Downtown Los Angeles Enjoying Rebirth as Telecommunications Hub; Competition in Telecom & Internet, Proximity to Network Switching Sparks Demand for Downtown Office Buildings
11:32 a.m. Sep 08, 1999 Eastern
LOS ANGELES--(BUSINESS WIRE)--Sept. 8, 1999--A fortuitous combination of factors,
including growth of the Internet and reasonable Downtown rents in office space located near
switching facilities, is driving a trend toward Downtown Los Angeles' emergence as the
region's hub for telecommunications companies.
Since the beginning of the year, leasing by telecom companies has resulted in the absorption of
more than 340,000 sq. ft., according to figures supplied to the Downtown Center Business
Improvement District (BID) by Cushman & Wakefield Market Research.
"While the greatest beneficiaries of the demand by local and long-distance telecom and Internet
service providers are previously empty Class B and C commercial buildings, Downtown Class
A office towers are also experiencing a resurgence," said Carol Schatz, president and chief
executive officer of the Downtown Center BID.
"Many telecom firms are building their gateways to Asia through Los Angeles," said Peter
Anastassiou, general manager of real estate management firm Jones, Lang, Lasalle, "and they
like to be near each other so they can interconnect. This trend is really significant, and will
attract other high tech companies to the area. It shows Downtown has the infrastructure here
to compete."
"Absorption by the telecommunications companies seems to have no end in sight," said Jason
Warner, telecommunications specialist, Cushman & Wakefield. "If you consider that we have
only scratched the surface with Internet companies who utilize large quantities of bandwith, we
can be very optimistic about the future."
Downtown's landmark One Wilshire building has emerged as the nexus of telecom activity, due
primarily to its proximity to the Pacific Bell/AT&T switching station on Grand Avenue.
"Connectivity is the key. In this case, it means having conduit connections for firms to run their
own fiber into One Wilshire to interconnect with more than 100 other telecom tenants that have
located their operations in the building," Warner said. "There are currently eight active buildings
that have connectivity to One Wilshire and are marketing space to telecom tenants, and another
one million square feet will come on line by year-end."
Three of those buildings include:
-- 707 Wilshire Boulevard. Formerly First Interstate Bank
headquarters, Jones, Lang, Lasalle has leased almost 18,000 sq.
ft. of space since the beginning of the year to Phoenix
Integration, a wholesale carrier to the Far East, and nearly
7,000 sq. ft. to DDI Communications. Existing tenant Verio, an
Internet provider, has expanded its switch room equipment, and
Destia Communications has leased almost 5,000 sq. ft. to house
its sales office.
-- 800 South Hope Street. Formerly Bullocks' headquarters, the
building is an eight-story, steel and glass edifice that had been
vacant since Bullocks' merger with Macy's in 1995. Containing
241,000 sq. ft. of rentable space, the building is described by
ACF Property Management's Acquisition Head Rob Beguelin as the
only exclusively "carrier hotel" in Los Angeles - it will house
no offices other than telecommunications firms. At present, its
third floor serves as MCI Communications' international switching
portal between the United States and the Far East, and the
basement as home of TELx, a provider of phone cards for consumers
and switch services for other telecom companies.
-- 700 Wilshire Boulevard. Downtown Properties has invested over $1
million in the necessary infrastructure to accommodate its
telecommunications tenants. According to Eric Bender, director of
property management with Mas Asset Management and managing agent
for Downtown Properties, the landlord has leased over 148,000 sq.
ft. of telecom space since the first of the year. Telecom tenant
rosters in this, and other Downtown Properties telecom buildings
at 818 West Seventh Street and 611 Wilshire, include such firms
as Williams Communications, GTE, Level Three Communications,
Allegiance Communications, Japan Telecom, British Telecom,
Twister Communications and Splitrock Services.
Additional telecommunications space is being leased at:
-- 600 West Seventh Street. Formerly a Robinsons Department Store,
Telecom Real Estate Services recently completed a major
transaction with Internet business exchange carrier Equinix for
some 130,000 rentable sq. ft. on the sixth and seventh floors. |
