The Need for Speed

More and more businesses are demanding high-speed telecom capabilities for their offices

May, 2001

Office-building tenants in the New Economy have come to expect high-speed Internet and telecommunications services as basic utilities, similar to the necessities of the old economy like water and electricity. But it isn’t only the so-called high technology companies that are demanding these advanced services lately. As more businesses become dependent on high-speed telecommunications, real estate executives are finding that tenants won’t stay with landlords who can’t meet their technology needs.

“As the larger and faster-moving companies increase their capabilities with respect to high technology, the medium- and smaller-sized businesses will take advantage of these efficiencies and demand faster and better high-tech services,” says G. Scott McCormack, managing director of CB Richard Ellis Hawaii Inc.’s Investment Properties/Consulting division.

According to the Society of Industrial and Office Realtors’ 2000 statistics, of the 3.5 billion square feet of Class A and Class B office space available nationwide, less than 10 percent has been upgraded with high-speed communications. As the leasing agent for the Harbor Court building in downtown Honolulu, McCormack has seen first-hand the benefits of a well-connected building. In December 1996, Square USA, a Japan-based computer animation company, chose Harbor Court for its research and development headquarters during the making of its computer animated film, Final Fantasy: The Spirits Within. McCormack says some of the key early design components of Harbor Court that attracted Square USA included ample conduit capacity, expansive loading capacity to support heavy high-tech server racks, dual access to copper and fiber-optic wiring, and the clincher—24-hour air conditioning.

“It’s kind of like a little telecomm or technology campus that we’ve benefited from,” says Chad Johnston, general manager for Summit Communications. “One of the benefits that has evolved is that we are able to work with some of the providers in the building.” The majority of 1132 Bishop’s high-tech tenants also provide service to the building, which Brown claims is one of the building’s more attractive features. Most buildings offer service from a single carrier, whereas multiple telecommunication providers are offered and encouraged at 1132 Bishop.Jamie Brown, senior vice president for Colliers Monroe & Friedlander’s Office Services Group, agrees that physical conduit capacity makes any building that much more attractive to potential tenants. Brown is the leasing agent for 1132 Bishop, and touts the building as “Honolulu’s Connected Office Building.” High technology tenants at 1132 Bishop include Highspeed Communications, Pacific DirectConnect, Net Enterprise, and Summit Communications.

And since more services mean more wires, the building has been fitted with larger conduits, allowing for easier distribution of cables throughout the building. Brown says 1132 Bishop has run into problems in the past where tenants would move in, contract a telecomm vendor to lay cables—only to move out shortly after, leaving a tangled web of dead cable in the conduits. The problem has since been alleviated by the hiring of a “telecomm czar.”

Additional features, such as redundant power feeds (in the event of a power outage to one line, backup power is fed through another) and video conferencing, also make buildings more conducive to high technology work. These types of services are still amenities in Hawaii, but are quickly becoming must-have features in some of the nation’s more competitive states. “The demand for broadband access and related services by traditional economy tenants is here and is quickly becoming critical to even the smallest businesses,” says Elizabeth Billante, vice president of Allied Risers Communications Inc.’s real estate services, a Chicago-based telecommunications company that has wired about 280 million square feet of property across the U.S. “Many of today’s most demanding companies already strategically employ broadband technology and related services to increase productivity, competitiveness and management costs. It won’t be long before everyone demands similar services of their building owners.”



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Jacy L. Youn