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Q: Let me ask you about the different things you're doing to bring the Internet into your buildings. Does this set you apart from other real estate companies? A: Certainly, the real estate community has embraced this in the last year or so. But we started wiring our buildings with fiber-optic technology through Allied Riser going back to '98. I think at that point in time it was viewed by many -- and probably including us -- that we were building in overcapacity. We knew it would be something that would be very useful to some of our customers and eventually over time to more of our customers. But in actuality, what has happened is the need for content to be delivered over high-speed networks has increased so dramatically that everyone is worrying about hitting capacity now, when we thought this was maybe 10 years out. Q: Have you found that tenants are willing to pay a little bit more to go into one of your buildings? A: What we're finding is that more and more customers are focused on high-speed access being an essential part of their business. When you talk about obsolescence of buildings, I think people have focused in the past on buildings that have not really maintained some of the physical amenities. But in fact what we're finding is obsolescence is if you are not technology-oriented in terms of providing high-speed Internet access. More and more, it's not a choice of whether you want it or not, but who provides it. A lot of this is just immediate access to information and the ability to click and move on to the next task. This is really redefining the office space and environment. Q: So it may not be that you can command higher rents, but that you have to have this to get anybody to come into a building? A: I think more and more people are finding this is a central issue to most businesses, if not all businesses going forward. So that is why we've made such concentrated effort to have multiple providers throughout our portfolio. In some cases, we have six or seven providers. But we have made sure all of our buildings are wired as soon as possible so there is not a competitive disadvantage. Q: I take it this might be better for smaller tenants who can't swing access on their own? A: Certainly for small to medium-size businesses, there is a cost consideration. They probably do not have the resources to do it themselves. But beyond that, I think it's also an issue of time and the broad array of choices out there. It's a confusing landscape out there for people just getting into it. So we've also found that even some of those large businesses that are able to wire their own space have seen that our leverage gives us some advantage. They can walk into our office buildings and have plug-and-play opportunities. Q: Are there particular markets where this is hotter in demand? A: I would say it's really happening in all markets. But providers can be only in so many places at once, so they have tended to pick the larger market where there tends to be a broader array of customers. What is really happening is the fiber optic or the wiring in general is just the plumbing system. Everyone was wondering why there wasn't content. The reason why is that there wasn't capacity to deliver that content. Now that the capacity exists, the content is broadening. I'm sure you've even seen this at home. My 14-year-old daughter has commented: "Once you have high-speed, it's hard to go backwards." The same thing is true in office buildings. Nobody really wants to go backwards. Q: What are you doing internally with the Internet? Is it the hope that eventually that customers can sign their lease via the Internet and send in their rent via the Internet? A: All of that technology is in place and is being done now in certain select cases. And we anticipate that will expand tremendously over the next year or two. Some of that is because of the universe of office users coming up: This is just the way people do business today. Whether it's furniture, whether it's energy, whether it's moving services, how you tie in to local establishments for food or retail -- all these things today that you'd have to go through a variety of sources to do -- you'd have easy access through the Internet. Q: It sounds to me that in the not-too-distant future, all these Internet services will be something we won't even think about. It'll be: Of course, there's heat. Of course, there's electricity. Of course, there are phones. And of course, there is Internet access. A: It's getting there in so many different ways. Originally, when ARC showed us their demonstration two years ago, they showed us their capacity would allow you to download movie trailers and to view CNN and other things. We sort of thought, "Well, that's a nice toy." Well, guess what? A lot of people see that now as a necessity. In terms of keeping up to date, they want CNN right there on their computer screen in a little box. Things that people thought as Space Age a couple of years ago are now becoming just the norm. |
