The excitement of receiving a cell tower lease from a cell tower developer is quickly replaced in many cases once landlords realize that the friendly person speaking to them does not have their best interests in mind, nor are they interested in selecting the best site from a zoning and coverage perspective, they are just looking for which landlord will accept the lowest and worst offer.
There is a dearth of professionalism among tower developers and they are interested in the fact that in today’s bad economy, many landlords are too scared to walk away from a low offer, which is typically in the $500/month range with rent increases ranging from 0% to 10% every 5 year period. They are not surprised when the property owner asks them the simple question of why they would encumber their beautiful piece of land with a tower for that small amount of money. The bottom-feeding parasite…um…the cell tower leasing rep usually smiles and walks across the street or looks for a spot next door, leaving the landlord scratching their head and wondering what went wrong since they are now forced to look at the cell tower for the next 25 years instead of charging them rent.
One of the buzzwords for tower developers is that they can get a better rental price if you give them a “clean lease” back, meaning a “clean lease” is a cell tower lease that is unmarked, has little to no changes, is completely one-sided in favor of cell tower companies, and usually takes advantage of the property owner. The sales tactic used by most of these tower developers is fear. It’s not illegal, just repellent. It is practiced primarily in the central United States, and now even some of the major carriers are getting away with rental rates that are below fair market value.
Most of these small cell tower development companies have owners or partners who came out of one of the big carriers like AT&T, Verizon Wireless, T-Mobile, or Sprint, and are trying to cash in on the cell tower boom. Many of them have friends still working on the inside who give them proprietary information from the inside and are backed by some silent partners or private investors. they are told where the open “search areas” are where carriers need to build a tower, again not public information, and they build some towers for the cheapest possible time with as many “clean leases” as possible, and they hand over their tower companies and small tower portfolios to their friends at the bigger tower companies, and walk away with seven figures.
When a tower developer offers you just $500 (or less) per month to encumber your property with a cell phone tower, and they kick and scream when you tell them you want a piece of the sublease proceeds, you should know that they’re making money hand over heels on your site, and they’re only paying you a very small portion of what they’re doing with all their cell carrier tenants.
What can a property owner do if approached by a local cell tower developer with a low cost cell tower lease offer? They can tell the representative that if they don’t reconsider their offer, as soon as they leave, they will contact other big tower developers like Crown Castle, SBA, American Tower, or GTP, who are more likely to make a friendly offer. Also, many times the cell tower lease fee will be slightly negotiable, but not by much. Property owners are then faced with the dilemma of hiring an expensive attorney to review the lease for a few thousand dollars they may not even get, since the tower’s acquisition representative is trying to get the property owner to hurry up and sign the lease.
Last year we negotiated a cell tower lease for an East Coast property owner with a major wireless service provider within a major city at a critical coverage site. The site’s acquisition representative originally offered the landlord $500 for a cell tower land lease, the owner wanted $1,500 but was willing to take $1,250, but the operator was only willing to go up to $1,000 and walked out on the deal, actually throwing a tantrum like a two-year-old would when he doesn’t get his way. The purpose of the cell tower site was to cover a 70,000 seat NFL stadium. Instead, the carrier ended up spending nearly $10,000 per home game plus ground rent (nearly $100,000 in 2010) to provide a temporary COW cell on wheels to make sure the venue was adequately covered. Yeah, they spent $100,000 because the leasing rep was haggling over $250. The carrier went back to the landlord this year and the first question they asked was, “We still like your property, are you going to work with a cell tower consultant? Here’s a clean lease.” Well, you can’t fix bullshit, I guess.
