How much for a Wireless Tower ground lease?
November 21, 2013 7:02 AM Subscribe
A wireless carrier has approached us about building a cell tower on our property in Northern Virginia. Aside from using the bandits that pop up in a Google search, how do we determine a fair ground lease price?
We have been approached by a major wireless provider about building a cell tower on our property in Northern Virginia. It would be located on a remote back piece of our 7-acre residential parcel, in a semi-rural location, but still within the DC suburbs. There are a number of "cell tower consultants" that are happy to take a percentage of the lease they obtain for you, but they also have a reputation for scaring the cell companies away to nearby landowners who are not using such services. They have already conducted a site study and prepared detailed technical drawings, so they seem moderately serious about using the site on our property.
Older questions have asked for similar advice, but may be dated. We understand some of the basic terms to seek in an agreement, but really don't have a clue as to what fair valuation is for leasing a small portion of our land. The initially discussed basic rent seems very low. Any hive experience in this area?
We have been approached by a major wireless provider about building a cell tower on our property in Northern Virginia. It would be located on a remote back piece of our 7-acre residential parcel, in a semi-rural location, but still within the DC suburbs. There are a number of "cell tower consultants" that are happy to take a percentage of the lease they obtain for you, but they also have a reputation for scaring the cell companies away to nearby landowners who are not using such services. They have already conducted a site study and prepared detailed technical drawings, so they seem moderately serious about using the site on our property.
Older questions have asked for similar advice, but may be dated. We understand some of the basic terms to seek in an agreement, but really don't have a clue as to what fair valuation is for leasing a small portion of our land. The initially discussed basic rent seems very low. Any hive experience in this area?
Presumably you're not doing anything with the land right now, so for the time being any income at all would be to the good. I'd be more concerned with the impact it would have on other uses of the property now and down the line. Would having a tower there, and a service road cut through to it, irritate you? Would it reduce the market value of the surrounding land?
I think I'd be talking to a real estate lawyer, not the sort of consultant you mentioned.
posted by jon1270 at 7:37 AM on November 21, 2013
I think I'd be talking to a real estate lawyer, not the sort of consultant you mentioned.
posted by jon1270 at 7:37 AM on November 21, 2013
So a fair price to lease something worth $2,500 would be 10% annually, or $250. So about $21 per month.
My grandfather, in norther Indiana, had a cell tower put on his property (in vast farmland, which although valuable is nowhere near the value of what it would be in any DC suburb) maybe 10 years ago. $500 a month, increasing by 2.5% annually, for 30 years (ballpark). They re-negotiated in Grandpa's favor maybe 2 years ago.
He got offers to buy the lease that exceeded the total purchase price of his farm.
Even two years of that lease would be enough to buy the land outright, so even though whatever corporate policy they are following is inscrutable to me, it could very well be a great deal for you.
I'd simply ask them for an offer, and take it if it seems good. Lawyer up to make sure you understand the implications, but if it is anything like Grandpa's situation, and you don't mind the tower or the access road, it could be a huge windfall.
posted by dirtdirt at 7:39 AM on November 21, 2013 [2 favorites]
My grandfather, in norther Indiana, had a cell tower put on his property (in vast farmland, which although valuable is nowhere near the value of what it would be in any DC suburb) maybe 10 years ago. $500 a month, increasing by 2.5% annually, for 30 years (ballpark). They re-negotiated in Grandpa's favor maybe 2 years ago.
He got offers to buy the lease that exceeded the total purchase price of his farm.
Even two years of that lease would be enough to buy the land outright, so even though whatever corporate policy they are following is inscrutable to me, it could very well be a great deal for you.
I'd simply ask them for an offer, and take it if it seems good. Lawyer up to make sure you understand the implications, but if it is anything like Grandpa's situation, and you don't mind the tower or the access road, it could be a huge windfall.
posted by dirtdirt at 7:39 AM on November 21, 2013 [2 favorites]
When I worked at MCI in 1980's, one person put a requirement for leasing land for a microwave tower that the company would have to decorate it for Christmas every year.
