Tower Leases

Components of a Cell Tower Lease

A number of components of a cell tower lease. The quality of attributes related to a potential lease will determine the possible value of a cell tower lease. The most important of these factors deserved its own post. If you haven’t already read about fair market value, do so first before continuing on with this post. What follows are the secondary components that will impact the value of your lease.

  • Location – Cellular providers look for properties that will have the least impact on the surrounding area. Zoning restrictions and regulations play a significant role in the possible application and viability of new tower construction. If your property is densley populated but strictly regulated, expect the two to factor each other out in terms of raw value. Value add locations will have little impact on the surrounding environment.
  • Redundancy – The magic distance for cellular tower redundancy is a five mile radius. Income is lost for cellular providers when more than one tower services a five mile radius. Expect better deals when your property does not represent a redundant option.
  • Zoning – Health concerns and visual impact of new construction are the guiding factors in public hearings on zoning. Local boards must adhere to the mandates of the Telecommunications act of 1996. Expect a better deal when precedents have previously been set by a local zoning board.
  • Duration and Termination- Cancellation windows of 30-90 days are common in most leases. This protects cell tower companies with relatively long average contract durations of 5 years. Expect this to be an issue when companies merge and absorb competing structures that create redundancy issues.
  • Footprint – Footprints for most towers are not larger than 10,000 square feet or double the height of the tower. provider access to the tower is included in the footprint.
  • Collocation – A quality lease for a landowner will include commission clauses if a company rents space of their leased tower to a competitor. This is a common practice and must be included in a cell tower lease.
  • Buy out leases – Property owners should want to save the ability to sell existing leases as a separate entity from the actual land the tower sits on. Cell tower lease buyouts can take on a level of complexity all on their own so we will cover them in a separate post.