Smart buildings: Who is fiddling with your roof?

Attention commercial building owners: Do you have a smart building? You’ve heard of smart phones and smart cars, but are you aware that advances in technology are turning inanimate objects, including buildings, into highly intelligent creators of revenue?

Smart buildings use advances in technology to create both cost savings and new revenue streams for the building owner. One need look no further than mobile telecommunications for a good example. Tall buildings provide perfect locations for mobile antenna sites and equipment shelters. The roof space is leased by mobile service providers under long-term, triple-net leases. This creates a steady, long-term stream of revenue for the owner.

If your building is at a height disadvantage, don’t worry. There are still opportunities to cash in. Many multitenant commercial buildings house tenants with high-speed data needs, who require high-speed fiber optic networks to support their businesses. Increasingly, fiber vendors are willing to pay for access rights to place fiber in the riser spaces in buildings. Similarly, telecom providers are willing to pay to lease space in the basement to develop network hubs and data centers that will serve customers both inside and outside of the building.

In granting access rights to these vendors, owners must be at least as smart as their buildings. There are risks to granting this access, and those risks should be managed through a document commonly called the building access agreement (BAA).

The BAA is a form of lease or license with the technology vendor. A good BAA will cover several important topics to protect the building owner. These include, for example, basic lease terms such as rent, term, definition of leased space, indemnity, limitation of liability, and insurance provisions. The BAA should also contemplate more specialized issues, such as ownership of fiber cabling, interference caused by competing technologies, liability for network downtime, and the need for 24/7 emergency access by contractors to fix the technology. The list of issues to address can be extensive.

 

Without a good BAA in place, a building owner risks losing control of valuable riser, basement, and roof space. The owner also risks giving away revenue streams that should otherwise be captured. And, significantly, the building owner risks being held liable for claims between competing vendors in the building or claims between a valued tenant and a vendor.

BAAs are common in metropolitan areas on the East and West coasts. They are less common in cities in the Midwest where owners typically have invited vendors to use the building at no cost. However, that is changing as Midwestern property owners catch on and ask the smart question: Who is fiddling with my roof?

Attorney Andrew J. Schlidt is a shareholder with the law firm Whyte Hirschboeck Dudek S.C., where he is co-chair of the firm’s Corporate Practice Group and leader of the Technology Law Team.

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