The wireless tower industry continues to grow as other industries have proven more volatile over recent years. In fact, the global telecommunication market size is expected to grow at a CAGR of 6.2% in the 2023-2030 forecast period. On that note, the market size of this industry in the US has increased faster than the economy overall in the last five years. Wireless towers have become a lucrative investment for those looking for alternative options in purchasing property.
Demand for Wireless Towers
As 5G networks continue to grow, and autonomous cars continue to trend, the demand for more towers also shows a steady increase. Wireless data standards are always evolving, and we expect our mobile devices to work wherever we are. Wireless providers are also expected to significantly increase their network capacities, so commercial real estate investors can rent these properties to key players in this space. Potential tenants, such as AT&T and Verizon must increase the capabilities of their networks to 5G, which doesn’t have as much range as the outdated 4G network. Their competition to build the best networks is another factor that increases their need to expand into more towers.
This steady increase in demand also brings tenants to sign long-term contracts on either towers or square footage on rooftops for antenna placement. Once they have coverage over this space, they aren’t likely to give it up. Renewal rates are a reliable 98% because vacating a tower would be a costly endeavor for most tenants, with coverage gaps becoming an issue.
Low Maintenance Investments
Ongoing maintenance for wireless towers is generally minimal, and once a wireless tower or rooftop antenna space is leased, there is little risk that the cash flow would be disrupted. As the generations of technology continue to grow and require upgrades, cell phone companies will go out and complete these at their own cost. The equipment isn’t necessarily pricey, what matters is the ability to broadcast from that location.
Wireless Tower Leases
Most leases between commercial real estate investors and carriers are ground leases. Property owners are leasing the land (the location) of the towers. This is also true for leasing rooftop space. The appeal lies in the local population density, traffic counts, and other variable factors.
Leases are often drafted with six-month options, as well as five-to-10-year lease options, with clauses built in for things like early cancellation, and items to be covered by the tenant. One common factor that makes this a particularly attractive investment opportunity is the net leasing terms. Responsibility for items such as equipment installation, construction, and government approvals are allocated to tower tenants, adding to the low risk for the property owner. Leases of this nature almost always have a positive effect on a property’s value. When the land is sold, the lease rides along.
Partner with Willowbrook Valuation & Advisory Services for Expert Investment Assistance
At Willowbrook Valuation & Advisory Services, we are a leader in trusted insight, cutting-edge innovation, and customer service. We offer exceptional litigation support to assist clients with insurance valuation, arbitration and consulting, property tax services, and expert testimony. To learn more about our valuation, counseling, litigation services, or office-to-apartment conversions in D.C., please contact us at (202) 919-3888.