What Factors Affect Cell Tower Lease Rates?

450px-Cell-Tower[1]So like any basic negotiation, price is determined by supply and demand. So what should a property owner know to make sure he/she is optimizing the value of the site:

  1. Cell tower lease rates tend to be higher in more populated areas. Some urban areas command completely different lease rates, even though they are similar in demographics, but this not the only factor.
  2. Zoning and permitting requirements play a very important factor in the value of a site. The more liberal the permitting standard, the easier it is to find several sites that meet a cell phone carrier or tower company’s criteria. Subsequently, a cell phone carrier/tower company will need to pay more for a cell tower lease in an area that has more stringent standards than it would in one that has more lax standards no matter the population of the area.

 

The cell tower companies who contact a property owner may think that they have the benefit of knowing all of their options. The agent has reviewed the below factors in selecting your property, along with reviewing your actual site. You need an expert on your side who can review the same information that a site acquisition agent is looking at and can level the playing field by being able to help you determine what an acceptable market rent rates should be for your cell tower lease. The following factors are items that are taken into consideration by a site acquisition agent/cell tower company:

  1. Construction Limitations– A site acquisition agent will conclude both if a site has suitable access and space necessary for construction of a tower. An optimal site will have level terrain with minimal or no ground or airwave obstructions (i.e. tree cover); the more obstacles, the more expensive it for a tower company to construct a site. A tower company/carrier will sometimes be willing to pay higher rent for a more suitable site in order to avoid more expensive construction costs on a similar site. We have experts on hand who have built hundreds of sites, so we the capability of assessing what the cost will be for the construction of a tower on your property.
  2. Zoning/Permitting Restrictions– Prior to a cell phone carrier/tower company getting approval to build on a site, they must first get a conditional use permit or special use permit to construct their facility. Most local governments have permitting requirements that will establish parameters on where a tower may be constructed; therefore, one property may be able to skate through the approval process, while other very similar properties in the same immediate area may not.  What does this mean for a property owner? If its property is one that works, that property owner may be able to ask for a premium when it comes to a cell tower lease rate. We can perform the due diligence to see what options a tower company/cell phone carrier may have so that a property owner can take advantage of that information
  3. Access to Power and Telephone Service– All tower locations need utility and telephone service.  As a result, the farther the distance to telephone service and power, the higher the price tag to the cell tower developer.  So, a site acquisition agent will always factor this in what they can pay for rent.
  4. Ground Elevation– Elevation is important, but not the most important factor by far, as cost will always outweigh elevation.  If you have the highest point in the city or county, that is not a guarantee you will be chosen. The cell phone carrier/tower company always has the option to build a taller cell tower at a lower evaluation, as it may be extremely expensive at the end of the day.
  5. Cell Tower Site Alternatives– All cell phone carriers build tower sites to fit inside their network. Cell towers are very similar to pieces of a puzzle that, at the end of the day, have to fit together. The cell towers are set up to “transfer traffic” from one cell tower to the other. The cell phone carriers have an exact “search ring” that they use when constructing a cell tower, so that it will be able to easily transfer phone traffic. These search ring areas can be as small as .25 mile to as large as 5 miles. If a property owner knows the alternatives a cell phone carrier/tower company may have, this will give a property owner the information they need to optimize the value of their property. We can work with you to determine what alternatives a cell phone carrier/tower company may have, as this will give you the information you need to optimize the value of your property.

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