The Architectural firm Sasaki Assoc. of Watertown has created an Advanced Technology Center prototype that blends telecommunications facilities with traditional real estate uses.

Displaying the unmerciful fury of a midnight tornado, the collapse of the telecommunications market has had a disastrous impact on commercial real estate during the past six months, carving a path of fiscal destruction and uncertainty among those who embraced the sector as the next great engine for economic growth.

Today, with Alan Greenspan’s term “irrational exuberance” ringing in their ears, real estate professionals are assessing the damage and trying to conjure up strategies to cope with the changed landscape. While some scramble to reposition properties once targeted for telecom use, many landlords are mulling whether to seize high-tech equipment left behind by bankrupt tenants. The more optimistic crowd, meanwhile, is looking beyond the current imbroglio to position themselves for an industry rebound.

The latter group would be advised against holding their breath for such an event, according to telecom expert C. Gabriel Cole. The founder of Needham-based ixpanse, Cole maintains that an overabundant supply of space and a lack of Wall Street capital will keep most Internet service providers and related high-tech firms on the sidelines of real estate, both in the Bay State and throughout the country.

“The pure telecom part is really shut down right now,” said Cole. “There are very few active [space] requirements, and I think that’s going to be the reality for the next year to 18 months.”

Cole’s own company has been evolving its approach ever since the downturn took hold, with one plan to take over existing data operations and either run them or sell the equipment on a secondary market. But even state-of-the-art, well-conceived facilities might be dangerous to pursue, Cole warned, given the flood of excess properties continuing to appear on the radar screen.

For example, one of the most modern data centers can be found at 55 Middlesex Turnpike in Bedford, where Psinet spared no expense on the power feed, backup generators and computer systems. Cole said his company has considered taking over the facility, but the prospect of competing opportunities has blunted ixpanse’s interest.

“There’s a lot of fear about doing that,” Cole said of buying such properties. “When you start seeing all that [additional space], you have to ask if the market will ever come back, and whether you’ve priced [such a purchase] accordingly.”

Alternatively, ixpanse is also working with property owners who had planned so-called switch hotels or co-location facilities, but now require a different approach. His company is currently evaluating nine such properties nationally, but Cole predicted only one or two would ever work as telecommunications center. For the remainder, the owners must come up with fresh ideas for the use of their asset.

Another dilemma is facing building owners who leased out space to high-tech companies that are bankrupt or are on the verge of filing in the near term. Holding everything from rooftop antennas to routing systems, landlords are trying to determine whether they have the legal right, as well as desire, to seize such equipment to satisfy unpaid rent.

“It comes up all the time,” Boston real estate attorney Will Wilson said last week. “It’s affecting a lot of landlords.”

Typically, Wilson said, landlords do have the right to grab office furniture and other supplies left behind from a failed lease, and he believes the same would be true for telecommunications equipment. But with some pieces costing tens of thousands of dollars, many lenders initially put liens on computer equipment, clouding the picture. In addition, the bankruptcy court may well decide that it has a superseding right to the property to satisfy the company’s other debts, Wilson said.

Thus far, Wilson said, there have not been enough instances to establish a precedent, but he predicted the issue will become clearer as more cases wend their way through the courts. In the meantime, however, he noted that many landlords might feet the effort is not worth their time, especially with such equipment already flooding the secondary market. Cole’s firm has studied the secondary market with the idea of forming a company to buy used telecom equipment, but Cole said prices have dropped dramatically in recent months to the point that it may not make sense to pursue such a concept.

Walking the Fence
Despite the pain inflicted upon the real estate industry in recent months, the promise of the technology field does have some observers hopeful that the market ultimately will recover. Among those bullish on the future is Sasaki Assoc. of Watertown. The architectural firm has created an Advanced Technology Center prototype, one that blends telecom facilities with traditional real estate uses, such as retail, office and research space.

Sasaki principal Michael Bourque said last week that the concept addresses several goals, including a desire among municipal officials that such properties be more than a lifeless computer building staffed by a handful of workers. Property owners, meanwhile, should feel more comfortable that the use is not focused on one business, he said, allowing the developer to spread risk across multiple markets.

“It more or less walks the fence,” Bourque said of the prototype’s flexibility. The basic scheme as envisioned by Sasaki would be a 19-story building encompassing 470,000 square feet of space, 285,000 square feet of which would be dedicated for telecommunications or data space. Another 29,000 square feet would be ground-floor retail, while the remaining 156,000 square feet could be designed for office, research or residential use.

Bourque said the concept was culled from working on telecom facilities for various clients, as well as studying what issues communities raise when considering such operations. The prototype was conceived for urban properties, he added, maintaining the presence of multiple computer lines makes cities more likely to attract high-tech companies.

Unfortunately, it may take some time before Sasaki’s idea is tested out, with Bourque acknowledging that demand for such space is off sharply. Whereas the company had hoped for business to pick up by this fall, Bourque said it appears the earliest shot for any significant activity probably will be sometime next spring.

“I don’t know of anybody who is planning an Internet data center at this time,” he said. Nonetheless, Bourque also insisted that the telecom market will recover in the future, making Sasaki’s concept worthwhile in the end.

“Once the new players are established, it will move forward again,” he said. “And when it returns, it will be large-scale.”