Profits through the Roof! Maximizing Revenue from Commercial Real Estate: The Hidden Potential of Roof Space
- the haptic investor
- 9. Aug. 2024
- 4 Min. Lesezeit
After the sale of our family's group of companies we decided to heavily invest in commercial real estate. Since 2008 our family office has bought multiple warehouses and logistics centers. In principle, this is already a great business. But as an entrepreneur and investor it is always interesting find additional income streams and possibilites to leverages one's assets.
Due to the great locations of our real estate investments, we have found an interesting opportunity to generate income with already rented out buildings: Leveraging roof space! Beyond the increasingly popular installation of photovoltaic (PV) systems everyone has heard of, there's another lucrative opportunity: renting out roof space to mobile network providers, mobile network brokers, and mobile antenna operators.
The Photovoltaic Advantage
Photovoltaic systems have become a go-to strategy for commercial property owners, particularly in countries where:
Subsidies are Generous: Governments incentivize the adoption of renewable energy through subsidies, making the initial investment in PV systems more affordable.
Electricity Prices are High: In regions where electricity costs are prohibitively high, generating your own power can significantly reduce operating expenses.
Market Sales are Profitable: If your operations do not require all the generated electricity, selling the excess to the grid or directly to tenants can create an additional revenue stream.
These factors make PV systems an attractive proposition, but they are not the only way to optimize your property's potential.
Unlocking the Value of Roof Space for Telecommunications
Since I am heading most of our family office's investment strategies I am heading our Telecommunication Strategies as well. Luckily, our buildings are located close to cities, but far enough away from residential buildings, which is why we haven't experienced a single complaint so far. This is an important fact, since a high percentage of people prefer not to live close to such antennas. However I do appreciate the business a lot and it is a business that makes a lot of sense.
With the exponential growth of mobile data usage, the demand for infrastructure to support mobile networks is skyrocketing. I do like the future outlook for the following reasons:
Mobile Network Providers: Major telecom companies are constantly looking to expand their network coverage and improve service quality. Renting out roof space for the installation of mobile antennas and base stations can provide a steady and significant income stream.
Mobile Network Brokers: These intermediaries manage the infrastructure for multiple telecom operators. By renting your roof space to brokers, you can indirectly cater to various providers, ensuring high utilization of your space.
Mobile Antenna Operators: Specialized companies install and manage antennas, often leasing them to multiple network providers. Partnering with these operators can enhance your property's attractiveness to a broader range of telecom companies.
Why Telecom Leases Make Sense
Stable, Long-term Income: Telecom leases are typically long-term agreements, providing a reliable source of revenue. In my most recent case, I was able to secure a 15 year deal.
Minimal Maintenance: Once installed, mobile network equipment requires minimal maintenance, reducing the burden on property management. And in our cases the tenants are responsible for the maintenance.
High Demand Locations: Logistics properties, often located in urban or strategically important areas, are prime candidates for telecom infrastructure, ensuring high demand for your roof space. If you want to avoid confilcts with neighbors, make sure to only implement this business model in industrial zones.
What I learned from negotiating with Network Providers
In my case, I am primalrily dealing with 2 different types of tenants:
Network Providers who operate the networks themselves and Brokers who rent out the antennas to Sub-Tenants.
Network Providers usually pay a very good fee, but there is only little room for negotiations and no bonus fees. Since their business model is improving their own network coverage, they don't have room to create additional revenue.
Network Brokers on the other hand look for Sub-Tenants and rent their antennas out to as many Sub-Tenants as they can. They usually don't pay great base fees, but you get a bonus for every Sub-Tenant they can find. This means your entrepreneurial risk his higher, but so is the potential reward.
In my last negotiations, I was able to achieve an annual increase in addition to the inflation adjustment already negotiated. In this respect, you can often go into negotiations with courage. With an excellent location, you always have a good negotiating position. Your contractual partners know this too. Don't sell yourself short.
My Two Cents
For commercial real estate investors, especially those in the logistics sector, thinking beyond traditional revenue models is crucial. While PV systems offer substantial benefits, renting out roof space to mobile network providers, brokers, and antenna operators can unlock additional, stable income streams. This strategic utilization of roof space ensures that your property remains profitable and future-proof in an increasingly connected world.
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