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Building Revenue with a Rooftop Lease

Rooftop Leases 101

If you are a commercial property owner looking to generate some additional income, you should consider utilizing your property’s rooftop.  If the property fits the criteria defined by the wireless carriers, you may be able to enter into a rooftop lease for a wireless cell site.  Leasing a commercial rooftop to a cell phone carrier is a great way to generate consistent and quality income from your property.

Although any additional income probably sounds great, you should be aware of all of the potential issues that could arise and know the true value of your rooftop property before signing on the dotted line.  This is where consultants from CellWaves can be a great benefit in the acquisition of a lease agreement. A good wireless consultant team will identify your rights and responsibilities, will anticipate and recognize problem areas, and will help you take actions to minimize risks and maximize income.  This will be an asset now and throughout the duration of the lease. A CellWaves consultant will always be your strongest advocate and have your best interests as their top priority.

Before signing a lease, we recommend that you become educated on important issues related to rooftop cell site leases.  This will help you make informed decisions about your lease. For example, the wireless carrier will usually try to restrict your ability to sell or assign the lease to new ownership.  This could especially present a problem for you if you have a commercial building in a developed area. Watch for restrictions in this regard during lease negotiations.

Although wireless carriers will own the equipment, they should never be allowed the authority to sublease.  This is because you would otherwise likely have the right to lease rooftop space to more than one carrier, thus increasing your flow of income.  However, this might not be possible in all situations. The carriers may install equipment that saves them money, which would make it difficult for you to rent the remaining space to other carriers.  This issue and other details like it should be addressed during lease negotiations before any papers are signed.

Another issue that may arise is about the equipment being installed on the rooftop.  Wireless carriers are frequently looking to expand their networks, and this may require modifying existing equipment.  You will want to find out what kind of equipment is being placed on the rooftop and what effects it could have on the building structurally, aesthetically, and legally per zoning codes.

Along this same line, you will want to learn what interference issues will occur once the wireless equipment is installed.  It may interact with sensitive electronics being used in your building. This is particularly true in hospitals and buildings that use sensitive equipment.  Problems like these are the reason it is necessary to anticipate potential difficulties. You want to minimize or mitigate any issues before they cause a problem.  If issues do surface later, you should also stay apprised of the rights and obligations of either party pertaining to the mitigation of problems, as well as what costs you would incur.

Another important aspect of a rooftop cell site involves your ability to develop the property in the future.  Some contracts will make it difficult for you to develop the property at any point in the future, which is why we recommend retaining these rights, as well as the flexibility to develop your property how you see fit.  If you don’t, clauses like these could end up becoming a major issue for you in the future.

Additional concerns could arise over whether the wireless carrier will have 24/7 access to the property.  They will strongly encourage you to grant this. This is one of the areas where a rooftop lease consultant, such as a team member from CellWaves, could be an asset.  The CellWaves consultant will negotiate the best terms for you and will help mitigate the stress of negotiating such a long-term contract..

Before construction begins, you can expect there to be site visits from many different contractors.  They include representatives from site acquisition firms, zoning specialists, surveyors, architects, engineers, telecom engineers, power consultants, construction contractors, and radio engineers.  These visits prepare them to have the site designed, leased, zoned, constructed, on-air, and optimized with the rest of the wireless network. During the actual construction phase, the crew will be there daily for as long as 4 to 6 weeks.  After the initial construction phase, these visits typically slow to about once a month, depending on the wireless carrier’s maintenance policies. Regardless, they will need some sort of regular access.

If you are a landlord, you likely do not want your tenants’ daily lives or activities compromised by the cell site.  Thus, it may benefit you to only allow rooftop access to the wireless carrier during business hours (with the exception of an emergency situation).  Noise produced by the equipment is another issue you will want to discuss during lease negotiations. If the building is occupied by people living in condominiums, the tenants may be disturbed by the air conditioner and fan sounds generated by the equipment.  Having this considered and addressed during negotiations can save you a lot of hassle in the future.

You will also want to make sure the wireless carrier’s equipment will not damage your roof in any way.  Often the addition of a cell tower will void any warranties covering the roof, so it is essential to know whether the equipment can be safely installed on the roof, that it won’t cause leaks,  and that it will not add excessive structural loading to the roof. The details regarding who will be responsible if such issues occur should also be negotiated into the contract.

You, or your lease tower consultant, should also have a structural analysis performed to determine if the roof has the capacity to support the cell tower and equipment.  An equipment box can easily weigh over 3,000 pounds. Without proper engineering to protect your roof, investments, liability, and the tenants below, you would be taking on unnecessary risks.

Ultimately, the wireless carrier’s biggest concerns arise over timeliness and cost, which aren’t necessarily helpful to you.  If they are in a rush during construction, there is a chance the use of shortcuts and unskilled labor can lead to construction mistakes and accidental damage to the property.  In extreme cases, these mistakes could compromise the structural integrity of the building.

If the construction workers do damage the roof, you will have significant problems getting the wireless carrier to pay for the damage unless it was included in the contract. Having a wireless lease consultant on-hand during the negotiations can ensure you will not have to worry if damage like this occurs, as it will be addressed and covered in the rooftop lease agreement.

