How to Negotiate a Rooftop Cell Tower Lease

Top dollars. When looking to generate more revenue, rooftops can be a valuable asset. Rooftop leases continue to be a highly sought-after commodity by mobile phone carriers, which are willing to pay to put cell towers on urban roofs, especially in neighborhoods where there is a high demand for additional bandwidth. Here’s what you need to know.

Coming to terms. If a phone company approaches your building, the first course of action is negotiating a license agreement, which involves an attorney and most likely a consultant specializing in cellphone towers. In a license agreement the building can grant the carrier non-exclusive rights to install equipment on the roof in exchange for rent, typically $2,000 to $5,000 per month. In some cases, the phone company may ask for exclusive rights to the roof. Andrew P. Brucker, a partner at the law firm Armstrong Teasdale, usually advises against that option, since it could cut off an additional source of income for the 25- to 30-year duration of the lease. “We don’t want to see exclusive use of the roof,” Brucker says, “since the board may get an offer from another phone company that also wants to lease it.”

Ask the experts. Michael Mintz, the chief executive and a co-founder of the MD Squared Property Group, advises boards to get outside help when negotiating an agreement. “With new roof leases we tend to use a broker, because there are nuances in how they are set up, including terms of access for maintenance and repairs,” Mintz says.

There may also be clauses that boards want to avoid, according to Meir Waldman, the chief executive at Nexus Towers, a cellphone tower consultant and brokerage. For instance, he says, a phone company might agree to pay $2,000 today, but then redo drawings and double the equipment. You want to be sure to be compensated for this.

Examination time. Once both parties agree on the lease terms, the next step is bringing in an engineer to assess the condition of the roof. A roof that is prone to leaks or is nearing the end of its life isn’t necessarily bad news for the board, however. “If the engineer says it’s going to be impossible to replace the roof once the tower is up,” Mintz says, “the board can ask the phone company to pay for a replacement before the equipment is installed. If they agree, you’re getting a new roof for free.” 

Boards still need to bear in mind that rooftop leases are not a simple process. “It’s like adding a new floor,” says Ira Meister, the founder and president of Matthew Adam Properties. “There are a lot of moving parts.”