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GREATER BOSTON-A study finds that this area has one of the highest rates of availability in telecommunications space in the country. With the collapse of the telecom market, developers here are trying to figure out how to quickly convert their Internet hotels into usable space.

The study, put out by Lehman Brothers and Cushman and Wakefield, indicates that only 25% of all the telcom space in the Greater Boston area was leased as of last February. That puts this area below New York, which had 56% leased; Washington/Northern Virginia, 54%; and, Atlanta, 43%. “We’re obviously one of the major telecom markets,” Jay Driscoll, senior director at Cushman & Wakefield, tells GlobeSt.com. “We are second in the country with the amount of telcom space, just behind New York.” The reason for that is that overseas traffic comes in through the East Coast.

For a brief period here, developers were grabbing up old industrial buildings and wiring them as Internet carrier hotels and data centers. But, according to Driscoll, Boston started later than other areas. “If you look at the real estate development cycle, by the time people here got into this sector, the market started to cool,” he notes.

For that reason, Boston’s telcom real estate is softer than most other major sections of the country. “Availability and demand are very weak,” says Driscoll. “The capital markets shut down and prevented it from developing.” Driscoll characterizes the telcom real estate collapse as happening “overnight. In the fourth quarter of last year, everything came to a screeching halt. We were working on 600,000-sf that were good companies. Their stock prices went down to zero.”

According to the study, this area has 1.5 million sf of available space and no demand. “There was a point in time when we had one million sf of demand more than we had inventory,” points out Driscoll. “People will have to be very creative and patient to get that space leased.”

Driscoll says that some of the space can be put to other uses such as biotech operations, high-tech manufacturing and distribution. “The physical components of that real estate are strong for other uses,” argues Driscoll. “The problem is demand for all types of real estate is weak. A lot of these people are sitting with empty buildings.”

The telcom property that made headlines was the Cabot, Cabot & Forbes plan to turn a former Casey & Hayes moving company warehouse next to the Massachusetts Turnpike extension into a $120-million Boston Internet City. When their major tenant, Globix, dropped out, the whole project fell through. The company recently began repositioning the project as biopharmaceutical manufacturing space and is talking to a Cambridge-based biotech company, according to Driscoll.

The future for the telcom industry here does not look bright. “Until capital markets change for that industry, telcom will not be consumers of space,” says Driscoll. “They don’t have the capital to do it.”

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