Seven Red Herrings in Cell Site Leasing

Ways that AT&T, Verizon, & T-Mobile intimidate their Landlords.

There are 450,000 US rooftop leases between landlords and AT&T, Verizon T-Mobile. 

Landlords face an unfair contest against carrier-tenants.  Sure, they have market data to set apartment, office or retail rents.  But for wireless sites, owners have no market data on what AT&T, Verizon or T-Mobile pay in rent for their rooftop antennas.  Carriers hold all the cards.  There is no CoStar for rooftop cell sites.  Landlords have no defense when carriers threaten to terminate their lease if they won't agree to a rent cut.  What’s reasonable: $25,000?  $60,000/yr?

Only carriers have the comprehensive view of leasing terms for rooftop sites.  Consultants and vendors know only part of the market.  My company has a head start after reviewing 1,200 leases. 

Predators (MD7, Blackdot..) are peering into leases, calling owners, arousing fear of termination.  Why not cut rent a bit?  Protect thousands of dollars?  Here’s why landlords should just say NO.

1.         DECOMMISSION THREAT 

Carriers never decommission sites to save rent or avoid property taxes. Relocation costs far exceed savings. One exception, sites made redundant post-acquisition (e.g. Sprint/T-Mo).   That’s it.

2.         OLD GEAR  

Carriers never move or reuse their gear at a new site.  On your roof, their electronics bake in the sun, get exposed to weather and host pigeons.  Engineering standards change.  Five-year-old gear is obsolete and power hungry.  It does not pay to deinstall, refurbish and reinstall old LTE gear from your roof to a cheaper site.

3.         PENNIES  

Yes, lease expense is a big part of carrier OPEX.  Yes, escalation clauses cause pain for carriers, though recent inflation has outpaced escalation clauses.  But when landlords discover they are owed tax reimbursement and file claims, the cost does not move the needle on carrier budgets.

4.         TAX REIMBURSEMENT – part I. 

By the third five year renewal, landlords no longer read the small print.  We focus on the property tax reimbursement clause. It is The tax clause is overlooked - 95% of owners make no claim.  Owners’ first and second claims are always rejected by carriers.  Then owners give up.   

5.         TAX REIMBURSEMENT – part II. 

Carriers discourage tax claims claims warning owners of re-assessing.  But assessors never see reimbursement claims.  They are between landlord and carrier-tenants. Even abatement filings don’t poke assessors to revalue.  Taxes are driven by ‘mass appraisals’ -  rules for ALL properties, not just yours.   

6.         COVERAGE 

Cell signal coverage holes are bad for carriers’ business.  Carrier engineers rule the network - not the CFO.  Losing a site undermines network integrity.  Consumers notice coverage holes. Carriers are actually densifying (more sites) to reuse spectrum, meet subscriber growth and support our hunger for more data throughput.

7.         PERMITS  

Getting permits at a new site is expensive, time consuming, painful.  Permit publicity is always bad for carriers.  Carriers like to collocate new sites because permit battles have already been won.  Permit pain for a new suburban or city location discourages moving off your roof.

Here are more Red Herrings regarding fears from invoicing carriers for tax reimbursement.

a) A tax clause is not in the lease (it’s in 75% of leases). 

b) We’re already claiming reimbursement (95% don’t). 

c) Claims risk our rental income (Wrong!  See above.) 

d) Churches/non-profits aren’t taxed (Wrong! Rent IS taxed). 

e)  No telecom tax is visible on my tax bill or assessing card (it is there, not broken out).