Office Tenants Should Negotiate Cell Coverage Like a Lease Issue

For most of the past two decades, connectivity in office buildings followed a simple division of labor. Tenants bought their own wi-fi. Wireless carriers delivered the cellular signal, and often funded the in-building systems that made it work.

That arrangement for cellular signal is over, and commercial real estate has been slow to realize it.

Carriers have pulled back from funding in-building cellular infrastructure, concentrating their capital on stadiums, airports and the handful of venues where the subscriber math makes sense. For everything else, including many Class A office towers, responsibility for installing and maintaining a distributed antenna system now sits with the building owner. And owners, carrying a cost they never used to carry, are looking to recover it from tenants.

This is how connectivity became a lease issue. Most leases still treat it as an afterthought, if they address it at all.

The consequences land on tenants from two directions. A tenant can sign for space where coverage is poor and then discover — after the buildout and the announcement to employees — that fixing it is a capital project with no clear owner. Or a tenant can sign a lease with broad operating-expense language and watch a substantial distributed antenna system (DAS) installation pass through as a cost it never expected.

Neither outcome is necessary. Both are avoidable in diligence.

Tenants and brokers should treat connectivity as a building system, the way they already treat HVAC or elevators: something that needs to be inspected, documented and warranted.

Start with what exists. Ask the owner for current coverage test data, carrier by carrier, with the measurement method disclosed. “We have good service” is not data. If a DAS or neutral-host system is already in place, find out who owns it, who maintains it, and which carriers are on it. A system built for two carriers is a problem for an employee who uses the third.

Then ask about the economics. If coverage is inadequate today, who pays to fix it, and how is that cost recovered? Is it capital, amortized over a defined term, or is it dropped into operating expenses? Ask whether the building has an exclusive arrangement with a connectivity provider or riser manager, because exclusivity determines whether a tenant has any leverage later.

Ask about public safety separately. In-building emergency responder radio coverage is a code obligation governed by fire and life-safety requirements, not a commercial amenity. It should not be conflated with cellular service, and its costs should not be quietly bundled into the same pass-through.

Undocumented answers hold no value. A few provisions do the majority of the work.

Define a measurable coverage standard. Name the carriers, set a signal-strength threshold, specify the percentage of the premises that must meet it, and agree on the testing methodology, both at delivery and at intervals throughout the term. A standard that cannot be measured cannot be enforced.

Address cost allocation with detail. Either exclude connectivity capital from operating-expense pass-throughs or cap it, and if it is amortized, state the term and the rate. Not saying anything defaults to the landlord’s form, which is rarely beneficial to the tenant.

Establish remedies for unmet coverage standards. There should be a cure period, a tenant self-help right, and, for significant failures, a reduction in rent. Remedies are essential to ensure that standards are enforceable.

Secure access rights. Riser, pathway, rooftop and conduit access, with a defined approval timeline, gives a tenant the practical ability to solve its own problem when an owner will not. Non-exclusivity matters just as much: A tenant that can only use the building’s designated provider has nothing to price against.

Finally, account for change. A 10-year lease will outlast at least one technology cycle. Provisions for upgrades, carrier decommissioning and equipment replacement keep a system from going stale in year four.

None of this needs to be adversarial. Future-forward owners who can document strong multi-carrier coverage have a leasing advantage, and they would rather settle these questions in negotiation than in a dispute in year three. Tenants who ask precise questions get precise answers, and better buildings.

The gray area between owner and occupier will not resolve itself. The carriers have made their position clear. What remains is for the rest of the industry to put it in writing.

Harry Klaff is U.S. president of Avison Young, a global commercial real estate advisory firm. Craig Gillespie is CEO of Airtower Networks, an in-building wireless network services firm.