A new study finds tower REITs are real estate housing the digital economy. 

The modern economy is increasingly supported by wireless networks. Network operators provide connectivity through a series of installations on communication towers and other infrastructure. These towers have obvious characteristics of real estate, and are often owned by publicly traded real estate investment trusts or REITs.

Download the study results

Cell phone tower in field

A new study conducted by Professor Timothy Riddiough at the University of Wisconsin and sponsored by Nareit, finds that tower REITs are an important part of the growing digital economy; a broad range of qualitative and quantitative evidence supports a conclusion that towers are intrinsically real estate; and that tower REITs operate in both a competitive environment and increase allocative efficiency and benefit consumers.

The key findings, include:

Towers are intrinsically real estate

  • Towers are permanent structures affixed to land and supported by a foundation.
  • The tower construction and development process mirrors that of other types of real estate.
  • Location is a source of value, with income derived from rents.
  • Towers have a long history of being treated as real estate for federal income tax purposes.
  • Appraisal standards consider cell towers to be real estate.
  • Towers meet FASB implicit tests for what constitutes real estate for revenue recognition purposes.
  • The two primary industry classification standards include tower REITs as part of the real estate sector.
  • Dedicated real estate mutual funds and ETFs frequently hold tower REITs in their portfolios.
  • The returns of tower REITs are more highly correlated with returns of most other equity REIT sectors than they are with telecommunication companies or the companies that collectively comprise the S&P 1500 Index.
  • Tower REIT operational performance, revenues and assets align with the operational performance, revenue, and assets of other REITs.
  • Tower REITs follow real estate financial reporting conventions.
Cell phone tower in city parking lot

Tower REITs and other tower companies operate in competitive markets with the threat of entry, and lease to primarily large, sophisticated tenants.

  • Commercial real estate is fractionalized in its ownership, making it a highly competitive industry.
  • Entry and the threat of entry, in the form of new construction, limits rental pricing power of tower companies in local markets.
  • Tower REITs and other tower companies of different sizes, including new entrants, compete with one another for tenants and the construction of new towers.
  • There has been significant entry in the form of new tower construction over the past five years. There are over 100 independent tower companies and nearly 75% of the new towers brought online in the U.S. were attributable to entities other than the three largest tower REITs.
  • Tower customers are highly concentrated. This market structure provides the customers with leverage in lease negotiations.
  • Tower REITs operate in an environment where there is meaningful ongoing technological change.


Tower REITs increase allocative efficiency and benefit consumers.

  • The “neutral host” model, whereby tower operators construct a single tower that can host competing mobile carriers, reduces duplication and creates opportunities for entry by mobile carriers while also reducing environmental impacts and optimizing land use.
  • Cell tower companies generate other efficiencies given their core expertise in locating, entitling, constructing, and operating towers for the benefit of their customer tenants and ultimately consumers.