How Can You Optimize A Cell Tower Lease Agreement’s Value In 2023?
Can You Make Money From A Cell Tower Lease Agreement In 2023 And Beyond?
All of the above questions are ones that property owners across the United States are and should be asking.
Short Vision and Long Structure
The quick answer to all of these questions is definitely “yes”, but property owners need to stop using the same method to not only determine how much cell tower rent they should charge under their cell site agreement, but, more importantly, how that cell tower lease agreement should be structured not only on day one of the agreement, but throughout the term of the cell tower lease.
Property owners need to combine “Short Vision” And “Long Structure” to both optimize the amount of money they get paid and to protect themselves and their property for years into the future.
Cell tower lease rents range from a few hundred dollars a month to several thousand dollars a month.
Average Rates
In 2022, most new cell tower lease agreements initial monthly rents were somewhere between from $400 per month to almost $2,000 per month, with the rent rates varying based upon several factors including the location, type of tower, cell tower tenant and cost and restrictions to build the cell tower site.
Cell tower rent rates did increase nominally from 2021; however, even with inflation rising from 2021 to 2022, the cell tower companies were forcing cell tower rent annual rent escalators from an average of approximately 3% annually to around 2% annually, which on its face seems slight, but over a typical cell tower lease term, between 30-50 years, could cost the property owner more than $200,000 over the life of that cell tower lease agreement.
Lifetime Value
As important as it is for a property owner to focus on the monthly cell tower rent, that is not how you make “REAL” money from a cell tower lease agreement.
A property owner should not focus on the cell tower monthly rent, but should actually focus on how the rent is calculated over the life of the cell tower lease agreement.
What do I mean?
If a property owner focuses on how much cell tower rent they’re getting every month and not how much value is being derived by the cell tower company from the use of the property, the property owner will get a check every month for rent no matter what that amount may be, as it is already predetermined based upon the terms or, more accurately, the structure of the cell tower lease agreement.
However, the property owner will never have any upside potential related to what the cell tower company is actually getting from the property by having the ability to participate in the value the cell tower is deriving from the property.
The property owner is getting paid, but the cell tower company is establishing wealth by an appreciating asset that grows in value for the cell tower company based upon expanding profit margins due to the rent that it has locked in with the property owner.
If a property owner wants to get paid, then they should focus only on the scheduled rent under the cell tower lease agreement, but if that property owner wants to build wealth via a cell tower lease agreement, he or she should focus on the structure of that agreement.
Remember, agreeing that cell tower rents are a derivative of the cell tower lease structure, the rent by itself is not structure.
If you have questions regarding the true value of your property for a cell tower lease agreement and what the cell tower on your property is worth, contact us today.
Get More Money! Get A Better Lease!! Get Vertical!!!
