LOS ANGELES—Rising Realty Partners‘ executives have launched 5×5 Telecom, a fiber-optic Internet and VoIP phone company that aims to solve the connectivity problems of office tenants and drive occupancy and rents in the process, GlobeSt.com has learned exclusively. As a real estate company, Rising Realty was uniquely positioned to understand and solve the connectivity needs of its tenants, and launched the company to bring fast installation and low-price network services without sacrificing speed and reliability. The result has helped to drive rents and occupancy in their buildings, and now, it is available to other property owners.
“This was founded from real estate owners that recognized a problem in the marketplace. Everyone is a tech tenant today, and everything is in the cloud,” Marc Gittleman, the CEO of 5×5 Telecom, tells GlobeSt.com. “We recognized that the big problems that tenants had were price and installation time. We realized that we could lower the cost of internet substantially, and we engineered a system that allowed us to turn on a customer in the same day.”
The same service from a standard Internet provider, like AT&T, would take somewhere between 45 and 90 days to install, according to Gittleman, and cost three times the price. For example, a 100MB circuit service at AT&T costs $1,700 per month, while the same service through 5×5 Telecom would cost tenants $550. That is an annual savings of more than $12,000 per year. “I don’t care who you are, but saving $12,000 per year in one line item is a meaningful number,” says Gittleman, adding that this helps to drive value for both owners and tenants. “As a real estate owner, our goal is to drive rent and occupancy. If we are saving someone $1,000 per month, the space is worth some percentage of that.” Even better for tenants, 5×5 is able to amplify the service to all common areas, so employees can work on their company’s secured Internet system, not just through WiFi, anywhere on the campus. As a result, the “office” square footage increases, as does the environment, which can be anything from a quite office space to restaurants and coffee shops on the ground floor.
The idea to launch a telecom company sprouted during Rising Realty’s repositioning of the PacMutual Building in Downtown Los Angeles. The firm was trying to attract tech tenants, but was having terrible connectivity problems. Gittleman had the idea to start its own ISP and engineered it to solve all of the problems tenants were having. “We had a very high incentive to have it work right because we were in the same building,” says Gittleman.
With the success of the property, they expanded the service to other Rising properties, and now to other property owners. “We do this in all of our properties, and the uptick rate is incredible,” he explains. “At our buildings throughout Downtown L.A., we have the fastest Internet of any other building. Then, we asked how we could change the landscape of real estate in Los Angeles, because rising rents are good for everyone, and if I can drive rent at a bunch of buildings, that is good for my investments. So, we wanted other owners to be able to take advantage of this as well.” 800 Wilshire recently signed up for the service, and other landlords in Downtown Los Angeles are showing interest. 5×5 is also installing the service in four buildings in Long Beach, and customers there are already signing up.
“This is a paradigm shift in how you can drive value in your space, the types of tenants that you can attract and letting the customer of your real estate understand that as an ownership entity, you understand their needs and you are proactively trying to address them,” says Gittleman. “The historical view of technology in real estate is that it was the tenants’ issue, and they were left in this doldrums of lack of connectivity and lack of cooperation. We totally changed that.”