Downtown Los Angeles Enjoying Rebirth as Telecommunications Hub; Competition in Telecom & Internet, Proximity to Network Switching Sparks Demand for Downtown Office Buildings.

LOS ANGELES--(BUSINESS WIRE)--Sept. 8, 1999--

A fortuitous combination of factors, including growth of the Internet and reasonable Downtown rents in office space located near switching facilities, is driving a trend toward Downtown Los Angeles' emergence as the region's hub for telecommunications companies.

Since the beginning of the year, leasing by telecom companies has resulted in the absorption of more than 340,000 sq. ft., according to figures supplied to the Downtown Center Business Improvement District (BID) by Cushman & Wakefield Market Research.

"While the greatest beneficiaries of the demand by local and long-distance telecom and Internet service providers are previously empty Class B and C commercial buildings, Downtown Class A office towers are also experiencing a resurgence," said Carol Schatz, president and chief executive officer of the Downtown Center BID.

"Many telecom firms are building their gateways to Asia through Los Angeles," said Peter Anastassiou, general manager of real estate management firm Jones, Lang, Lasalle, "and they like to be near each other so they can interconnect. This trend is really significant, and will attract other high tech companies to the area. It shows Downtown has the infrastructure here to compete."

"Absorption by the telecommunications companies seems to have no end in sight," said Jason Warner, telecommunications specialist, Cushman & Wakefield. "If you consider that we have only scratched the surface with Internet companies who utilize large quantities of bandwith, we can be very optimistic about the future."

Downtown's landmark One Wilshire building has emerged as the nexus of telecom activity, due primarily to its proximity to the Pacific Bell/AT&T switching station on Grand Avenue.

"Connectivity is the key. In this case, it means having conduit connections for firms to run their own fiber into One Wilshire to interconnect with more than 100 other telecom tenants that have located their operations in the building," Warner said. "There are currently eight active buildings that have connectivity to One Wilshire and are marketing space to telecom tenants, and another one million square feet will come on line by year-end."

     Three of those buildings include:

--   707 Wilshire Boulevard. Formerly First Interstate Bank
     headquarters, Jones, Lang, Lasalle has leased almost 18,000 sq.
     ft. of space since the beginning of the year to Phoenix
     Integration, a wholesale carrier to the Far East, and nearly
     7,000 sq. ft. to DDI Communications. Existing tenant Verio, an
     Internet provider, has expanded its switch room equipment, and
     Destia Communications has leased almost 5,000 sq. ft. to house
     its sales office.

--   800 South Hope Street. Formerly Bullocks' headquarters, the
     building is an eight-story, steel and glass edifice that had been
     vacant since Bullocks' merger with Macy's in 1995. Containing
     241,000 sq. ft. of rentable space, the building is described by
     ACF Property Management's Acquisition Head Rob Beguelin as the
     only exclusively "carrier hotel" in Los Angeles - it will house
     no offices other than telecommunications firms. At present, its
     third floor serves as MCI Communications' international switching
     portal between the United States and the Far East, and the
     basement as home of TELx, a provider of phone cards for consumers
     and switch services for other telecom companies.

--   700 Wilshire Boulevard. Downtown Properties has invested over $1
     million in the necessary infrastructure to accommodate its
     telecommunications tenants. According to Eric Bender, director of
     property management with Mas Asset Management and managing agent
     for Downtown Properties, the landlord has leased over 148,000 sq.
     ft. of telecom space since the first of the year. Telecom tenant
     rosters in this, and other Downtown Properties telecom buildings
     at 818 West Seventh Street and 611 Wilshire, include such firms
     as Williams Communications, GTE, Level Three Communications,
     Allegiance Communications, Japan Telecom, British Telecom,
     Twister Communications and Splitrock Services.

     Additional telecommunications space is being leased at:

--   600 West Seventh Street. Formerly a Robinsons Department Store,
     Telecom Real Estate Services recently completed a major
     transaction with Internet business exchange carrier Equinix for
     some 130,000 rentable sq. ft. on the sixth and seventh floors.

--   1200 West Seventh Street, Garland Building. Wells Fargo Corporate
     Properties has leased about 158,000 sq. ft, and expects to lease
     a total of 174,000 sq. ft. by year-end.

The Downtown Center BID is a coalition of property owners united in their commitment to enhance the quality of life in Downtown Los Angeles. The organization aims to help the 65-block central business district - The Heart of the City - achieve its full potential. Nearly 250 property owners provide funds to the district via a special tax assessment. Further information on Downtown events and real estate opportunities is available at www.downtownla.com.