On Top of Rental Market
Even with the real estate market in the doldrums a couple of years ago, the owners of the 62-story First Interstate Tower in downtown Los Angeles were busy signing lucrative leases. The only hitch was the leases weren’t for new office tenants, but for antennas on its rooftop.
And, although the building is now mostly occupied, the high-rise’s roof is still its most coveted space per foot, with 28 different companies together paying as much as $300,000 a year to be there.
“The revenue generated by our rooftop is now even greater than it is for renting an office floor,” said building general manager Peter Anastassiou.
Roofs, towering signs, even baseball scoreboards and church steeples are turning into revenue-producing real estate as such wireless telecommunications companies as Sprint PCS and Pacific Bell Mobile Service race to build antenna networks to transmit their new digital cellular phone service.
“There’s quite a competition for good space,” said Tim Ayers, a vice president with the Cellular Telecommunications Industry Assn. in Washington. About 38,000 antennas now transmit around the country, according to the CTIA. But in just a few years, that number is expected to mushroom to 100,000 as new companies launch cellular service and existing firms dramatically expand their coverage areas.
“If you’ve got a tall building in town, you can be in a good negotiating position,” Ayers said.
Recognizing that, some property owners are already contacting cellular carriers and “roof brokers” to try to land antennas on their buildings. Sam Ebeid, general manager of the 12-story Furama Hotel near Los Angeles International Airport, recently signed a contract with a company that promised him 27 more antennas and almost $50,000 a year in rent. He plans to use the money to upgrade the hotel’s lobby and improve its Internet service.
“In the old days, the only thing we worried about was whether the roof leaked. We never thought it would be a profit center,” Ebeid said.
Cellular antennas are also profit centers for a brigade of vendors that have moved into Southern California as personal communications service, or PCS, companies launch their digital cellular phone service. One of them is Furama’s rooftop manager, Conshohocken, Pa.-based Apex Site Management, which has built a nationwide business by treating building tops as desirable real estate.
“Like a broker, we require our people to actually walk the roof and show [carriers] the space” they will rent, said Mark Ganzi, Apex general partner. And like a traditional real estate broker, Apex gets paid commissions by landlords--in his case 30% of all profits for the term of the lease. With more than 300 clients and 5,000 roofs, Ganzi boasts that his company is swiftly becoming the “Trammell Crow of telecommunications.”
Another breed of site brokerage firms, which includes Atlanta-based TDI Inc., represents telecommunications carriers trying to pinpoint and engineer new antenna sites. TDI opened its first Southern California office in Costa Mesa in January, after Sprint began offering service in San Diego. Sprint has since rolled out service to Orange County and will do so in Los Angeles around Thanksgiving.
Sprint’s rush to get antenna coverage has helped swell TDI’s local ranks to 53 employees. And Vice President Gordon Smith expects the company to grow further as more companies enter the cellular fray.
But industry watchers say that finding new sites and persuading local governments to let carriers erect antennas is becoming harder. The proliferation of cellular poles and towers that began in the early 1980s with cell phone service by LA Cellular and AirTouch already has some municipalities complaining of “air pollution.”
Enter a new breed of firm, called “stealthers,” that helps telecommunications companies appease planning commissions and neighborhood activists by disguising equipment as trees, bell towers or church steeples.
“We’ve got half a dozen palm trees in Southern California alone,” said Kurt Samson, Western regional sales manager for Valmont Industries, a Valley, Neb., firm that began selling cloaked telecommunications equipment two years ago after partnering with a Tucson-based design firm experienced in casino adornment.
Valmont ships steel poles to artists who coat them with epoxy molded to look like rough bark. Pipes are welded on to look like big branches, and then leaves are screwed in after the poles are put in place, much like an artificial Christmas tree, Samson said.
Last year, Pacific Bell built a 50-foot tower complete with stucco paint and steeple on the grounds of Green Hills Baptist Church in La Habra. To get city permission, it had to sign a 15-year lease, put in water lines and plant about 50 new trees around the tower.
Churchgoers and neighbors initially had reservations about the size and the look of the tower, but complaints leveled off after it was built and the checks started coming in.
“It kind of looks like an old Oklahoma windmill to me,” said Associate Pastor Paul Krake. “We don’t even talk about it anymore, unless it’s how to spend the money,” he said.
Green Hills uses the $800 to $1,200 it receives in rent every month for capital improvements. Its latest project was fixing the cement walkways in front of the church.
