Telecom Trend Sparks Big Downtown Deals for Firm.

A couple years ago, Kevin Keating plunged into developing telecom buildings, just as the trend in locating communications equipment in vacant downtown structures was taking off.

Now his downtown L.A.-based Telecom Real Estate Services is realizing a windfall from those investments.

Vancouver-based 360networks Inc. is buying 1 million square feet worth of buildings in downtown Los Angeles, Atlanta and Dallas from Telecom for $118 million in cash and $26 million in 360networks stock. The transaction is expected to close in the next few weeks.

In addition, 360networks has options to acquire more buildings -- more than 900,000 square feet worth -- in L.A., Denver, Austin, San Antonio and Houston from Keating's firm.

Keating first got into the telecom segment while working as a broker at Cushman & Wakefield, where he represented numerous clients in the industry. "I saw the lack of quality space and decided to create a better model," Keating said.

He formed his own company with private capital and started developing a better mousetrap with a "carrier hotel" project in Dallas, outfitted with a huge amount of power capacity, space for equipment and special ventilation. Then last March, Keating began renovations on the old Robinsons department store building at 600W. Seventh St. in downtown L.A.

Wolfgang Kupka of Vista Realty Advisors said Keating's vision has paid off. "It's like he's on a mission," Kupka said.

The 400,000-square-foot Robinsons building had been shuttered for several years and was owned by private investors. There were no takers from the retail world in subsequent years -- both Target and Price Club passed on it.

Then along came the demand from telecom companies, which have paid top dollar to lease in excess of 1.5 million square feet downtown to house switches and equipment for high-capacity networks. Much of that is in empty, older office and department store buildings (the old Bullocks being another example). Further facilitating the conversions is a major fiber-optic trunk lines that runs underneath downtown streets.

Keating's group has invested in excess of $30 million to renovate the Robinsons building with a major seismic retrofit and massive power upgrade. "The capacity is unbelievable," Keating said.

The building is also being added to the city's historic register and having its exterior restored. "We're taking an old dog and it's going to be a beautiful building," Keating said.

The tenants -- which include 360networks, ICG, Nextlink and Qwest -- are investing another $200 million in improvements and will move in by the fall. The building is 100 percent leased (including a non-telecom tenant -- Rite-Aid, which will be the ground-level retail tenant).

Keating said the building, renamed Carrier Center-Los Angeles, is not so much pure telecom but more of a data and Internet facility. It has a large complement of equipment but also houses more customers and programmers than the typical telecom equipment building, which tends to be maintained by a skeleton crew. About 100 people will work in the Carrier Center building.

One of the main tenants, 360networks (formerly Worldwide Fiber), is building a 56,300-mile network linking 90 major cities.

"(The acquisition of Carrier Center) makes it easier for our customers to connect their facilities to our network," said Michelle Gagn[acute{e}], spokeswoman for 360networks. "It's the ideal location (in L.A.) for a facility of this kind and near a lot of telecommunications infrastructure."

With the sale of his buildings, Keating is moving to Seattle and will work for 36Onetworks' carrier hotel group.