Cell Tower Lease Rates: Effects of Small Changes

By Brett Reall

A hot topic in the cell tower infrastructure industry today is cell tower lease negotiations. Whether you are negotiating a new lease, renewing an existing lease, or evaluating a rent reduction request, understanding how small changes in initial rent and escalation rate compound over time is critical.

Gunnerson Consulting has created proprietary tools to assist property owners in determining the fair market value of their cell tower lease, and to model the impact of different lease terms over time.

Scenario 1: Different Rent, Different Escalation

Higher cell tower rent is always better, right? Wrong! Many times during lease negotiations, customers are offered a higher initial rent but a lower escalation rate – or vice versa. The impact of these changes compounds dramatically over a 25-30 year lease term.

For example, a difference of just $100/month in initial rent, combined with a 1% difference in annual escalation, can amount to tens of thousands of dollars in total lease value over the life of the agreement.

Gunnerson Consulting can model the financial impact of any proposed lease terms and help you understand the true value of what is being offered. Contact us today for a free initial consultation.