Moving Up

As urban spaces become more dense, rooftop leases become more popular

Rooftop real estate is seen as easy income for building owners, but there are issues to take into account before signing a lease. / LAW WEEK FILE

Anyone who’s seen a bee buzzing around downtown has come into contact with the growing use of rooftop real estate.

As cities become denser and street-level property goes to other uses, rooftops become more and more popular for some of the more unsightly things, such as cell towers and solar panels. More and more, though, building owners are recognizing the value of rooftops for other uses that might not fit as easily into an urban landscape or that are just easier to enjoy once they’re up in the fresh air and clear sky — such as bars, social venues, gardens or beehives.

But with each of these uses, there are specific considerations for building owners. While it might seem like an obvious advantage to rent out unused rooftop space for something like a cell tower, there are concerns about length of term, structural integrity and the interplay between different installations to consider.

Rod Carter, a Husch Blackwell attorney who works out of the firm’s Milwaukee office, said one example was a historic hotel that operates a farm-to-table restaurant that operates a rooftop garden and beehive. 

“You typically think about a truck coming from the farm. Here, you have other concerns,” he said. “If you have beekeeping, will there be bees all over the hotel that pose a risk? If you do rooftop gardening, can an old structure support that or support the water? And how will you do maintenance with a garden in place?”

And while green spaces and locally grown produce might be particularly trendy right now, the transition to a 5G cellular grid has brought an influx of cell towers to urban areas as well. 

“[Rooftops] will become more popular; you’ll see uses having to coexist with each other,” Carter said. “It’s attractive for a wireless carrier to look at a building and see that it’s great for 5G and also a city initiative for green space and rooftop considerations for a rooftop deck or venue. These can all be going on in the same location.”

And these varied uses could be competing interests when detailing exactly where a certain installation might fit or who is responsible for structural maintenance and repair. With the growing interest, there are many concerns to take into account. 

A rooftop might be viewed as an added value for a building, but it could also cause problems if a rooftop can’t hold what a landlord leases it for or if they want to sell a building while still under a lease agreement. Building owners should first consider how much of their rooftop they want to use, how long a lease term is and how easy it is to terminate that agreement, Carter said. 

There are also those structural concerns that need a proper inspection. In most cases, the potential tenant should be willing to pay for such an assessment. But then maintenance costs factor in, as well. 

Maintenance also carries with it issues regarding security — who can enter a building and when in order to access a roof — how much notice they must provide before doing maintenance in order to guarantee access and forewarn other building tenants, and protecting the integrity of the roof as well as any other tenants using the space.

Like with many contracts, Carter said forethought is key and that many of these things can be addressed in the agreement ahead of time. 

He said he recommends clients communicate with an insurance agent about what happens if something goes wrong, and what the obligation is for one party to indemnify another if that happens. 

Similarly, planning goes a long way in preserving the rooftop space for future tenants as well. He said he encourages clients to do a memorandum of lease when renting out a rooftop space in order to record what the interest is in the rooftop and where on the rooftop something should be.

“I’ve seen in different telecom projects, you have installations where they shouldn’t be. You want to memorialize what your rights are, and by reporting it, you put the world on notice,” he said. “I’ve seen it where carriers go up to install [an antenna] and another carrier’s antenna is where you negotiated to put them on the lease.”

He recommended getting drawings of a roof and making sure building owners understand what the drawings say regarding where rooftop installations can go.

Carter also stressed the importance of negotiating a lease, even when an agreement is common practice for a tenant. “A lot of times, entities, particularly corporations or chains that do this routinely, they will present a form lease. Those can always be negotiated,” he said. “Don’t be so excited to just sign the lease. You can negotiate it and you should.” 

— Tony Flesor

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