TIPS FOR NEGOTIATING A CELL TOWER LEASE
On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Friday, March 30, 2018.
Cellular companies are always looking for new places to build the towers they need to transmit customer data. If you’ve been approached by one about leasing a spot on your land, you need to make sure that you are getting a fair deal.
While any bit of cash for land you aren’t currently using is probably appealing, you don’t want to practically give it away. Here are a few tips that can help you negotiate:
1. Remember that the company representative, no matter how nice he or she may seem, is being paid to get the company the best possible deal. In fact, there’s probably a bonus for the agent if the cost of the lease is low enough. He or she is not going to volunteer any information that would increase your bargaining power. That’s one of the reasons that people often look for advice from a commercial real estate attorney who is familiar with cellular tower leases.
2. The actual value of the lease increases according to how many different carriers want to use the tower. That means that if you have a prime spot that could benefit a number of cellular companies, a tower on your property has actual investment value. That should be considered when setting the cost of the lease.
3. You don’t want to agree to a rent-per-square-foot deal. The actual size of the cellphone tower can be pretty small. Agreeing to a lease based on square footage of land used is a sure way to undercut your own profits. The value of the tower is the same regardless of its actual land usage.
4. Negotiate a regular increase in the lease rate for inflation. You can generally come to an agreement about how often the rent will adjust for inflation and what marker will be used to set the adjustment. A cell tower is likely to stay put for years. The rent you charge today won’t look so handsome in a decade once inflation kicks in.
Keep in mind that information is power when you’re negotiating. Good research and the appropriate consultations will keep you from finding out in a few years that you were shortchanged.
Source: Technogog, “4 Facts to Know About Cell Tower Leases,” Kristofer Brozio, accessed March 30, 2018