Throughout my professional career, I’ve worked hard to stay aware of technology trends & changes. My first gig in college was working for a blog publishing website – well before anyone even knew what a blog was! Since that day, I’ve been involved in many entrepreneurial tech ventures that both increased my awareness & improved my ability to evaluate opportunities. 5G Networks are a major real estate opportunity that landlords are currently overlooking and need to capitalize on.

For those unaware, 5G networks are the newest and fastest cell phone coverage networks. The fifth-generation (5G) network offers the fastest-ever mobile speeds (anywhere from 10 to 100 times faster than current speeds). 5G also accelerates the response time between when a user clicks a link or visits a site and when the network responds to that request. When 5G first became available, users were slow to adopt the technology because of limited compatibility with existing phones and limited coverage areas. The speed was incredible, but most users were hesitant to embrace 5G until it was more widely available. Users will have to have a phone that is 5G enabled, which is not the case with most of the existing cell phones on the market. While the technology has existed for a few years, providers have struggled to roll 5G coverage & phones out effectively and efficiently. Hence, the opportunity. 

A negative to 5G is it has a shorter range. One site on 4G can cover a massive territory but that is unfortunately not the case with 5G. Most experts feel that the 5G coverage range is shortened to a maximum of 150 meters from the antenna. Cell providers will have to increase their number of antennas to meet demand as the 5G market matures.  For landlords this is good news because carriers will need many more 5G cell sites than they previously needed for 4G ones. 

Because of the increased demand for antennas, all commercial real estate property owners should evaluate whether their property is a good fit for a 5G cell phone antenna. Generally, the space used for the antenna is much less than a typical landlord expects and sometimes can even be on the roof & not visible from the ground level entrance.  

There are many financial benefits to erecting a cell phone antenna and entering into a long-term lease. First, cellular carriers will pay rent to place the antenna on your property, building, facade or structure. The lease rate, length, and terms can be negotiated with the cell phone provider. Many property owners have already successfully negotiated that the cell phone company pays the portion of property taxes related to the antenna in addition to their monthly rent. After the antenna is installed, property owners could potentially sell the lease rights to the antenna to a real estate investment fund that specializes in the purchase and management of cell sites. 

Should a property owner continue to own and manage the site, they can also depreciate the cost of the site for tax purposes. As an added benefit, in the court case Broz v. Commissioner the Tax Court held that assets used for commercial wireless cell coverage are depreciated over 10 & 15 years under Section 168 of the Internal Revenue Code. As a result of the Tax Cuts & Jobs Act of 2017, 10 & 15-year assets, including cell antenna & cell equipment, are subject to bonus depreciation. This means that the cost to erect the cell antenna isn’t depreciated over 39 years like the building itself. Rather, depreciation on the cell site cost can be accelerated for tax purposes and treated as a 15-year asset while the cell site equipment & leased digital equipment should be considered a 10-year asset. The more depreciation expense can be moved to the first years in an investment, the higher rate of return on the investment.

Unfortunately, most property owners are not aware of the benefits of 5G and how their properties can be used for a cell site. Because of the limited radius for cell coverage on 5G antennas, there is expected to be a major demand for additional antennas. Between the additional rental income, accelerated tax depreciation, and the potential disposition ability, property owners should strongly consider adding a cell antenna to their property.

If you are interested in finding out more then contact me so I can introduce you to the amazing team I have been using to successfully represent and market my properties to all the cell carriers and providers.

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