Negotiating a Cell Tower Lease: Getting Help
A recent survey of the FCC's antenna structure registration database showed that in 2001 there were roughly 89,000 antenna sites registered with the FCC. Today, there are over 109,000 registered sites. It is important to note that most towers under 200' are not required to be registered, so there are significantly more towers in the US than this number suggests.
All of these sites are on someone's property, whether the tower company or antenna site owner owns the land underneath it or is leasing it. Over the past 5 years, the tower companies and wireless carriers have predominately chosen to lease land rather than buy it. Assuming that the increase in antenna structure registrations constitutes just 50% or all new leases, in the last five years, that yields 40,000 new cell site leases.
From my experience in the industry procuring land and structure sites for cell towers and antenna sites, the vast majority of the landowners who are approached to lease land or space on their building have very little experience with this type of lease agreement. The landowners often inquire with their associates and colleagues to find out how they should negotiate. However that assumes that the landowner's colleague negotiated a good agreement in the first place, which is often questionable.
So where is a landowner faced with negotiating a lease agreement to turn? First, start by asking the pertinent questions from the agent interested in leasing space for a cell tower.
What is the going rate for a cell tower in this area? What is your average lease payment? What was the amount of the last lease agreement you signed? Can you show it to me? Why are you looking at my property? Is there anything special about it?
While you may not get straightforward answers, you will at least get a sense of how this agent operates. From there, be prepared to do some research. Ask friends and business associates if they know of anyone with a tower on their property. Search the web for cell tower lease rates and for cell tower leases. Be aware that every piece of property is different and that each has its own value to a wireless carrier that may not be reflected by its total value. Call your local zoning or planning office to discuss what the requirements are for a tower and whether or not your site meets them.
Lastly, retain the services of an attorney, consultant, or both. You are preparing to sign a 25 year agreement that will tie your land up, make sure that you understand it well. The cost of a qualified attorney or consultant is minimal compared to the money recieved over the term of the lease. If you are using an attorney, ask specifically how many wireless leases they have negotiated. If the answer is less than 5, look for someone else. A wireless lease is not like a standard commerical lease even though some of the clauses will be the same. Your attorney really needs to know the difference or he/she could end up costing you the lease.
A cell tower lease can be a very lucrative proposition for you. We in the industry like to call it mailbox money- you sit back and receive a nice monthly check for doing nothing other than allowing your land to be leased, often for significantly more than any other type of use on the property. While the reward can be great, make sure that you minimize the risk by asking the questions and getting the outside help you need.
Ken Schmidt is the owner of Steel in the Air, a cell tower consulting firm. Steel in the Air provides expert consultations on cell tower valuation, cell tower lease negotiations, lease renegotiations and lease buyouts. Ken has been quoted on cell towers in the NY Times and numerous other publications.
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