July 28, 2003 -- Verizon Global Networks will lease 16,300 square feet in eXchange @ 200 Paul carrier hotels in San Francisco and Santa Clara, Calif., the buildings' owner announced today.
The announcements cap a strong year in which eXchange @ 200 Paul in San Francisco and eXchange at 1100 Space Park in Santa Clara have both experienced growth.
"It's been a good year for us," said John Wilson, president of eXchange. "We've really grown our colocation business and added a significant number of carriers. In the past 12 months, we have maintained strong positive cash flow, reduced our debt and remain fully funded to support future capital investments. We are bullish on our prospects for the remainder of 2003 and beyond."
The Verizon lease is notable because it is for unfinished "shell" space in which Verizon will install improvements and build out its technical space. Most recent leasing activity in carrier hotels has involved finished data center space that was built by a previous tenant and then abandoned or surrendered.
Verizon Global Networks will lease 11,500 square feet at eXchange @ 200 Paul
and another 4,800 square feet at eXchange at 1100 Space Park Drive, according to Wilson. It's not the first time during the telecom downturn that eXchange has leased a large chunk of unfinished space, either. In 2002 the company leased 15,000 square feet of shell space to Cingular.
"These companies come in with the expectation of leasing built space and wind up building their own," said Wilson. "When it comes right down to it, the engineers strongly prefer to build their own space."
Between its two facilities, eXchange @ 200 Paul now has over 42 carriers and IP service providers.
At 1100 Space Park in Santa Clara, eXchange @ 200 Paul has added a number of carriers including Verizon Global Networks, SBC Communications Inc., WilTel Communications, Qwest, Neopolitan Networks, Looking Glass Networks, Silicon Valley Power and Tyco Telecom.
In San Francisco, eXchange @ 200 Paul now provides 65 high speed, state-of-the-art GigaBit Ethernet connections through 11 services providers including NTT/Verio, Above.net, Wiltel, Cogent Communications, OnFiber Communications and Optigate.
Meanwhile, eXchange's colocation customer count is up 280 percent from the same time a year ago.
"About eight months ago we went from no colo inquiries to two, three or four per day," said Mark Hansen, exchange's director of operations, colocation. "There seems to be more interest as people become comfortable that the companies that are going out of business have done it already."
"A lot of it is single cabinets," Wilson noted. "It's really still a fairly low level of demand."
Wilson says exchange's financial position - the operation is cash-flow positive and has what Wilson calls a "fairly conservative" debt load - is a major selling point for its facilities. He is hopeful that the market for carrier services and colocation will build on the modest momentum of recent months.
"It's not a great market, but it's moving," he said. "2003 was better than 2002, and a lot of the competition has dried up and gone away.
"I think it's inevitable that the lack of spending on IT (information technology) is going to catch up to corporations," he added. "I think they'll jump back into IT spending before they spend on hiring."