DOWNTOWN LOS ANGELES ENJOYING REBIRTH
AS TELECOMMUNICATIONS HUB
Competition In Telecom & Internet, Proximity to Network Switching
Sparks Demand For Downtown Office Buildings
LOS ANGELES (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 regions 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.
Downtowns 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 Macys in 1995. Containing 241,000 sq. ft. of rentable space, the building is described by ACF Property Managements 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.
· 1200 West Seventh Street, Garland Building. Wells Fargo Corporate Properties has leased about 158,000 sq. ft, and expects to lease a total of 174,000 sq. ft. by year-end.
The Downtown Center BID is a coalition of property owners united in their commitment to enhance the quality of life in Downtown Los Angeles. The organization aims to help the 65-block central business district The Heart of the City achieve its full potential. Nearly 250 property owners provide funds to the district via a special tax assessment. Further information on Downtown events and real estate opportunities is available at www.downtownla.com.