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What’s a Cell Tower Lease Worth?

March 5, 2013

Individuals with cell towers on their property are frequently contacted by companies offering to “buy out” their cell tower lease. The resulting question we get is, “What’s my cell tower lease worth?” This advisory will attempt to answer that question. Our complete collection of cell tower advisories can be viewed here, including one addressing how to secure the best price and terms in a cell lease sale.

Generally, three factors drive the price for a cell tower lease: location, years remaining on the lease and current rent being paid.


Is this a rural location with multiple sites for a cell tower and landowners who are willing to lease land at low rates? An urban setting? A college town with high demand for wireless services but limited locations to put an antenna? A suburban location with medium demand but limited locations for cell towers? Prices will be higher in the latter two cases, in which wireless demand is high and locations are scarce. 

Number of Years Remaining on the Lease

To a certain extent, cell phone companies are at a disadvantage if a lease is near expiration. Why? It will cost them $250,000 or more to find a nearby site for a new tower, lease it, permit it, zone it, build it, and then take down the old tower. They have to do this to prevent a gap in service. Thus, a lease that is one year from final expiration is worth far more than one that has 15 years to go. The key here is final expiration of the lease. Although leases normally renew in five-year increments, the cell company effectively can’t cancel a lease for the reason just noted — they have to renew it.

Current Rent Payment

This is the most important factor driving buyout prices. As of late 2021, buyout prices were approximately 19 times annual revenues. The good news for landowners, however, is that bargaining or getting an auction process started usually drives up the price substantially.

Buyout companies make money by purchasing leases on the cheap and charging a large amount to cell companies to use the tower. Buy low, sell high. Which means it comes as no surprise that their initial offers to landowners are quite low. As a rule of thumb, landowners should view buyout offers at a multiple of less than 15 times the annual revenues they are currently receiving or less than $150,000 as “lowball” offers to reject. 

Terms and Conditions

Price is not the only consideration. The terms and commitments in the buyout company’s proposed documents to purchase a lease, usually presented as an “easement,” are almost always to the disadvantage of the landowner and need to be corrected.

In the most common example, the sale interferes with the landlord’s expected use, development and operation of the property. In cases where we have represented purchasers of property with a cell lease, such terms have driven down the value of the property by nearly one-third and, in the case of older buildings, decimated the property value entirely.

A final note of caution: landowners should have a lawyer review the first document they sign regarding a buyout, even if it appears to be an informal “letter” or “letter of intent”, as it could bind a landowner to terms that are too one-sided.

Varnum represents clients nationwide on cell tower leases, including on the sale of over 100 cell leases. If you would like to discuss an initial cell lease or retention, sale or renewal of an existing lease, please contact John Pestle or Peter Schmidt.

John Pestle is a telecommunications attorney who, for decades, has represented property owners, including municipalities, on cell tower leases and sales. He is a graduate of Harvard, Yale and the University of Michigan Law School and held an FCC license to work on radio, TV and ship radar transmitters.

Peter Schmidt is a real estate attorney who has represented clients on numerous cell lease sales, including the Detroit Public Schools on the sale of approximately 24 leases. He is a graduate of Albion College and the University of Wisconsin Law School.

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