The planned Telecom City development would be built in portions of three communities: Malden, Medford and Everett.
These days, the border of Medford and Malden near Route 16 resembles something of a war zone, with backhoes and other heavy equipment negotiating through half-demolished buildings and mounds of dirt and debris. But that’s a good thing.
While it may not result in any beauty awards, the activity on the fringe of what is to be Telecom City is considered a sign of progress for the ambitious $750 million project. After years in the planning stages, work on the 200-acre parcel is finally beginning, with the initial phase focused on tearing down several old industrial properties to make way for roadway improvements and the venture’s first office building.
Even as work progresses, however, doubts continue to mount over whether the project will ever materialize, especially in light of the recent collapse of the telecommunications industry sector. Telecom City, which also encompasses Everett, was envisioned as a mecca for companies and universities to focus on the technology industry, but conditions have changed significantly since the concept was initiated.
Among other things, there is considerable competition for telecommunications providers and servicers after numerous real estate owners pursued that market when it was booming in 1999 and 2000. Data centers and so-called switch hotels to house telecom equipment sprung up throughout the region, but the recent struggles have left many of those buildings empty, including a large inventory of space that is already built out with raised floors, back-up generators and other staples required of such companies.
That’s where the next generation of tenants will go, said Meredith & Grew broker Leigh Freudenheim, a specialist in telecom real estate. That’s the space that will be absorbed first.
Even that stage could be difficult to reach given current conditions. Although Freudenheim insists the industry will rebound strongly in the future, he also stressed that the lack of interest among Wall Street providers has kept capital from flowing into the telecom field. Maybe long-term it could work, but currently there is virtually no demand, he said. The current crop of network providers, also known as Competitive Local Exchange Carriers, have unworkable business models and will have to be replaced with new companies before Wall Street returns, Freudenheim added.
Another difficulty facing Telecom City is the lack of fiber network in the area, according to C. Gabriel Cole, an expert in switch hotels and other so-called co-location facilities. Cole, the CEO of ixpanse Advisors, maintains that Telecom City does not have the modern infrastructure necessary to attract a critical mass of telecom companies.
If you don’t have the network connectivity, nothing can set you apart from the crowd, Cole said. It will make it very difficult for them to achieve what they want to achieve.
‘The Next Wave’
But proponents of Telcom City disagree, including John Preotle, whose New York-based firm is serving as master developer of the project. Preotle said he believes the project’s name may be confusing to some because the goal is not to simply attract telecom uses, but rather to draw other high-tech firms as well, including software companies and high-tech research firms.
What we have planned for Telecom City is very people-oriented, he said. It was never meant to be an equipment center or a network center.
For those purposes, Preotle said, Telecom City should have the necessary high-tech infrastructure to service tenants.
Currently, Preotle said, the biggest challenge to kicking off the initial phase of construction, which will entail 440,000 square feet, has been the overall downturn in the local economy, one which has cratered interest among tenants. The fact that the office market is not great is relevant to the beginning of construction, he said, rather than the project’s focus on technology.
Some backers of Telecom City have suggested the development team should construct a speculative building to foster interest in the project, but Preotle said that is unlikely in the dour economic environment. If you were going to do a spec building, you would want to do it in a stronger market than what we have today, he said.
Among those who continue to back Telecom City is Everett Mayor David Ragucci. Ragucci insisted that abandoning high-tech to court general business users would defeat the initial plan for the three cities to create well-paying high-tech jobs. He noted that many high-tech companies with beginnings in nearby Cambridge have emigrated out to the Interstate 495 beltway, and suggested those operations would stay closer into Boston if appropriate, affordable space were available.
Conceptually, this is a tremendous idea, he said. We’ve always felt as a development plan it would be a success, and we’re hoping that the [technology] industry rebounds and we can catch the next wave.
Preotle said he is encouraged by the progress made in recent months with Telecom City, praising the mayors of the three communities for sticking with their game plan. The team is currently finalizing permits from numerous agencies, he said, while a contract to make the roadway improvements is slated to be awarded this spring. The key at this juncture, Preotle said, is patience and retaining the belief that it will ultimately come to fruition.
If somebody is looking for a groundbreaking in April … you’re not going to see it, he said. But long term, if we didn’t think it would work, we would have stopped by now and moved on.
