The demand for cell towers to keep up with the cell phone industry is skyrocketing, and it is one of the most profitable real estate opportunities available today. If you have a property with a viable spot to erect a cell tower, you can generate a good income, but there are factors to consider. Companies are extremely selective and consider only the best cell tower ground lease prospects.
Cell tower ground leases are profitable real estate opportunities for those who offer communication companies a viable option. Worthwhile towers are carefully vetted, with approval factors that include location, elevation, traffic, nearby towers, and zoning.
Cell phone companies rely on towers to provide an effective and uninterrupted signal to consumers, which opens a great opportunity for landowners with ideal spots to lease their land. Cell tower ground leases require little space and can generate a good income for several years. You must know the requirements and factors; this article will provide everything.
Cell Tower Ground Lease
Whether you own a piece of land in the city, on the outskirts, a small holding, or a farm and have a portion you do not use, it is ideal for a cell tower. A cell tower ground lease offers a small piece of land for wireless carrier service companies to erect a tower. Generally, the portion of land is large enough for the tower, plus an extra portion for tenant equipment.
Tenants like T-Mobile, Verizon, and AT&T seek property owners with good sections of empty land or rooftop space ideal for cell towers. Cell towers are often erected on properties with elevated sections like a hill, mountain, or building rooftops for maximum distanced coverage.
Generally, a cell tower ground lease starts with a 5–10-year non-cancellable contract with the option to renew. Wireless carriers prefer lease agreements 25 years and longer, with some running up to 50 years. A landowner can have multiple towers or tenants on one tower if no signal interference or a clause prevents a direct competitor in the contract.
Cell Tower Ground Lease Rates
Prime cell tower real estate in the U.S. is extremely profitable, with monthly lease rates starting at $1,500, while others go for $3,500 and upwards. One tower with a single wireless carrier can earn between $18,000 and $42,000 annually, which doubles if a second wireless carrier is added.
Unlike other countries like China, India, and Europe, the United States typically does not offer colocation lease rate discounts, plus cell tower lease rates generally have an annual increase of 3% .
Primary Factors That Affect Cellphone Tower Lease Rates
In the United States, cell phones are the main means of communication, and there is an ongoing need to increase signal strength and coverage. While there is a huge opportunity for landowners to enter the cell tower lease market, there are various factors to consider.
If you are considering entering the cell tower real estate market, it is best to acquire the services of a professional to assist you with the process. A consulting firm will help you determine the land value potential revenue and provide advice on other factors.
Consulting firms, real estate brokers, and legal professionals are the three best options for advice when you want to get into the cell tower real estate market. These experts will identify any obstacles and highlight the primary factors why a carrier will lease your land:
- Location – Areas overpopulated by cell towers generally struggle to compete, and cell companies pay less if they have better or other options.
- Elevation – Cell towers rely on signal efficiency and mostly operate on elevated high spots like mountains, hills, churches, or other buildings with high rooftops. Properties with mountains that can increase distance and efficiency are prime locations for service carriers.
- Nearby towers – Cell phone companies rarely consider a tower if another is within one mile, and local zoning jurisdictions prefer that existing towers get preference.
- High traffic areas – The value of a cell tower depends on its effectiveness, especially its signal reach and quality improvement potential. Elevated land near a densely populated, urban, suburban, or business area increases its value tremendously. Cell companies prefer a tower that helps supply good signals to high-traffic areas.
- Zoning – Zoning ordinances approve the necessity of a new cell tower, and their regulations are a vital factor to consider. Industrial land surrounded by densely populated areas like towns, counties, or cities is prime cell tower real estate, and the local community development office will have all the requirements. Zoning considers various factors before approving any tower.
The Top 5 Reasons for Having a Cell Tower on Your Land
Cellphone communication is expanding at a rapid rate, and almost everyone in the U.S. is glued to their phone; in fact, very few people do not own one. The need for reliable, uninterrupted signal and connectivity across the country relies heavily on cell towers, opening a good business opportunity.
Buying a piece of land to erect a cell tower is costly, and communication companies rely on lease opportunities for optimal positioning. Here are five reasons to consider erecting a cell tower on your property if it is a viable spot:
- Revenue: According to a tower lease database for 2018 and 2019, a Cell tower generates an average income of $1050 per month. A lease can run up to 25 years, generating a cumulative income of $459,386.
- Highest and best use: The space for a cell tower is minimal, and the revenue generated per square foot exceeds any other ground lease rate.
- Credit Grade Tenants: Companies dealing with cell towers are reliable and credit-grade tenants with an extremely low default rate.
- Maintenance: Cell towers require little maintenance from the lessor, and the tenant does most of the maintenance. Generally, maintenance is so minute that it does not even intrude on the landowner’s privacy.
- Transferable Asset: Typically, a cell tower lease can be sold, and a buyout company sometimes pays up to 15 times the annual lease rate.
Conclusion
Leases for cell towers consider several factors like location, elevation, traffic, nearby towers, and zoning. A cell tower ground lease can provide a steady income from $1,500 to $3,500 per month for between 5 and 25 years or more. Towers require a small piece of land, and a landowner can earn maximum square footage revenue with little to no maintenance.