One of the most important questions you will want to answer is how much the wireless carrier values the rooftop lease.  Even cell sites built close together could have very different values. In fact, you may lease to two different carriers on the same rooftop and find that one of the carriers values the arrangement more than the other.  Knowing the value of a particular rooftop can be a challenge. During lease negotiations, some of the tower companies may threaten you by promising to take their tower elsewhere due to what they consider to be an inflated price for rent.  With CellWaves consultants on your side, you will be able to separate genuine negotiation concerns from common scare tactics.

Generally, two things have a big impact on what a rooftop is worth to the wireless carrier.  First is the demand for coverage in a particular area. The second variable is the number of existing available sites and what their limitations are.  The wireless carrier will assess these two areas specifically, and their answers will affect the monetary offer presented to you. A high demand for coverage combined with a low number of existing sites in the area will result in higher rents.

Be aware, wireless carriers sometimes employ a compensation method that promotes low rent rates offered by their site acquisition contractors.  The lower the rent rates the acquisition contractors offer, the better their firm looks to the wireless carriers who employ them. In turn, their firm will receive more work from the carriers.  This is in addition to the bonuses they receive for negotiating rents below certain set dollar amounts.

If the wireless carrier offers a 1% change in rent, that may not sound like much; however, when this amount is multiplied by the number of years the rooftop lease is anticipated to be active, it may add up to a hefty amount of money.  Do not be misled into thinking a small percentage of lost revenue will not mean much money to the carriers or to you.

Another notable area of concern is all the ways a wireless carrier will request your cooperation.  Be aware, the lease usually grants responsibility to the carrier for meeting necessary zoning requirements, in addition to obtaining permits.  They will be required to comply with the Federal Communications Commission (FCC) and Occupational Health and Safety Administration’s (OSHA) rules and guidelines.

Additionally, the equipment will use utilities, and the contract should state who will be responsible for the bill associated with those utilities.  There are a variety of ways this can be negotiated. In some cases, you and the carrier will be metered and billed separately. Other situations will have you pay for all utilities and be reimbursed.  If you partner with a CellWaves consultant, you will be better able to determine the best method for your particular property.

Another important lease term to negotiate is good insurance protection for you, particularly when a building is involved.  CellWaves consultants always shift the risk of insurance and loss to the wireless carriers. This protects clients like you from the structural building and consequential damages to your properties.  Wireless carriers and tower companies are in the best position to acquire this kind of telecommunications insurance, contrary to what tower companies and wireless carriers will tell everyone.

Another tip for you is to know that inflation will be an issue, as well as the potential for increases in utility rates.  Be aware of any future spending that might impact the agreement with the wireless carrier company. The contract will likely span several decades, which means you will want to carefully consider all the potential pitfalls that could affect your rooftop lease revenue.

This can sound somewhat overwhelming, particularly for someone new to the business of rooftop leases.  One helpful option is to hire a rooftop tower consultant. When you employ the team at CellWaves, you will benefit from the expertise of professionals who are not bound by the lease terms proposed by wireless carriers or their agents.  And that is only the beginning of what we can do to help. Here is how we have helped other property owners like you.  Remember, CellWaves consultants are industry experts.  They have worked inside the industry for the wireless carriers in the past, so they know exactly how the machinery works.  Fortunately for property owners, CellWaves consultants now only represent private parties and put all that industry knowledge to work for clients like you.

Commercial Rooftop Marketing

If a building meets the engineering criteria and does not have a cell tower on the rooftop, the only explanation is that the property has not been marketed correctly.

This industry is approaching thirty years, and generally all regions that require cellular phone coverage have already been built out.  Wireless carriers are more precise with their cell site placements, and having a professional CellWaves wireless consultant gets a property on the wireless carrier’s radar.  We know what makes a building a prime candidate for cell tower placements.

We manage the entire process from the beginning to the end.  This includes radio frequency (RF) engineering, zoning analysis, contract negotiations, and rooftop design that protects the building structurally while also preserving the property value.  Beyond that, we stay with the project through the construction and quality assurance phases to protect the building’s fascia, walls, and roof, as well as to make sure you receive your first rent check.

The best part of this? We charge you nothing for the marketing program.  We only charge for the actual results we deliver to you. This means if our efforts do not result in securing a cell site on the property, you owe us nothing.  We only market properties that we believe, through our efforts, will result in a strong likelihood of their selection as future wireless rooftop sites. No business wants to expend financial and human resources over an extended period of time without the certainty of income.  We are so confident in our experience, expertise, and the value we provide, that we are prepared to take on the financial risk for building owners like you.

Not all buildings meet the engineering, site acquisition, zoning, construction, and marketing requirements for wireless carriers.  This is why we prequalify all buildings before adding them to our portfolio of sites that we present to wireless carriers. No two potential sites are ever the same.  The demographics, internal engineering growth objectives, population concentration, vehicular traffic, morphology, topology, commercial interests, popular venues, access to power, high-capacity broadband fiber-optic backhaul networks, and many other conditions all have a unique effect on the viability of a site.

Equally important, though, is how the location is packaged, presented, and marketed to the people who make those deployment decisions at the wireless carrier level.  This phase is crucial to the success of the marketing program. Only through decades of working in the industry for the carriers, and working side by side with engineers, site acquisition teams, land use experts, wireless real estate attorneys, construction managers, and program managers, are we able to confidently take on projects without charging clients like you an up-front fee.