5 Tips to Negotiate Cell Tower Leases
Tower Genius’ 5 tips to negotiate cell tower leases…U.S. Cellular carriers like Verizon, AT&T and T-Mobile and tower management companies like American Tower, Crown Castle, SBA Communications and Vertical Bridge are constantly trying to increase their profits and shareholder value as they rightfully should. They don’t view property owners and landlords as partners. Rather you are the “low hanging fruit”.
A small difference in the cell tower rental revenue or a slight modification in the rental escalations from an annual rate of increase to a per term increase can make a big difference to their bottom line and your bottom line. Cell tower lease “consulting companies” have popped up primarily consisting of individuals who worked for firms specializing in purchasing cash flow or selling rent reduction lease amendments on fear, and of attorneys who’ve never seen the inside of a courtroom. All three type have one thing in common, they’ve never actually developed a site but claim to be experts inhaling you get the best cell tower rental rates.
Have you been contacted by a cell tower development company offering to build a tower on your land or install wireless antennas and equipment on your rooftop for 4G or 5G?
If yes, here’s 5 things to help you succeed if you plan to go to battle alone against Goliath.
#1 Use Your Noggin. Don’t rush into negotiating a cell tower lease agreement.
- As a potential cell tower landlord, you need to gather as much “market intel” before starting to negotiate with the cell tower company or cellular carrier. Remember the deck of cards is always stacked against you, even if you’re a seasoned real estate professional. There are several factors that can drive the price up such as property elevation, carrier coverage area, zoning classifications, and surrounding neighborhood. Bottom line is the less choices they have to place the cell tower, the better that is for you.
- Is your wireless lease a direct carrier lease with Verizon Wireless, US Cellular, T-Mobile, AT&T or DISH Network, or is there a local cell tower company or developer building the tower to be sold or assigned to a company like American Tower, Crown Castle or SBA Communications, and will the carrier be their subtenant? If so, there may not be as much “meat on the bone”with your rent payment as you may think, and the deal cannot be structured the same way as a straight carrier lease would.
- Find out which cellular carrier subtenant the cell tower developer is building the site for. Go down to your local building of planning department and see who has proposed cellular sites recently in your area. Bring them a box of donuts, it can go a long way.
#2 Avoid Premature Negotiation. Let them spend money first before you start negotiating terms.
- Negotiations are over often before the property owner even knows they made a mistake. They want you to blurt out a rental price or sign a term sheet before you have any idea about the amount of leverage you may or may not have with your particular site. You will be dealing directly with a real estate site acquisition consultant who is incentivized to give you a deal that benefits their client, the carrier or tower company — not you. This is true for newly proposed cell phone towers and rooftop cellular sites, and it is true for exiting towers and cell sites that have expiring leases and need to be renewed. Remember, although they may be nice over the phone when you are talking to them, they are not your friend.
- Whenever at all possible, let them spend money at your site or property first before you agree to anything. Don’t negotiate prematurely. Tell them to come out and get you a site plan or a survey.
#3 Sometimes You Should Not Encumber Your Property. It’s Okay to say NO.
- During lease negotiations, sometimes, you need to walk a way from a deal to get a deal. Is it worth encumbering your property for a lowball cell tower lease offer of $300 or $500 per month? For some folks it would be a blessing but usually it is not. Sometimes the best cell tower lease is the one you don’t sign.
- If there are a dozen alternative property candidate choices nearby, you can almost be certain that the cell tower site acquisition representative is going to look for the cheapest solution. So they will almost always offer “take it or leave it” leases when proposing cell tower agreements, with little or no changes and horrible terms. Unless you are in a desperate situation, you should almost never take a deal like that. Walk away. Run. See ya. Don’t be a sucker for the bottom-feeding tactics that we often see these wireless leaches try to pull on rural property owners.
#4 Becoming a Wireless Landlord With A Cell Tower Lease Is Risky. Count the costs.
- Even if you sign a cell tower lease or option lease agreement there is no guarantee it will be built right away or even built at all. Even if you think you have a deal, there is no way of actually knowing if you are Candidate #1 or #2 or #3. Despite your best efforts, the carrier might decide to put your site on hold, they might redesign the search ring, they could defund the project or find an “artifact” or “endangered lizard” on your land that an environmental activist released to mess with your good fortune.
#5 Talk to Tower Genius. The wireless industry employs experts, shouldn’t you as well?
- Since the deck is stacked against you, it’s probably not a good idea to go into battle — negotiations — alone.
We can answer your cell tower lease questions. We have been providing cell tower coaching and lease consulting services for landlords exclusively for over 14 years, and have helped thousands cell tower landlords get the upper hand in their telecommunication lease agreements. The Partners of Tower Genius, Kevin and Steve have almost 50 years of wireless industry expertise. Call us at 888-313-9750.
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“Towering genius disdains a beaten path. It seeks regions hitherto unexplored.” — Abraham Lincoln