As Cell Site Activity Heats Up, Landlords Have Opportunity to Grow Cash Flow

Due to Unique Nature of Cell Site Agreements, Many are Leaving Money Behind, According to Cassidy Turley Cell Site Services Group

Published on February 13, 2014

SAN DIEGO – Cassidy Turley, a leading commercial real estate services provider in the U.S.reports that while cell sites have become a valued source of additional cash flow for many commercial real estate landlords, many are leaving money on the table due to the unique and often misunderstood nature of cell site leases and what they entail. The same risk is true for landlords who decide to sell the cell site rent stream for immediate cash without seeking professional consultation.    “Most landlords have no idea what the fair market value is for a cell site on their property, nor do they know how to monitor the technical equipment on a site to ensure their tenant remains in compliance with the lease,” said Nick Foster, a Cassidy Turley cell site expert. “Cell site leases are not standard commercial real estate agreements and are drafted by the carrier who is the lessee. This puts the building owner at a clear disadvantage in negotiations. Over time, this can result in the loss of tens if not hundreds of thousands of dollars in rent that could have been collected.”

The Cassidy Turley Cell Site Services Group reports that there are more than 3,000 existing cell sites in San Diego County and another 200 proposed for construction in 2014. The most dominant carriers are AT&T and Verizon, both of whom are actively constructing new sites and upgrading existing facilities. Other carriers, such as T-Mobile and Sprint Nextel, are only focused on upgrading current sites at this time.   

“As competition between cell service carriers intensifies, landlords will be contacted for new sites on an increasingly frequent basis,” Mr. Foster said. “Likewise, carriers with existing sites already located on a particular property may approach the landlord to conduct maintenance or like-for-like antenna swaps, when in fact they are implementing upgrades that should entitle the landlord to more rent.”

A landlord approached by a cell carrier often feels like they’ve won the lottery. The same feeling holds for a landlord who is given a check for several hundred thousand dollars by an investor wanting to buy the site’s rent stream. Mr. Foster notes that if someone did win the lottery, professional consultation and legal advice would be sought immediately to ensure their rights are protected in the transaction.  “It is no different with a cell site – expert representation can ensure the landlord benefits from an agreement that reflects fair market value and terms. Every $100 increment in monthly cell site rent not secured today can translate into substantial lost income for years to come,” he explains.

There are several things Mr. Foster says landlords should do if they are considering a cell site on their property or already have one.

First, because new cell site contracts typically run for a period of 20 to 30 years, terms should be carefully evaluated by an expert. “This is a long-term commitment, and there may not be an opportunity to reverse mistakes made today,” Mr. Foster noted.

Additionally, a landlord who is approached by a carrier for consent to upgrade a site that has already been installed should also seek professional advice. “If consent is signed, the prior terms of the agreement may apply and an upgrade that should have entitled the landlord to more rent may be completed for free,” Mr. Foster warned.

Every rooftop with cell site equipment should be routinely audited.  Back-rent applies whenever the carrier is in breach of the lease.

“Few landlords know what to look for, let alone how the installation compares to the lease,” Mr. Foster said. “If equipment is installed outside of the official area as set by the lease, this equates to ‘trespassing’ and back rent applies. Two of our recent audits resulted in back rent awards collectively totaling just over $100,000.”

If a landlord needs immediate cash, the cell site rent stream can be sold. Typical buyers are small investors, private equity, individuals and corporations. Often offers to buy are unsolicited and seem like “easy money.”  Mr. Foster advises landlords to step back and have an expert evaluate whether the offer is low-ball or on par with the current market.

Finally, tax issues should be considered since selling a site’s rent stream could potentially be taxed as capital gains vs. ordinary income. “While this can be advantageous for the landlord, having CPA advice is prudent,” Mr. Foster stated. 

“Landlords can realize tremendous benefit from a cell site lease or sale,” Mr. Foster said.  “As with any transaction, expert advice can help them make an informed decision, maximize the value they receive and ensure their rights are protected.”   

About Cassidy Turley

Cassidy Turley is a leading commercial real estate services provider with more than 3,800 professionals in more than 60 offices nationwide. Based in Washington, DC, the company represents a wide range of clients—from small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion in 2012, manages approximately 400 million square feet on behalf of institutional, corporate and private clients and supports more than 23,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate services—including capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside North America through a partnership with GVA, giving clients access to commercial real estate professionals in 65 international markets. Please visit for more information about Cassidy Turley.


Sandra Grove 



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