But yes, do speak to a Real Estate lawyer, and the zoning folks too.
posted by Ruthless Bunny at 7:40 AM on November 21, 2013 [1 favorite]
But yes, do speak to a Real Estate lawyer, and the zoning folks too.
posted by Ruthless Bunny at 7:40 AM on November 21, 2013 [1 favorite]
I am not positive but based on newspaper reports, my local port authority is apparently leasing some property to AT&T for a cell tower and getting around $13,000 a year.
There is a definite need for the tower in the location they are going to put it, and there was a fuss from the nearest neighbors about it. Including a protest of soil sampling. :)
So, you may want to consider how it will look, and ask to see options of how else it can look, and yes, definitely require something festive for whatever holidays you want, and also consider the neighbors if you have any (including wildlife, perhaps, or any livestock or pets). Also consider restrictions on the land for yourself and how this might affect a future sale.
If it was me, I'd want references from other people leasing for cell towers. I'd want to talk to them, find out if they had a problem with traffic to/from (while being built and afterward; roaring through in the middle of the night?), construction process, regular payments, etc. Be wary of the easement wording, who knows what it might say. Be sure you read everything and have a lawyer read it all, too, and make sure it is clear that you may not agree with it all and that you may want to negotiate.
posted by AllieTessKipp at 7:53 AM on November 21, 2013 [1 favorite]
There is a definite need for the tower in the location they are going to put it, and there was a fuss from the nearest neighbors about it. Including a protest of soil sampling. :)
So, you may want to consider how it will look, and ask to see options of how else it can look, and yes, definitely require something festive for whatever holidays you want, and also consider the neighbors if you have any (including wildlife, perhaps, or any livestock or pets). Also consider restrictions on the land for yourself and how this might affect a future sale.
If it was me, I'd want references from other people leasing for cell towers. I'd want to talk to them, find out if they had a problem with traffic to/from (while being built and afterward; roaring through in the middle of the night?), construction process, regular payments, etc. Be wary of the easement wording, who knows what it might say. Be sure you read everything and have a lawyer read it all, too, and make sure it is clear that you may not agree with it all and that you may want to negotiate.
posted by AllieTessKipp at 7:53 AM on November 21, 2013 [1 favorite]
Eye-opening question - and responses - on this thread for me. Here in the PNW, building a new cell tower - even one disguised as a fir tree - can be an extremely controversial, months-long process with the potential for denial at the end.
I'd mistakenly assumed it was that way everywhere.
posted by stormyteal at 8:00 AM on November 21, 2013
I'd mistakenly assumed it was that way everywhere.
posted by stormyteal at 8:00 AM on November 21, 2013
Seconding AllieTessKip's $10-15K/year. When I was developing wind farms, this was the price that cell companies were offering in rural Ontario for a simple tower. You will likely also have to sign for an access easement, since they will require access at any time.
posted by scruss at 10:11 AM on November 21, 2013
posted by scruss at 10:11 AM on November 21, 2013
I'm very familiar with siting cell towers when I used to work for a major cell phone provider in the mid 90s.
Unfortunately I can't give you an accurate price estimate, because it really varies by a variety of factors. Not only does location matter, but the zoning, topology also play a large factor into how valuable the cell phone company sees your property vs others they may have surveyed.
Typically, the cell phone company will try to get at least 3 candidates for a given site, and progress to drawings on one or two. I've never seen site drawings for more than 3 candidates for a cell tower. A lot of times other factors rule out the candidates (owner not willing to lease, untenable zoning laws, location not amenable to providing the necessary coverage, etc). So, yes they are serious about your location.
You will have the biggest negotiating advantage the rougher the terrain is in your location. If it's relatively flat, then the cell phone company will go with the cheapest option, if it's mountainous, they will have a strong preference for a given site. Regardless, I've seen plenty of times where a cell phone company has gone for a poor site because it was just easier and/or cheaper.
