This paper describes an observer system that can be easily incorporated in a mobile cellular network base transceiver station (BTS) for the optimization of small-cell deployment in 2-tier HetNets. The system can be used to periodically monitor the cell coverage area and identify regions of high concentrations of mobile users for possible small cell deployment. By deploying micro-, pico-, or femto-cells in areas of higher user concentration, high data rates and good quality of service in the network can be maintained. The observer system divides the cell into a series of azimuthal and range sectors, and determines which sector the users are located in. The observer system provides the network manager with relative angle of arrival (AoA), and distance estimation to determine the relative location of user clusters within the cell. Simulation results indicate system robustness to a range of propagating environments and at different noise levels. Result show that mobile user location estimation can be determined for a signal to noise ratio of as little as -20dB.