asked on January 6, 2023

Is $1,300/m a competitive offer and is it possible to increase the monthly rent if they bring in more service providers on the cell tower?

I have a 1.25 acre commercial lot along a highway. I was approached by a company to put up a cell tower on behalf of T-mobile. The soft proposal (with limited information) is $1,300 / month for a 30-year lease for a 50’ x 50’ area on the property. I have requested the formal proposal/ contract to review the additional terms and that is pending.

I’ve read some great posts such as to add an inflation clause (i.e 3%- 4.5% yearly), remove the first right of refusal, insurance, etc.

However, is this a competitive offer as far as monthly rent or could it be higher? And is it possible to add a clause to increase the monthly rent if they bring in more service providers on the cell tower?

Any advice / guidance is appreciated.

Leasing

Leasing | T-Mobile | Inflation

Answers to the question:

Answers

Whether an offer of $1,300 per month for a cell tower lease is competitive depends on various factors, including location, market conditions, the terms of the lease agreement, and the number of wireless service providers colocated on the tower. Here are some considerations:

Location: The location of the cell tower can significantly influence lease rates. In high-demand urban areas or locations with limited tower sites, lease rates tend to be higher. Conversely, in rural or less densely populated areas, rates may be lower.
Market Conditions: Market conditions play a crucial role. If there is high demand for wireless services in your area, leading to multiple carriers seeking space on the tower, it can drive up lease rates.
Lease Terms: The specific terms and conditions of the lease agreement are critical. Factors such as the lease duration, rent escalations, and any additional terms negotiated can affect the competitiveness of the offer.
Number of Service Providers: The presence of multiple service providers on the tower (colocation) can lead to higher lease rates. Carriers often pay additional rent for space on the tower, which can increase the property owner’s income.
Negotiation: Property owners may have the opportunity to negotiate the lease terms, including rent amounts. Negotiating from a position of knowledge about market rates and lease terms can potentially result in a more favorable offer.
Comparable Leases: Researching comparable cell tower lease agreements in your area can provide insights into what other property owners have negotiated for similar tower sites. This can help you assess the competitiveness of the offer.

Regarding the possibility of increasing the monthly rent if additional service providers colocate on the tower, it depends on the terms of the lease agreement. Many lease agreements include provisions for additional rent (also known as “additional carrier rent” or “colocation rent”) when more carriers use the tower. Property owners should carefully review their lease agreements to determine whether such provisions exist and how they are structured.

Typically, additional carrier rent is calculated based on a percentage of the rent paid by the new service provider(s) or a fixed amount specified in the lease agreement. It’s important to note that the terms related to additional carrier rent should be clearly defined in the lease agreement to avoid disputes.

If your lease agreement does not currently include provisions for additional carrier rent, you may consider negotiating with the cell tower company to amend the lease to include such terms if additional carriers express interest in colocating on the tower. However, negotiations would need to be conducted in accordance with the existing lease terms and applicable market conditions.

Consulting with experts in cell tower leasing or legal professionals experienced in telecommunications can be valuable when evaluating and negotiating lease agreements to ensure that you receive competitive terms and are well-informed about your rights and options.