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One of the by-products of the telecommunications revolution has been the additional value which landlords have found in their rooftops. A mix of technological advances and telecommunications marketplace changes has led to an explosive growth in the demand for a range of high speed communications services. The providers of these services have, in turn, created a demand for antenna space on building rooftops to send and receive signals for cellular phones, pagers and other voice, data and video communications. In addition, tenants are demanding building infrastructures which allow for access to such service providers.
In order to take advantage of the increasing market for rooftop antenna space, building owners and managers should be aware of some of the pitfalls which can arise from the lease of rooftop space. A landlord should keep in mind the following tips in negotiating such leases.
- Location. A building owner or manager should take care to carefully designate where on the rooftop the tenant‘s antenna can be installed. Failure to do so may preclude the later lease to other possible rooftop users.
- Installation and Removal. One of the benefits of a lease to a rooftop antenna user is that ordinarily the landlord does not need to install any tenant improvements. Typically, the rooftop antenna user installs its own equipment. However, care needs to be taken that the installation does not damage the integrity of the roofing system or void any applicable warranties.
- Equipment. The landlord should require a specific description of the equipment to be placed on the rooftop for at least three reasons. First, the landlord needs some assurance that the equipment to be installed will not be an unsafe burden on the load-bearing capacity of the roof. Second, since different telecommunications uses require different antenna structures, designating the equipment to be used gives the landlord additional control over the assignment and the subletting of the rooftop space by the tenant or by an expansion of the use by the tenant beyond that originally agreed in the lease. Third, depending upon the physical characteristics of the building, the landlord may be concerned with aesthetic considerations.
- Access. Typically, a tenant will require 24 hour a day, 7 day a week access to its equipment in order to respond to equipment failures.
- Termination. Rooftop antenna tenants will want to have the right to terminate the lease if its operating licenses are lost or revoked, or if for technological reasons the site is no longer useful. Some possible compromises include allowing the tenant to terminate if a new building or structure is built which blocks the tenant‘s signal, or if the tenant pays a termination fee (for example one year‘s rent) coupled with a long notice period to the landlord.
- Compliance with Laws. The rooftop antenna lease should place the burden of compliance with all applicable laws relating to the installation and use of the rooftop antenna squarely on the tenant. Nonetheless, there may be some compliance issues that may require action on the part of the landlord (or at least the landlord‘s cooperation), such as special zoning variances and building permits.
- Interference. Unless the landlord is providing the tenant with the right to the exclusive use of the landlord‘s rooftop, the landlord will want to reserve its ability to lease other areas of the rooftop to other tenants. This raises the issue of possible interference from other tenants. Accordingly, the landlord needs to provide that the tenant can only change frequencies with the landlord‘s prior consent.
While many of the issues that arise with respect to rooftop leases are the same as with any other office lease, there are significant differences. Rooftop leases provide a landlord with opportunities for creating value from a portion of a building which previously had none, but only if these differences are recognized and the necessary and appropriate precautions are included in the lease document.
Matthew L. Kimball is the Chair in the firm‘s Commercial Real Estate Department, and is the co-author of "Property Manager‘s Guide to Commercial Real Estate Law" recently published by the BOMI Institute. For additional information please contact him at 410-783-6354 or firstname.lastname@example.org.
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