Why Cell Tower Leases Are Undervalued and What to Do About It

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Cell towers affect us every day. What’s more, with the rise of 5G, many more cell towers are being installed. As telecommunication companies clamor to win the race for 5G-compatible services, the number of cell towers is increasing to support the demand. Meanwhile, people continue to debate health concerns and where to put additional towers. However, one problem is being completely neglected. Cell tower leases are hugely undervalued for most landowners.

In fact, Vertical Consultants states that throughout the life of a cell tower lease agreement, landowners miss out on more than $852,000 of possible income.

 

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How Cell Tower Leases Are Undervalued

The main reason cell tower leases remain undervalued is because landowners are unaware of the true value of their site. Too many times property owners attempt to tackle cell tower lease negotiation with a DIY attitude.

When people research market values on cell towers, the first place they start is often with information they find online. However, they should consider any comparisons they find online with a large grain of salt. Since cell towers don’t operate based on market rents, cell tower lease agreements cannot be viewed like real estate. Therefore, comps are one of the trickiest parts of the equation.

Cell tower lease agreements are utility contracts. This means that each site will have an individual value. Since most landowners are unaware of this, cell tower companies take full advantage. That is, they offer landowners terms that take advantage of their lack of knowledge, and often undervalue their property.

Trained representatives of the tower companies utilize fear tactics and sales strategies designed to entice landowners into signing agreements quickly. The representatives typically withhold information about all of the benefits the company will receive by using the land for a cell tower.

 

Cell Tower Leasing Has Similarities to the Oil Industry

This approach is not new for US landowners. During the oil industry boom, oil companies often exploited property owners for drilling rights by offering a flat rate without royalties. “The oil companies paid landowners for the right to use the land, but of course all of the money came from what they got out of the land. The best-case scenario for the oil companies was to pay for the right to extract and sell the oil, but not be obligated contractually to paying royalties,” says Hugh Odom, president and founder of Vertical Consultants. “The cell tower lease industry is similar, except that the profits are from sending signals into the air instead of drilling them out of the ground.”

NPR recently wrote an article about two landowners. One landowner is getting a lot of money every month. Meanwhile, the other is in a class-action lawsuit against the energy company. It’s an example of how important it is to understand all the aspects of your contract before you sign.

 

How to Handle Cell Tower Lease Negotiations

The first step for any landowner considering a cell tower lease negotiation is to slow down. Making a quick decision about a matter you are unfamiliar with could mean lost income. Moreover, it could also lead to problems down the road.

It’s important to remember that if a cell tower company has approached you, they need you. The use of your land is valuable to them. And that puts a lot of the negotiating power in your hands.

They will try to get you to focus on what you’re getting. However, it’s just as important to understand what you’re giving up.

 

Talk to an Expert

When negotiating cell tower leases, it’s crucial to find an expert for advice. Cell tower companies will attempt to distract landowners by emphasizing rent or initial buyout offers.

As landowners turn their attention to initial money offers, they are more likely to overlook the details of the deal. The right expert can ensure fair value for initial land utilization. The expert will negotiate the best terms possible for the landowner. What’s more, they will negotiate for coverage on the property throughout the lifetime of the lease.

Property owners need to take measures to protect themselves. The best place to start is by negotiating for the lease they deserve.


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