10 Factors landlords should consider when looking to increase cell site rent to market rate
As a landlord considering a market rent increase for a cell tower lease extension, there are several important factors that you should take into account to ensure that the new rent reflects the true value of the lease. Here are ten such factors, with an explanation for each:
Location and Demand: The desirability of the site's location, based on population density and coverage needs, can greatly affect rent. High-demand areas typically command higher rents. Researching local market demand and how other nearby towers are priced can provide a baseline.
Carrier Profitability from the Site: Understanding how crucial your site is to the carrier's network can give you leverage. If the carrier generates significant revenue from the equipment on your land, you may have room to negotiate higher rent.
Co-location Potential: If there is potential for additional carriers to co-locate on the tower, this increases the value of the tower to the operator and thus should impact the rent.
Lease Expiration Urgency: The closer the lease is to its expiration date, the more urgency the tenant may have to secure an extension, which can provide leverage in negotiating rent increases.
Current Market Rates: Being aware of the current market rates for new tower leases can help set a benchmark for your lease extension. Rates can be influenced by factors such as industry growth, inflation, and changes in technology.
Inflation and Cost of Living Increases: The rate of inflation and cost of living increases should be factored into the new rent to ensure that the value of the lease income does not diminish over time.
Technological Changes: Advances in technology can impact the need for towers or the amount of equipment a carrier needs to install. 5G technology, for instance, may require more equipment space, potentially justifying higher rents.
Replacement Cost: Consider the cost for the tenant to replace your site with a new location. High replacement costs can justify higher rents as moving and constructing a new site is often significantly more expensive than paying increased rent.
Zoning and Permitting Challenges: If new towers face significant zoning and permitting challenges in your area, this increases the value of existing sites and can be used to justify higher rents.
Comparable Lease Data: Research comparable lease data from reliable industry sources to understand the lease rates for similar properties in your region. This data can be leveraged during negotiations.
It's important to note that it may be necessary to consult with industry experts or use professional services that specialize in cell tower lease consulting to obtain the most accurate and up-to-date information. CSA offers free consultations for curious landlords who want to know more about the true value of their cell tower asset.
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