Thursday, August 21, 2014

5 cell tower leasing trends in self-storage

Cell towers can be a good source of extra income on your storage facility. But what’s going on in the cell tower industry? What does the future hold for your extra income? It’s important to stay on top of trends in the cell tower industry, so here are the top five cell tower leasing trends for self-storage owners.

1. Cell tower construction is booming.

Tens of thousands of cell towers are under construction across the U.S. The major cellphone companies are aggressively expanding their footprint, especially Verizon and AT&T. If you’re lucky enough to be approached about a cell tower lease, your best bet is to contact an expert in cell tower leasing. The length of a new cell tower lease is 25 to 35 years, so every dollar and term you secure in your agreement today will be locked in for decades.

2. Lease extensions are on the rise.

AT&T, Verizon, Crown Castle, American Tower, SBA—do these names ring a bell? These companies are reaching out to self-storage owners to request lease extensions. Why? Public telecom companies are being pressured by shareholders to reduce the risk of lease termination.

A discussion about lease extension either can be an excellent opportunity to increase rent or renegotiate terms, or it can be a complete waste of time. How will you know? It greatly depends on the amount of years left on the lease. The closer the lease is to the date of expiration, the better a deal you can negotiate with the tenant.

3. Lease buyout prices are at an all-time high.

You’ve probably received countless calls from investors offering to buy your cell tower lease. What you may not know is that buyouts are commanding record prices. Why? It’s likely because of lower interest rates for capital to buys leases and increased competition in the buyout sector.

If you’re looking at selling your facility at a 6 percent cap rate but the cell tower lease is at 7 percent cap rate, it doesn’t make sense to separate the two assets. To explore your options, you might want to consult an expert in cell tower leases.

4. Cellphone companies are upgrading.

You have a cellphone, perhaps one with the latest technology, but the cell tower near you still is using outdated antennae. This “cart before the horse” reality has hit the cellphone companies hard, so they’re rushing to upgrade existing cell towers.

Given that environment, it’s important to not miss an opportunity to raise rents and to negotiate new lease terms. Tenants often are asking you for “landlord consent” when they actually should be offering a rent increase. However, you can’t blame them for this, as they’re looking out for their own best interests.

5. Cell tower operators are on the prowl.

With all the activity in the market for cell tower leases, if you have a cell tower on your self-storage property, you will receive a letter from a suitor and your phone will ring. Before doing any deals, make sure you understand the terms; that probably will involve reaching out to an expert on the subject of cell tower leases. In the end, it’s up to you to maximize everything you can with a cell tower lease.

Nick Foster is founder and president of Airwave Advisors, a cell tower consulting firm based in San Diego.

The post 5 cell tower leasing trends in self-storage appeared first on Self Storage Blog: The Storage Facilitator.


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