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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Property owners will tell you, getting a new 5G cell tower lease is like winning the lottery, but a windfall can quickly turn into a nightmare if landlords fail to include the right language covering key lease terms that will cause problems in the future if not addressed today.

So, before you start celebrating, take a deep breath and think about what's going on at your site and how it will affect other tenants (if any) who may be sharing your property. With so much competition out there, landlords may feel they have no choice but to offer up their properties at rates and terms they would never offer other tenants. So if you're not careful, you could end up getting yourself into a situation where you have the tail wagging the dog when comes to what you can or can not do on your property after signing a cell tower lease.

Here are some things you need to consider before signing off on any new tower lease:

• Right to Relocate - Most cell tower leases require the landlord to give wireless tenants 24/7 access to their equipment while tenants are rarely obligated to move their equipment to allow future development. Why is this a problem? Unlike traditional 2,5, or 10 year commercial leases, wireless leases offered by AT&T, Verizon, or T-Mobile can be as long as 30 years and have little if any way for landlords to cancel their wireless lease. So, if you don’t secure the right to relocate the cell tower, you could be limited or denied the ability to develop your property over the next 30 years. Moreover, this omission could impact your ability to sell your property to a buyer who intends to develop your property after purchase.

• Maintenance and Upgrades - Wireless tenants like American Tower or Crown Castle periodically need to repair, improve or upgrade their tower equipment. Depending on the project this may require heavy lifts, cranes, supplies or materials to be placed outside the tenants leased area for extend periods of time with construction work occurring on the tenants schedule with little or no concern for other tenants. Landlords who fail to require wireless tenants to have prior written approval for tenant improvements that require use of property outside the tenants leased area face the risk of having wireless tenant equipment blocking or occupying key areas of the property causing business disruptions for the landlord and or other tenants.

• Assignability - Landlords often miss terms that allow the wireless tenant to assign their lease to an unaffiliated third party without prior consent or landlord approval. This could be a costly mistake for landlords who want to increase revenue by adding new tenants because by allowing the tenant to transfer the tenant can sell their leasehold interest to another and profit from another party who may have leased from the landlord directly. In some cases, wireless tenants like Verizon have sold their interest via MLA’s (Master Lease Agreements) to tower companies like SBA or Crown Castle then they lease back on same tower at a lower rent without having to pay additional rent to the landlord and this is all due to poor or no lease language that prevents this from happening in the first place.

Key Takeaway - It’s easy to see how unknowing landlords can lose tremendous value if they don’t understand how a tower lease can impact their property both now and the future.

CSA recommends a site evaluation for any landlord who is interested in adding or is currently negotiating lease terms with a wireless tenant and no instance should a landlord negotiate without a cell tower professional on their side who knows how best to protect your properties value while maximizing your cell tower income. Contact CSA today if you would like to know more about how we can help.