How to Negotiate Higher Lease Rates through Leverage
When the opportunity arises to trade, renew, or renegotiate your cell site lease, there are many external factors beyond the actual contract that can work in your favor. In this report, we will cover some simple principles that can help you gain leverage and negotiate higher rates. These tips work for our clients and can work for you as well.
TIP #1: Consider the tenant type
Understanding the nature of the tenant is critical to gaining leverage in lease negotiations. There is a significant difference between dealing with a tower company and dealing with a carrier directly.
Carriers may be willing to pay more for a particular site rather than move to an alternative location. On the other hand, tower companies have subleases in place with carriers and cannot necessarily retrade with their subtenants when negotiating a new deal with you. A wireless expert can provide help if you have trouble analyzing your tenant.
TIP #2: Think ahead (lease area size)
Carriers and tower companies want their cell site lease to include as much square footage as possible. In fact, wireless tenants typically secure a much larger lease area than they will ever need. Why is that?
Simply put, they do not want to be forced into negotiating for more space in the future. Tenants know this would put them at a real disadvantage. They would rather secure and control the area for decades prior to needing it. This ensures that the site owner will never have leverage over them in the future.
Understanding the tenant’s motives can give you and other landlords power in current negotiations. The first step is to determine how much lease area the tenant actually needs for their installation. This knowledge alone will help you maximize rent while minimizing the allotted square footage. There is always assistance available from wireless consultants if you are having trouble with your assessment.
TIP #3: Other factors
There are many other questions to ask if you are looking to gain leverage with tenants. For example, in what city is the cell site located? Is there only one carrier or do multiple tenants co-locate on the site? Is there something about the site that creates a unique value? Could the installation be easily decommissioned and moved to an alternate site?
Knowing these answers can give you confidence during negotiations – and possibly lead to higher rent. If you are concerned that you may have overlooked something you should consider speaking with a cell site consultant.
TIP #4: Don’t push too hard
Site owners should always seek to maximize their bargaining power. However, it is important not to negotiate too aggressively. Your site is probably not the only one that meets the tenant’s needs. They may initiate new negotiations with a less demanding neighbor if you make things too difficult.
Just remember that you have an opportunity to realize a new use for your property – one that provides a long-term cash flow with little effort. The key is understanding just how hard you can push without extinguishing the deal.