With the recent success of the iPhone and similar smart-phones and tablets, the demand for wireless data service is skyrocketing across the country, especially in high-traffic areas. This means that the owners of busy shopping centers and mixed use developments will see more opportunities to lease rooftop space for mini cell towers and antennas. The tenants in these deals sometimes pay rent based on the volume of wireless traffic and the leases give property owners a new revenue stream without requiring additional investment in the property. While property owners can make money off of otherwise unusable portions of their buildings, rooftop leases raise issues that property owners should consider on the front end of the deal.
Here are a few questions that property owners should ask when evaluating rooftop wireless leases for commercial projects:
- Does the lease restrict the disposition of the property? Many wireless companies try to limit the property owner’s ability to sell the property and assign the lease to a new owner and may even ask for a right of first refusal. This may not be a huge concern for a cell tower site carved out of a corn field, but it can present a serious problem for a rooftop facility in the middle of a larger commercial development. The property owner should weigh the benefits of this new income against the burdens of unwinding or working around this transaction if necessary to sell or refinance the entire parcel.
- What services and equipment are permitted? In order to take pressure off the cell tower networks, cellular companies are deploying multiple technologies, including cellular service and wi-fi facilities that are capable of handling both cellular calls and data service. Property owners should be clear about which kind of facilities are included in the lease and any exclusives for certain kinds of facilities need to be spelled out. Additionally, property owners should consider whether the tenant will be permitted to sublease to multiple service providers and if there will be additional compensation to the property owner for those facilities.
- What does the lease say about interference? Property owners may seek assurances that the cellular facilities are not going to interfere with electronics or telecommunications equipment used by the other occupants of the property. Improved cellular service can make the property more attractive, but owners cannot jeopardize more important rent streams by allowing interference with the daily operations of other tenants at the property.
- Will the lease restrict future development or alterations? Just as property owners would not want to tie their hands with respect to the future sale of the property, property owners should not tie their hands for future development and alterations to existing structures. They should negotiate relocation provisions or termination rights in order to retain flexibility for future development and alterations.
- What kind of access is required for maintenance? Wirelesss companies expect to have 24/7 access to their equipment. If the facilities are located on the roof of a shopping center or other property with multiple occupants, then the property owner will probably need to limit access and may require the owner’s personnel to be present while the technicians are on the roof.
- Does the agreement protect the roof and other equipment? Property owners need to take care that the rooftop equipment is properly installed and does not damage the roof or any mechanical equipment or other property located in the vicinity. They should also review existing leases to make sure that the equipment will not conflict with any rights that other tenants may have in portions of the rooftop.