There’s gold in them thar … streets?
“I think everybody is a little bit amazed at what we’re seeing in rents,” said Robert Grant, whose Essex Capital Partners is converting a decrepit factory in Everett into a 365,000-square-foot internet data center. Although Essex originally planned to restore its industrial capabilities, the presence of several fiber lines in the area made the building a strong candidate as a so-called switch hotel.
While fiber optic access is hardly the only requirement needed by such users – high clearance, wide column spacing and heavy load capacity are also mandates – a building almost certainly will not pass the telecom grade without at least one or several fiber optic backbones nearby. Providers such as Level 3 Communications, MCI, Verizon, Qwest Communications and many more are all laying new lines with a zeal that Grant likens to the birth of the railroads during the 19th century.
“What’s being built is a whole new infrastructure, and there’s a rush to control that infrastructure,” said Grant. “Some will survive, but others will [eventually] get rolled up.”
Unfortunately for anyone aiming to get in on the fiber fever, finding where the lines are – or will be headed – is not an easy thing to do. Grant said it took six months for his company to identify the available lines, while Cabot Cabot & Forbers President Jay Doherty said it is one of the more challenging aspects of developing a switch hotel.
“For an industry that is trying to provide services to people, they [telecommunications providers] are damn stingy about their maps,” said Doherty, whose firm is doing a 450,000-square-foot data center in Allston. “You can’t just call them up and ask for one.”
Doherty was fortunate in that the building CC&F bought runs along the Massachusetts Turnpike Extension into Boston, where several fiber optic lines have been placed. It was one key reason cited by Globix Inc. in the blockbuster deal made earlier this year that will have the company leasing the entire Allston facility when it opens next year.
Having just one or a few fiber options could make a project less marketable, Doherty said, given that some tenants may have contracts with a provider not serving that area.
“You are much better off with a lot of fiber lines,” said Doherty, adding that the issue becomes more difficult in rural areas. Doherty estimated that 95 percent of the fiber optic lines in the Bay State are within the ring of Route 128.
Qwest spokesman Matthew Barkett admitted that “there is no process” at his firm for providing fiber traffic advice. Not only would his firm be inundated by a constant stream of developers and speculators, Barkett said, but there is no way to tell where future lines will be located.
“It’s kind of like a chicken-and-egg thing,” Barkett said. “You don’t lay a fiber optic line until you think the demand will be there, because it can be very expensive.”
‘Silk Purse’
Finding where a line exists requires a mix of guile, creativity and persistence, most observers say. Doherty said CC&F tries to pump salesmen seeking to bring lines into their buildings as to where the company plans to expand. The industry is currently watching the former Wonder Bread factory in Needham, being marketed as switch space, to see how far out such ventures can succeed.
At this point, the communities which seem particularly well-heeled in fiber optics are within metropolitan Boston. Boston’s downtown has several switch buildings, including the Macy’s Department Store on Summer Street, while the Saracen Cos. and a Dallas-based Infomart are converting two industrial properties in Waltham and Watertown, respectively, into massive data centers.
“You don’t find much in Billerica or Weston or Dedham,” said Doherty. “But Waltham is so rich in the kinds of companies that use fiber that it must go there to serve them, just like they have to in Cambridge or Silicon Valley.”
The Essex venture was aided partly because the building is located in Telecom City, a 200-acre park that straddles three communities and has been marketed for five years as a destination for new-age technology companies. Essex had to get special permission from the commission overseeing the project to allow its building to remain. With all the fundamentals – including 33-foot clearance and the strength of a former tank factory – the existence of fiber optics should make the building the first switch hotel to be built in the park.
“It’s a great story,” said Grant. “Talk about breathing new life into old, rusting hulks … It really is the silk purse from a sow’s ear.”
Having received its permits from the Mystic Valley Development Commission and the city of Everett, Essex plans to break ground on its project this month, with space slated to be available late in the first quarter or early in the second quarter of 2001.
In the meantime, Doherty’s firm continues to scout out new telecom prospects in the Greater Boston area. The business, he said, fits into the company’s strategy of pursuing complicated, value-added opportunities.
“That’s one of the reasons we like the business,” Doherty said. “It’s more than just going out and building on a piece of land.”
