Ground Zero has built two telecom hotels in Phoenix--the 315,000-sf Sky Harbor Technology Exchange and 320,000-sf Downtown Phoenix Technology Exchange. Although occupancy is about 60%, initial rents were high enough to make the two projects successful, says Richard M. Gatto, executive vice president for the Alter Group. "We're in pretty good shape there, and we have staying power," Gatto says.

Cost of the project east of the I-355 interchange at Ogden Ave. in this western suburb of Chicago is $45 million including land, he says. Completion is expected in the spring of 2002, about a year after ground-breaking on the single-story structure. There are several prospects interested in the entire building, Gatto says, but the slowdown in the tech sector has put most of them in a holding pattern. "By next year, the markets will have to come back," Gatto says. "Maybe it won't be as feverish a pace as it was a year ago, but the market will be back."

The joint venture is betting on its location near the Oak Brook and East-West Corridor markets, which have about 50 million sf of office space, Gatto says, will draw companies looking at the Downers Grove Ground Zero project for a data center, data storage or Web hosting.

Ground Zero also is developing a $16-million, 130,000-sf colocation facility in Durham and a $6-million, 50,000-sf carrier hotel in Indianapolis. Ground Zero is converting a warehouse next to Research Triangle Park. "We have some activity there, but it's been a little slower," Gatto says of pre-leasing. "We need an uptick there." The Downtown infill site in Indianapolis, however, is a different story. "We have someone we think is extremely interested in the whole building," Gatto says. "We've been extremely impressed with how active the Indianapolis market is. I can't explain why."

The product, which offers instant access for heavy technology users, might be part of the answer. "The telecommunications industry remains underserved from a real estate standpoint," says Michael J. Alter, president of development company. "Companies wanting to bring their multimedia services to market have had to contend either with fledgling developers unfamiliar with network architecture, or with telephony or Internet companies seeking new revenue streams through development that are unprepared for the complexities of the design and construction process."

Ground Zero has relationships with such high-tech firms as Level(3) Communications, Inflow, NEXTLINK, Qwest, 360 Networks and Metromedia Fiber Networks, says Ground Zero managing director Steven Taslitz. "This means that we deliver a powerful ensemble of service providers to every Ground Zero facility so that our tenants can connect to each other and achieve the pervasive network connectivity and aggressive pricing in services that they need to succeed," Taslitz says.

Ground Zero facilities are designed by Ruys and Co. and feature unlimited and redundant power, carrier-class floor loads, investment-grade security and unbreachable firewalls against all natural disasters to eliminate downtime.