Tower Relocation is when a tower is moved to an adjacent property or nearby property. Usually tower relocation is a negotiating ploy used against a landlord when they are in negotiations with a cell tower operator. It’s important to note that tower relocation in this situation is rare. However, the purpose of this being mentioned by a cell tower operator is to get the landlord thinking this may occur so they can get slightly better financial terms. This is mainly used when a property owner wants a deal that is above and beyond what the tower operator wants to give. To mitigate this risk, it’s important to evaluate items involving zoning, nearby towers, and who’s on the current tower. Another popular reason for tower relocation is when the cell tower operator has a high rent tenant site in which the carrier wants to improve that rent being paid to the cell tower operator. Some of these legacy tower tenant leases can be billing the carriers between $4,000-$10,000 per month. It’s a massive benefit to the carrier to move off that expensive tower onto a much cheaper alternative that may have more lease term as well. The carriers work with tower developers to help them get rent reductions off these expensive tower leases.
Knowing the zoning restrictions in the area where your tower is located is important. Depending on where the tower is located, it could be very easy or very hard to relocate the tower. In areas that are easy to zone you will see a company like Tillman who have built towers to poach a tenant that is paying an ungodly amount of monthly rent. This is what’s called tenant relocation. As mentioned in prior blogs, Tillman and these other tower developers get terms that are unbelievable for the carriers which is why they like using them. I’ve seen deals in which Tillman has a 75-year lease starting at $500 per month and 5% term increases. In areas that are more difficult to zone, the property owner has more leverage as the lease gets closer to final expiration. The ideal of tower relocation is almost zero.
Having an idea of what other towers are nearby can be helpful in your negotiations. For example, say Crown Castle has a tower on a property owner’s property but then has another .3 miles away. It’s a very real possibility that the tower .3 miles away could be an option for them to move that tenant to if negotiations aren’t progressing towards a deal. The heights at where that carrier is vs. what they would be on the other tower can come into play as well. In another situation, maybe there’s no tower within one mile or greater. Those make for much different negotiations. It’s very rare that a cell tower operator will have a secondary tower a tenant can collocate on, but they are out there.
Knowing the tenants that are on your tower is another important factor. As you can imagine if you have a single tenant AT&T tower, there’s a lot more to lose if AT&T moves to a developer-built tower or another existing tower. Sometimes a property owner can overplay their hand in negotiations if the cell tower operator could simply move the tower or tenant to another existing tower. Towers that have multiple tenants on it may be more likely to lose one tenant but not all of them. This could hurt any revenue share you have in your lease but at least you’d still have revenue from the tower. If you only have one tenant on your tower, it’s a high probability if the tenant or tower can be moved, your tower will be taken down. Usually, the carriers don’t want to be at a lesser height on a newly constructed or existing tower. These towers that were built in the 90s and early 2000s are grandfathered in certain states and there may be height limitations for newly built towers.
As you can see there’s a lot of items property owners need to be aware of when they’re in negotiations with cell tower operators. Knowledge is power. A good consultant will be able to weigh all these items and more when it comes to dealing with any cell tower operator. Another one of the 500 reasons why you should hire a consultant. JP Tower Consulting has experience that can’t be matched and has seen every situation out there.