As others have mentioned, the zoning will be of high importance to the cell company, and their contracts will usually stipulate that they owe you nothing until final permits are acquired and construction commences. Also, I would not be shocked if they offered contracts on multiple locations with clauses that get them out of the contract if they decide to go with a different location. In essence locking the land-owner into a negotiated price, but without them having actually committed to a lease.
As far as offering a price, I don't have much advice, only what I'd do. Since, only the cell phone company will know what price they are willing to pay, and there is no "normal" as the price varies on a variety of factors. The best thing to do would be to pick a number you'd feel happy with receiving if you got it, but not regretful if you lost out to a neighbor who had offered less.
If you're really worried about not getting the full value, you can stipulate a shorter lease duration, and renegotiate when the lease is up. In fact, thinking about that for moment, it might be an interesting strategy. If you offered a dirt cheap lease for 5 years, then after that 5 years you'd have the cell company over a barrel, because they would really, really not want to relocate. I'm not sure if the cell company would be interested in negotiating a shorter lease, but it probably wouldn't hurt to ask.
One final thing, make sure you have a lawyer review and explain any agreements so you are fully aware of the implications.
Anyway those are my somewhat random thoughts on the matter. Good luck.
posted by forforf at 8:33 PM on November 21, 2013
Unfortunately I can't give you an accurate price estimate, because it really varies by a variety of factors. Not only does location matter, but the zoning, topology also play a large factor into how valuable the cell phone company sees your property vs others they may have surveyed.
Typically, the cell phone company will try to get at least 3 candidates for a given site, and progress to drawings on one or two. I've never seen site drawings for more than 3 candidates for a cell tower. A lot of times other factors rule out the candidates (owner not willing to lease, untenable zoning laws, location not amenable to providing the necessary coverage, etc). So, yes they are serious about your location.
You will have the biggest negotiating advantage the rougher the terrain is in your location. If it's relatively flat, then the cell phone company will go with the cheapest option, if it's mountainous, they will have a strong preference for a given site. Regardless, I've seen plenty of times where a cell phone company has gone for a poor site because it was just easier and/or cheaper.
As others have mentioned, the zoning will be of high importance to the cell company, and their contracts will usually stipulate that they owe you nothing until final permits are acquired and construction commences. Also, I would not be shocked if they offered contracts on multiple locations with clauses that get them out of the contract if they decide to go with a different location. In essence locking the land-owner into a negotiated price, but without them having actually committed to a lease.
As far as offering a price, I don't have much advice, only what I'd do. Since, only the cell phone company will know what price they are willing to pay, and there is no "normal" as the price varies on a variety of factors. The best thing to do would be to pick a number you'd feel happy with receiving if you got it, but not regretful if you lost out to a neighbor who had offered less.
If you're really worried about not getting the full value, you can stipulate a shorter lease duration, and renegotiate when the lease is up. In fact, thinking about that for moment, it might be an interesting strategy. If you offered a dirt cheap lease for 5 years, then after that 5 years you'd have the cell company over a barrel, because they would really, really not want to relocate. I'm not sure if the cell company would be interested in negotiating a shorter lease, but it probably wouldn't hurt to ask.
One final thing, make sure you have a lawyer review and explain any agreements so you are fully aware of the implications.
Anyway those are my somewhat random thoughts on the matter. Good luck.
posted by forforf at 8:33 PM on November 21, 2013
This thread is closed to new comments.
So if an acre sells for $10,000, and the tower will take up 1/4 of an acre, you're starting with a sale price of $2,500. So a fair price to lease something worth $2,500 would be 10% annually, or $250. So about $21 per month.
You can tweak the numbers a bit, but that's how I'd view it. Also, this is income, so you're going to want to think about how it will affect your tax situation and account for that as well.
posted by Ruthless Bunny at 7:11 AM on November 21, 2013