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Demand Fair Market Value For Your Cell Site Lease

                 Demand Fair Market Value For Your Cell Site Lease

Factors Influencing Wireless Rent Amounts.  You know how much rent you are receiving from the carrier, but do you know how much it is worth?  Rent rates vary greatly depending on your location; proximity to population concentrations, such as busy freeways and residential and concentrated business centers; and how well you negotiated with the wireless carrier or tower company.

A carrier must develop (spend money) many sites surrounding your property (called a search ring) to find the best possible site.  Each potential site must meet or pass:

  1. Zoning requirements.  Various zoning reviews are required. In a Conditional Use Permit zoned area, carriers must meet commercial, boundary setback, noise abatement, neighborhood comments, public hearings, expert reviews, public safety, traffic impact, property value influence, aesthetic concerns, protected corridors, and more.
  2. FAA review on impact to flight paths for airplanes and helicopters.
  3. Power and Data. Available commercial power and high-bandwidth fiber-optic infrastructure available to be brought to the site.  For cell towers, drilling and trenching are often required to bring power and broadband fiber-optic cables to the tower location from distant off-site sources.  If not, carriers would have to spend upwards of $50,000 to test, engineer, build, and construct microwave communications paths on a minimum of two sites to carry data from your site back to to the switching operations.
  4. Geo-Technical Studies and Engineering. For cell towers, an auger would have to dig deep into the earth (30 feet or more) and take core soil samples to be tested to determine whether or not the soil can support the intended tower.  Too many rocks or too much sand or clay will cost carriers more to build the site, and construction cost would influence their site decisions.
  5. State and Federal historic preservation. Is your site on any historical list? Was your site a burial ground at one time? Are any endangered birds, plants, or insects living on your property?  Specialists will be hired to make the necessary assessments and filing with local, state, and federal agencies
  6. Environmental Impact.  Environmental studies, EPA reviews, and hazardous material testing are required.  Historical research conducted on your site will help determine if your property was ever used to store or manufacture hazardous chemicals.  The results may require additional studies and risk assessments by the wireless carriers or tower company legal departments.
  7. Structural Engineering.  Your rooftop must be able to support heavy steel beam structures, telecom equipment, commercial battery packs, and other heavy equipment.  Structural analysis, engineering, and reinforcement of your building will be required.
  8. Zoning Compliance.  Zoning laws defined by local jurisdictions will place limitations, restrictions, and conditions on cell site installation.  Some zoning laws prohibit the installation of cell towers, and others require negotiations with the planning department to allow the installation.
  9. Neighborhood impacts. Hearings, traffic assessments, parking availability, landscaping, and more will be studied and evaluated as part of the approval process.
  10. RF Engineering Designs. Antennas, once installed, cannot be blocked by nearby buildings, trees, terrain, or reflective water surfaces.
  11. Disaster Preparedness.  Earthquake, hurricane, and seismic activity considerations and design requirements are factored into the approval or denial of a cell site installation.  Tower installations are often required to meet extreme natural disaster events, such as 120 mile-per-hour winds or two inches of ice buildup on tower top equipment, or major seismic activities as part of the process of approving such installations.

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These are only some of the fifty governmental and engineering requirements that every cell site must pass to receive the necessary construction permits.  Now that you know what happens behind the scenes to get your site qualified and that $500,000 was spent to get your site on-air, a “consultant” tells you that your site is likely going away unless you reduce your rent?  Based on the entire industry history in the past twenty-five years, your site lease will not be terminated unless there’s a very strong and compelling reason to do so.  Sites will be terminated for only three very specific reasons: (1) duplication of sites due to mergers and acquisitions, (2) tower companies acquired duplicate towers and want to merge the sites to reduce rent obligations, and in rare instances (3) landlord bankruptcies.

Urban settings command higher rents than rural areas because they have greater population concentrations, and zoning codes are more restrictive.  Having your site on-air and carrying cell phone traffic confirms that you have passed a series of improbable and important hurdles that had to be overcome by the carriers to bring the site on-air—“improbable” because most sites that are picked for cell site development do not pass stringent governmental, environmental, and engineering hurdles.  The greater the hurdles the carriers have to overcome, the greater the value your site is to the carriers and the tower companies that purchased the towers.

Coverage Holes Must Be Avoided At All Costs

No signal

Turning off your cell site will create coverage holes, resulting in dropped calls and “zero bar” frustrations that result in customer dissatisfaction and mobile plan deactivations. Carriers spend billions of dollars every year to advertise the supremacy of their networks, so they can’t afford to turn off sites on a whim because they need to reduce your rent by $100. With so much time, energy, and capital invested in getting your site on-air, carriers will not turn off your site without considerable internal review.  Engineers are not motivated to recommend site terminations because their bonuses, performance ratings, and pure engineering pride are tied to their assigned areas performing well with as few coverage holes as possible.

Corporate is too far removed from individual cell site performance to dare recommend terminating sites at the local market level.  To the contrary, corporate finance understands the real cost of getting one site on-air (remember that they had to develop several sites to get your one site on-air) and will question any recommendations to terminate site leases.  While we did not quantify the worth of your site in a single hard rent number, you can see that qualitatively your site is vitally important to the overall network performance of their wireless system design. Anyone telling you otherwise either does not know about the inner workings of the engineering aspects of the cell sites or they are being dishonest.

If you want a straightforward answer, please contact us anytime by calling, emailing, or filling in the box at the top of this page.