The Baker House Newsletter Issue VII
The Tenant on the Roof
Wireless carriers pay decades of rent for a hundred square feet of roof or a corner of a parking lot. This issue covers what the leases pay, why so many are underpriced, and what to check before buying a building that has one.
THE LEAD
The Hundred-Square-Foot Lease
Look up at the antennas on an ordinary apartment building or the tower behind a church, and you are looking at one of the strangest leases in real estate. A wireless carrier or tower company rents about a hundred square feet of roof or ground, pays every month, and stays for decades: most leases run 30 to 50 years once the automatic renewals are counted. Rooftop leases typically pay 1,000 to 3,000 dollars per carrier per month, and prime urban sites pay more, per industry data.
The tenant profile has no equal in this series. The rent comes from some of the largest companies in the country, the space was producing nothing before, and the tenant needs almost nothing from the landlord. Rent for the roof, on a building the owner already owns, from a tenant who almost never calls.
The catch is where every catch in this series lives: in the paperwork, and in who knows what. Rents are set by network necessity, so two similar buildings a mile apart can earn amounts thousands of dollars apart, and the owner negotiates once in a lifetime against a counterparty who negotiates thousands of times a year. The result is a category where the income is excellent and the pricing of it, by the people who receive it, is routinely wrong.
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CHART
Illustrative example at 11 times annual rent. Buyout offers are quoted as multiples of annual rent, commonly 10 to 12 times, with no published standard. Source: Airwave Advisors, cell tower lease buyout pricing.
THE TURN
Two facts drive everything in this category. First, old leases are badly underpriced. Industry consultants who track hundreds of thousands of sites report that leases signed 10 to 20 years ago often sit 50 percent or more below what carriers pay for comparable sites today, because owners signed the first offer, accepted weak escalators, and never revisited the terms. A renewal window on an old lease is a repricing event most owners sleep through.
Second, the income is severable from the building, and this is where last issue’s lesson returns. Buyout firms pay lump sums for lease income, and they typically take the rights through a recorded easement that survives any sale of the property. A building can trade with antennas on the roof and none of the rent attached, because an owner two deeds ago sold the income for cash. Anyone buying a building with equipment on it prices the lease as a separate asset with its own diligence, the same way they would a liquor license or a grandfathered use. Each fits the pattern this series keeps returning to: valuable rights attached to ordinary-looking property, waiting for a buyer who checks.
The carrier signs for a hundred square feet and stays for thirty years.
THE FRAME
One Property, Two Ways to See It
| WHAT THE MARKET SEES | WHAT A DISCIPLINED BUYER SEES |
|---|---|
| A few antennas on the roof | A credit tenant on a decades-long lease |
| A one-time windfall offer in the mail | Roughly ten years of rent traded for thirty or more |
| An odd easement in the title search | Rooftop income a prior owner already sold |
WHAT TO LOOK FOR
If you own a building with a lease. Read the escalator before the rent. A lease at 2 percent steps every five years and a lease compounding 3 percent annually end up in different worlds over 30 years. Old leases are the ones most likely to be far under market, and the renewal window is when you have leverage. Ask for a share of co-location revenue, commonly 15 to 30 percent of a new carrier’s rent, when a tower company adds tenants above you.
If a carrier approaches you. The first offer is an opening bid from a counterparty who does this daily. Rent is set by how few alternatives the carrier has at your location, so comparable-property numbers mean little. Terms outlast the starting rent: escalators, expansion rights, a removal bond, and insurance naming you.
If a buyout letter arrives. Offers run as multiples of annual rent, commonly 10 to 12 times, and the firms making them resell or hold the income at higher values, which tells you which side of the trade they expect to win. The lump sum usually comes with a recorded easement that outlives your ownership. Sometimes the certain cash is the right trade. Know what you are selling before deciding.
If you are buying a building with equipment on it. Confirm the lease still belongs to the seller. Run the title search for recorded easements and lease assignments, get the actual lease and its termination clause, and price the income separately from the building. Antennas on the roof prove equipment exists. They do not prove the rent comes with the deed.
HOW THE MATH WORKS
A rooftop lease pays 2,000 dollars a month, 24,000 a year, with a 3 percent annual escalator, using round numbers. Left alone, it collects about 275,000 dollars over the next ten years and roughly 1.1 million over thirty. A buyout firm offers 264,000 today, about eleven times this year’s rent. Whether that trade makes sense turns on one question: how likely is the site to stay. A multi-carrier site in a town where zoning makes new towers nearly impossible rarely goes dark, and selling it at eleven times undervalues decades of escalating rent. A single-carrier site after a merger is a different animal, because most leases let the carrier terminate on short notice while the owner is committed for decades. The same asymmetry prices the purchase side: a building marketed with 24,000 of rooftop income deserves a discount for the termination clause, and no value at all if the title search turns up an easement from a sale nobody mentioned.
THE RISKS, TOLD STRAIGHT
The asymmetry is the headline risk: carriers can typically terminate on 30 to 90 days notice, while the owner is bound for decades, so this income deserves a haircut in any underwriting, never face value. Carrier consolidation is the proof, since mergers have decommissioned thousands of sites, and single-carrier locations carry the exposure. Technology moves too: small cells pay a fraction of macro-site rents, and network redesigns can relocate equipment. Mid-lease, carriers deploy professional negotiators to cut existing rents, and owners who engage without data give ground they never recover. Removal is real money, commonly 25,000 to 75,000 dollars, which is why a removal bond belongs in the lease. And the buyout industry exists because the lump sum usually favors the buyer. The income is excellent. The contract around it decides how much of it you actually keep, and the discipline is the same as every issue in this series: the category is real, and the individual deal is earned through diligence.
THE WIRE
The proof at the top. Entire public companies were built on exactly this income: the major tower companies own or operate hundreds of thousands of sites and are among the largest real estate companies in the world, and a parallel industry of lease buyout firms pays lump sums to individual owners and holds the income at higher values. The top of this category was institutionalized decades ago. The bottom was never managed at all: single buildings, one lease each, signed long ago, with escalators nobody has read since. The professionals on the other side of the table are the best evidence of what the income is worth, and the gap between what they know and what the average owner knows closes one informed landlord at a time.
OFFICE HOURS
This issue covered the case, the checklist, the math, and the risks. The judgment, whether your lease is under market, whether a buyout is the right trade, whether a listed building really includes its rooftop income, is where the real questions start. Richard takes them every Wednesday at 2pm ET in his free office hours. He answers whatever attendees ask, live, for an hour. If this issue raised a question for you, bring it.
SOURCES
- Dgtl Infra, cell tower lease rates and agreements, 2026: rooftop antenna leases of $1,000 to $3,000 per tenant per month.
- Steel in the Air, 2026 lease rate and negotiation guide: typical new lease proposals of $500 to $1,250 per month, higher in urban markets.
- Airwave Advisors, cell tower lease buyout pricing: offers commonly 10 to 12 times annual rent. Vertical Consultants and Cell Tower AI site database: 30 to 50 year effective terms; older leases frequently 50 percent or more below current comparable rents.
- EMFRadar landowner guide, 2026: co-location revenue shares of 15 to 30 percent; removal costs of $25,000 to $75,000; carrier termination provisions. Figures reflect industry consultancy data; no institutional research series covers this category.