"What's makes it so attractive to developers is that all they have to do is provide the heavy power required and get the permits, and the tenants will do the rest," Rick Osterhout, a broker with Kidder Mathews & Segner, tells GlobeSt.com. "By doing so, it enables the developers to charge three, four, even five times the amount traditionally charged for lease space."
A good example, says Osterhout, is the New York real estate firm Argent Ventures. Having purchased the Odom Corp. beverage distribution warehouse last June for $9.5 million, Argent has applied for permits to convert the 125,000-sf building at 26 S. Hanford St. into Telecom Central.
When the facility is complete early next year, instead of the traditional $5 to $6 per sf that industrial space usually goes for, Argent can get away with charging communications companies $20-$25 per sf because of the demand. Four companies are reportedly expressing interest in the space.
There are issues to be considered, says Osterhout, such as ensuring that the facility has adequate access to power, which is in limited supply. The facility also must be located near fiber lines from telecom companies, and tenants usually look for a minimum of four telecom providers.
Despite these limitations, Kidder Mathews & Segner is so convinced of the potential that it has two other telecom data facilities in the works: the Spectrum Technology Center, a proposed 212,000 sf telecom facility on property owned by Boeing Realty Corp., and the Stadium Place, a telecom data center/office space that will be marketed to companies such as Amazon.Com and Go2Net.
"I think we are in the second inning of a nine- inning game as far as the wired world is concerned," notes Osterhout. "Everything is moving to a web-based something. And if you look at the data or telecommunications industry, a lot of things are happening there. The bi-product is that everyone needs a place to house the equipment."
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