use perspective. Only enter into a cell tower lease that puts the burden and expense of obtaining permits and approvals on the carrier or tower company, not on you the Owner/Landlord.
Q: What if cell towers become obsolete? What happens then?
A: Carriers are heavily invested into the development of the wireless network. Over 70% of the U.S. population uses cell phones. So if you hear rumors about a balloon or blimp or satellite being used for cellular technology don’t be fooled, cell towers are here to stay. We didn’t stop using Sony Walkmans either, they just call them iPods now, but people will always want to have personal music players, and the same holds true for personal communication devices.
Q: How long will my cell tower lease be good for?
A: When you sign a cell tower lease the lease term will be initially for 5 years with two renewal terms in most cases, and an additional ten year term after that. Since no one has a 35-year cellular tower lease as of yet, we can’t say how long they can be extended for, but assume that your cell site leases will be extended for as long as you own the site and people need to speak to each other on wireless devices.
Q: How much can you get for your cell tower lease?
A: Isn’t this always the big question… And our answer is that it depends how badly they need your site and where you are located. The closer to the heart of a major metro area, the greater the demand for wireless coverage and capacity will be, and the more you can get. Rooftop sites vary from ground leases. For example in Columbus, Ohio you might get $1,100 per month each for three carriers on your rooftop totaling $3,300 per month. While if you had a cell tower on your property in the same city you might get $1,200 for the first carrier who built the tower, and to additional carriers pay rent to the first carrier to co-locate on their pole, and then each pay you $900 for ground space rights, or a total of $3,000 per month.
Q: Shouldn’t My Attorney Be Able To Guide Us?
A: A cell tower lease is a very intricate and specialized contract that is weighted heavily in favor of the cellular carrier. But think about it, it needs to be. Getting a cell tower built on your property is like having Donald Trump saying, “I’d like to have a small portion of your ground space, and I’m going to build a structure on your property that costs hundreds of thousands of dollars at MY expense, and it can potentially bring you $1-2 Million in rental income over a 25-30 year period if we can develop it properly. But I’m only going to do this if the contract protects my investment. And if you don’t like it, no hard feelings, the guy next door has 2,000 square feet of space and could use the retirement money.”
Now nothing against Mr. Trump, because he is an icon of success, but if you were going to sign a deal with him would you use an average attorney or get a top-gun attorney? And that’s where we run into a shortage of talent in the marketplace. Those who can afford it hire a specialized cell tower lease attorney, those who can’t cross their fingers and hope that they are getting a good deal.
That’s why cell tower development and leasing on your own is a challenge and why property owners who can find a partner to work with are well served in both the short and long term.
Q: How can I get a cell tower lease signed for a tower on my property or antennas placed on our roof?
A: Having an uncle working in the real estate department at one of the carriers is your best bet. If that’s not an option, submitting your site to the carriers directly gives you roughly a 1 in 1,000 to 1 in 10,000 chance for site selection.
Here’s our insider secret to getting a cellular carrier interested in your site, revealed for the first time anywhere. First, pray to the gods of Radio Frequency. Then print up a dozen or so 18 inch x 24 inch “bandit signs” on your property that say in bold letters “I Want a Cell Tower On My Property.” Your neighbors will probably steal them, but keep them posted on your property in a visible area. If a site acquisition consultant happens to be driving that way, you should get a call.
Last Question… (Extra Credit)
Q: What’s the difference in signing a cell tower lease at $2,000 monthly with 2% yearly increases vs. the same monthly rental amount at 3% early increases over a 25-year cell tower leasing term?
A: The difference is $132,000 over 25 years. WOW!! Are you happy or are you kicking yourself?