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Telecom Hotel Trend Prompts Expansions

MINNEAPOLIS-The bunkers at the old Minneapolis Fed and Control Data buildings are a good fit for telecommunications equipment. Rents of more than $20 per sf net are being seen, spurring owners to create "telecom hotel" space.

By Jim McCartney | Updated on March 20, 2001

MINNEAPOLIS-Two buildings that had developers scratching their heads a few years ago, specifically the old Federal Reserve building and the submerged old Control Data business incubator site near the Metrodome, now have turned golden for their owners. Credit the “telecom hotel” movement, in which telecommunications providers like Qwest Communications, AT&T, and MCI Worldcom, are scouring metropolitan markets for buildings to install their systems next to each so they can share costs and back each other up when trouble arises. These nerve centers are a creation of the rise of the Internet and the deregulation of the telecommunications industry.

Art Petrie paid about $500,000 for the old Federal Reserve Bank building on Marquette Avenue in Downtown Minneapolis. But it had problems. The tower’s floors were too narrow for the wide-open floor layouts now demanded by most corporations. And who but a central bank would want to lease the huge underground vault?

Renamed Marquette Plaza, the 120,000-sft bunker is leased out at some attractive rents (more than $20 per sf net) to 360 Network, Qwest, Allegiance Telecom and Cable & Wireless. Meanwhile, the tower is being doubled in size to nearly 400,000 sf–and will be outfitted with the power and wiring to house more telecom tenants, says Jim Montez of Minneapolis-based Grubb & Ellis, who is leasing the project. Petrie’s firm will spend $60 million to redevelop and reopen the tower by the summer of 2002.

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