High-rent Relocations Still a Controversial Practice

South Wireless Summit 2023

Although the Tower Panel at the South Wireless Summit in Nashville held this week agreed on most topics, there were differing views concerning high-rent relocations. When carriers like AT&T complained that tower rents had gotten too high, modifications were made to many master lease agreements to make them more holistic with lower escalators over the years. But that has not blunted the practice of building cell towers next to an existing structure in order to siphon off tenants with the offer of lower rents and reduced costs. 

Bob Paige, Executive VP,  Mergers & Acquisitions, Vertical Bridge, said that high-rent relocations are a challenge to the cell tower industry, because, historically, there has not been the same lease up on towers that are built next to other tower company structures.

“We think that that lease up is going to become even more challenged as the carriers continue to cut holistic deals with the larger tower companies so that those assets will not have the same value as a tower that is a true build-to-suit tower for a carrier to meet coverage or capacity needs,” Paige said.

Alexander Schwartz, VP of Development at Tillman Infrastructure, said high-rent relocations are important to the network ecosystem to counter the increase in carriers’ operating expenses. “It is one tool that we’re proud to be a part of, in terms of lowering the carriers’ operating expenses and giving our carrier partners a more sustainable business model,” he said.

Schwartz described Tillman as an industry leader in high-rent relocations and said that Tillman is trusted by the carrier to provide the product. “We’ve really carved out a specific skill set and an ability to do build to relocate,” he said. High-rent locations, as seen by many analysts, are merely a sign of competition in the marketplace, he added.

Schwartz noted that high-rent relocations do offer a challenge, but he disagreed with Paige, saying that Tillman has successfully added enough colocated tenants to make economic sense of the practice. “High-rent relos are not by any stretch of the imagination the only thing we do, but it might be most distinctive,” he said.

By J. Sharpe Smith, Inside Towers Technology Editor

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