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Feature Article*
April 7, 2004
Developing a
Successful Rooftop Strategy
by Tim Dennis,
President
Mid-Atlantic Tower Management, Inc.
Rooftop Revenue – Why Now?
With the continued increase in wireless
usage, carriers are aggressively looking to expand their networks and
improve their coverage areas. This translates into increased activity
in antenna site acquisition and development, either in the form of
independent towers or rooftop space on existing buildings. With the
high turnover of rooftop management companies, due to mergers,
acquisitions, downsizing, or bankruptcies, there has been less and less
focus by building owners on marketing and leasing their rooftops.
However, now is the time to take advantage of the wireless “land grab”
and make sure your building rooftops are positioned for profit.
Step1: Hire a
Rooftop Management Company
Rooftop management is specialty. To be successful, the rooftop manager
must be familiar with the local market, maintain close relationships
with the wireless carriers in each market, and have an intimate
knowledge of each building under management. Further, the rooftop
manager is responsible for actively marketing your rooftop space to
interested clients. Successful rooftop management requires personal
attention to each property and persistence in getting deals done.
For larger portfolios with numerous properties around the country, a
national site management company offers the benefit of representing
their clients in multiple markets. However, real estate is a local
business, and it is important that these national companies have a
strong local presence and understand local and regional market factors.
Too often, buildings have become just an address in a large database
with little focus on targeted marketing activity, and even less focus on
personal rooftop management. Dedicated local managers are often better
able to serve their customers due to proximity to their buildings,
knowledge of the local market, and personal relationships with the
building management teams.
Rooftop
managers are typically compensated as a percentage of gross rooftop
revenue, anywhere from 20-30%, on average. It is important to determine
exactly what services you will receive for this fee and how successful
you believe the rooftop manager will be in generating revenue for your
property. Percentage fees are directly correlated to the amount of
revenue the owner will earn, and sometimes it’s worth paying a higher
percentage if you believe it will lead to higher gross revenues for the
property. So, don’t let the numbers fool you – the real questions to
ask in selecting a rooftop management company are: how many properties
do you have under management; how many properties are generating
revenue; what’s the average revenue per property; and what’s the average
revenue per agreement? This will give you a much better understanding
of the performance of the manager.
Implementing a successful rooftop strategy is an intricate process,
which can only be accomplished by establishing strong relationships with
prospective licensees. Most site acquisition decisions are made by the
carriers’ local site development managers, and they typically know which
rooftop managers to work with when they are looking for a new site.
This kind of close working relationship is critical to getting rooftop
agreements done in a timely manner, which benefits both the wireless
carrier and the building owner. The longer the rooftop remains
“under-utilized,” the more revenue the owner is losing.
One
benefit for building owners is that the more sites the carriers develop,
the lower their antenna height requirements become (due to network
engineering and coverage requirements). Therefore, buildings that once
had little chance of attracting rooftop tenants may now generate rooftop
activity. On the down side, however, is that because of the increase in
the supply of available rooftop space, the monthly rates for rooftop
access may begin to soften.
Step 2: Develop a Comprehensive
Telecom Program
As
the telecommunications industry begins to recover from the implosion
that began in 2000, property owners interested in additional ancillary
telecommunications revenue now have a couple of different options. At
one time, rooftop managers focused solely on wireless companies that
wanted to locate transmission antennas and related equipment on building
rooftops. In more recent years, however, some rooftop managers have
expanded their business into full-scale, comprehensive
telecommunications managers. Additional services might include
negotiating building access agreements or soliciting additional
telecommunications business – such as fiber connections to the property,
voice over the internet (“VoIP”), in-building wireless systems, private
cable service, WiFi Hotspots for public spaces, or high speed internet
services for tenants. Here is a brief outlook of several industry
segments for 2004:
Telecom/Fiber Services. After several years of consolidation, the
traditional voice and data telecommunications market is beginning to
come alive again. Tenants will always need competitive choices for
their communications needs, and as technology continues to advance and
new solutions hit the marketplace, the building owner will constantly be
faced with managing new access agreements. Much of the telecom activity
will be from the growing interest in voice over the internet (VoIP)
services and for the still growing demand for high-speed internet access
and other broadband business applications.
In-Building Wireless. You can’t talk about wireless access on the
roof without looking at the options for wireless access throughout the
building. The trend toward wireless communications is forcing building
owners to reevaluate their internal telecommunications infrastructure to
include in-building antenna systems for the distribution of wireless
signals indoors. One of the emerging trends in this segment is for
carriers to tie in-building antennas systems together with a macro
network site on the roof. This allows them to provide two different
coverage solutions with one installation.
WiFi.
Most think of “hot spots” when they hear term WiFi, but in suburban
and rural markets WiFi Internet service providers are rapidly replacing
dial-up service by deploying their networks on existing rooftops. There
is a lot of industry excitement and venture capital activity focused on
this market segment, but few of these WiFi providers have achieved
profitably. This is a business model that is in its infancy, and most
of the providers tend to be small start-ups with limited capital. The
one advantage is that these companies can often rapidly deliver
high-speed internet service to buildings where there is no other
cost-effective option.
Paging. It seems that simplex (one-way) paging is rapidly
disappearing from the market place. Consumer subscribers are migrating
to cellular/PCS devices that offer a variety of communications means.
Business and industrial users are migrating to cellular or now using
duplex (two-way) pagers that are provided by a few of the national
companies such as Skytel and Arch Wireless. As this migration is
occurring, the existing paging subscriber base is shrinking by as much
as fifty percent a year. To offset this pressure, these companies have
been consolidating their businesses and their networks. Just recently,
Arch Wireless and Metrocall announced their intention to merge their
companies. The paging segment once represented a significant revenue
opportunity for owners, but it is not as prevalent now. This revenue
segment will most likely continue to shrink and is at risk of
disappearing altogether as the cellular and PCS carriers continue to
expand their wireless data offerings.
Cellular and PCS. After several years in which the national
wireless carriers have had severely limited capital budgets, this year
has brought forth dramatic activity in the acquisition and construction
of new sites. This increase in carrier activity can be largely
attributed to their need to improve system call quality and capacity as
well as to expand their networks to provide seamless wireless coverage.
Many of the PCS carriers are aggressively working to build out their
networks to compete with the more mature systems of the legacy cellular
carriers that had a ten-year head start. This year promises to yield a
large increase in wireless activity in major markets across the country
as more and more consumers cut the phone cord and rely primarily on a
wireless phone for their telephony needs.
Conclusion
The next two years are expected to be a great time to increase
ancillary telecommunications revenue for office buildings. In order to
ensure that you don’t miss out on these revenue opportunities, we
recommend hiring a professional telecommunications manger to actively
market your rooftops and risers.
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Mid
Atlantic Tower Management (MAT) provides rooftop management and
licensing service in the DC metro area and rooftop consulting on a
national basis. MAT represents several of the leading commercial
real estate companies in the mid-Atlantic region and has successfully
managed their rooftops and in-building telecommunications needs for over
eight years. Mid-Atlantic Tower has teamed with CRE Partners to
offer unparalleled telecom management and consulting services. For
more information about MAT, please contact Tim Dennis at 301-651-8400.
*CRE Partners is not responsible for the content, validity,
technical accuracy or other claims or information contained in this
article. Feature Articles are often authored by outside sources
and do not necessarily reflect the views or opinions of CRE Partners.
Further, publication of articles in the CRE Partners Newsletter and/or
web site is not meant to represent, promote, or endorse any company,
brand, product or solution.
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