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PORTLAND-The economic slump is taking its toll on the Portland telecom market, just as it has elsewhere in the nation. In the long run, current troubles are expected to show up as a just a blip on the screen of an otherwise fruitful niche. In the short run, it’s more like the reality television show Survivor.

Already voted off the telecom island are RCN Corp. and Relera Inc. The former had purchase a building in Panattoni’s Cornelius Pass Corporate Center and the latter had leased one there. Relera has since paid to terminate its 78,000-sf lease, and RCN is expected to put their vacant 45,000-sf build-to-suit on the market anytime now. “It’s not of any benefit to have a competing property for sale right next door,” says Panattoni’s Mike Wells, who still has four of the business park’s seven buildings to unload.

The next victim may be Fowler Flannigan, owner of the Pearl Tech Center at, a 320,000 sf former warehouse at 1438 NW Irving that is believed to be largely, if not completely, vacant. A representative of the group declined to speak with GlobeSt.com for this article, but word on the street is it hasn’t been making loan payments and is now trying to refinance or find additional backing to stay out of bankruptcy.

Also vacant is the 160,000-sf Pacific Telecom Exchange Building at 1417 N.W. Everett St. Romona Harrington, the Cushman & Wakefield broker marketing the property, tells GlobeSt.com that the owners — an LLC out with roots in New York and Dallas — have the financial capability to survive and ultimately thrive in the Portland market.

“The owners believe the market is going to turn and frankly I agree with them,” says Harrington, who has placed many of the telco tenants in town. “Everybody wants information and they want it faster and that’s what the telco hotels are all about. Eventually there will be constant demand. Right now we have excess space.”

Two other projects have been postponed. Williams Communications of Tulsa, OK is delaying construction of a 100,000-square-foot telecom facility at Northwest 20th Avenue and Pettygrove Street, and Level 3 Communications of Broomfield, CO has delayed construction of a 100,000-sf expansion on its Northrup Street property.

The situation is largely the same across the nation. National telco hotel vacancy is averaging upward of 30% in most major markets, according to the latest report from Grubb & Ellis. Another 5.4 million sf of telco space is said to be under construction and less than 20% preleased, while projects not yet under construction are being put on hold.

Back in Portland, the going rate for space in a telco hotel has been $20-to-$24 per sf. Any deals cut in the near future, however, will either be heavily discounted or loaded down with bonuses like months of free rent or substantial tenant improvements. “Most competitive rates in town,” says local broker Andrew Harnish’s flyer on the Centric Building at 1233 NW 12th, which is only partially vacant. “Call for rates.”

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