Cell Site Lease Renewals - A Huge Wave of Opportunity Forms
If your cell site lease was originally signed prior to 1994, it is likely that the lease term will be expiring in the next few years. Many leases signed during this period had maximum automatic term renewal of 20 or 25 years requiring their renewal or extension prior to expiration. Since it takes many months and sometimes years to deploy new sites, tenants must take action years before the term expiration to sign a renewal with the landord. If they are unsuccessful in renewing, a new site must be chosen to replace the lost lease.
Landlords are being approached with extension and renewal offers. We read several such offers and have not been impressed. With few exceptions, the inital offers are a simple extension of the existing lease for up to 50 years. In some cases, a modest rent increase is offered and, in others, a rent reduction is proposed. No matter what the proposal, the wise landlord stops, carefully reviews the lease, audits the site and seeks assistance, if appropriate.
Landlords should be aware of the opportunity created by the lease term expiration. As the expiration date approaches, the landlords negotiating power increases. Significant increases in rent may be necessary to bring the lease up to market value. While it may be true that moving the site is a possibility, the costs of deploying a replacement site are high and the environment today is far less friendly for new sites than it was 20 years ago. So, if the tenant threatens to move its site, do your homework and make an informed decision. A great deal is at stake.