Install Fiber Optic Cable to Stay Ahead of Tenant Demand
By: Ron Derven, contributing editor, Development
Developers who are still installing Internet connections to their buildings through copper wire may lose tenants at the next lease renewal and risk early obsolescence if a recent report on Internet and data growth from Cisco Systems is to be believed.
According to the white paper, “Cisco Visual Networking Index: Forecast and Methodology, 2012-2017,” “Global IP traffic has increased more than fourfold in the past 5 years, and will increase threefold over the next 5 years. Overall, IP traffic will grow at a compound annual growth rate (CAGR) of 23 percent from 2012 to 2017.” The report adds that business Internet Protocol (IP) traffic will increase at a CAGR of 21 percent from 2012 to 2017.
One company that is prepared for this growth is Cincinnati-based North American Properties. The firm is developing Avalon, a mixed-use complex in Atlanta’s Alpharetta submarket. North American acquired the Avalon property, which fell victim to the recent recession, from Wells Fargo. North American demolished the existing buildings and is creating a $600 million, 2.3 million-square-foot mixed-use project. The first phase, which is projected to be completed this October, will contain 400,000 square feet of retail space, 250 multifamily housing units, 101 single-family residences and 105,000 square feet of loft office space. Planned future phases will feature more office space, a hotel, a conference center and other uses.
About two years ago, Mark Toro, a managing partner at North American Properties, came across an item on Twitter that captured his attention. Google was planning an initiative called Google Fiber, and was reaching out to municipalities around the U.S. and asking them to apply to Google to install fiber optic cable to homes and businesses in their cities. The communities selected would be “lit up,” the term Google used for making fiber optic technology operational.
Toro did a bit of research and discovered that in the 1970s and 1980s, when fiber optic technology first came on the scene, numerous “fiber optic rings” had been installed in public streets, railroads and utility rights of way around the U.S. “The idea,” he explains, “was to provide a backbone for data to travel literally at the speed of light.”
However, the companies that brought in telephone and cable service and, later, Internet service had installed copper wire to businesses and homes and had no intention of ripping up that costly infrastructure and replacing it with fiber optic cable. Toro discovered that most cable and Internet customers — both business and consumer — are still using what is known as “fiber to the node” technology. That means that fiber goes to an AT&T, Comcast or Time Warner Cable node. Those companies then run copper from that node to the building, which drastically reduces the bandwidth, capacity and speed of the connection.
Toro found that the average speed of an Internet connection in the U.S. today is between six and nine megabits per second. Meanwhile, the average speed of a fiber optic connection is about 1,000 megabits or one gigabit per second. Toro was determined to get that data transmission speed into Avalon and found a company, Philadelphia-based Hotwire Communications, that could handle the job.
Google Fiber is considering installing fiber optics connections in Atlanta and surrounding municipalities sometime in the future (see “Is a Fiberhood Coming to Your Neighborhood”), but this is not yet a done deal. Hooking up Avalon to fiber optic will make it one of only two “fiberhoods” (neighborhoods with fiber optics) in Georgia. (The only other fiberhood there is Georgia Tech.) In discussing fiber optics with Georgia Tech officials recently, Toro was told that the single biggest factor in the growth of technology companies going forward will be the availability of fiber. According to Georgia Tech studies, both technology companies and more traditional businesses have bandwidth requirements that are growing at a phenomenal rate.
Installing traditional copper wire in a building today to connect it to the Internet is the fastest way that Toro knows of to make that building obsolete. “Fiber optics is rendering all non-fiber optic office space Class B office space, because if you do not have the speed and bandwidth, you cannot compete,” he notes. “I liken this to constructing a building with water supplied by a one-inch garden hose.”
To drive home this point, Avalon has posted a YouTube video that demonstrates the difference between downloading a typical HD movie from the Internet at fiber optic speed and at the speed of a conventional connection. The fiber does the job in about three seconds; the traditional connection can take up to 35 minutes.
For more information:
“Cisco Visual Networking Index: Forecast and Methodology, 2012-2017”
“Gigabit Internet Service, Avalon, Speed Demonstration”
Becoming Twitter Wise
As a real estate professional, you may think of Twitter as something for kids (or adults with a lot of time on their hands). According to Mark Toro, managing partner of Cincinnati-based North American Properties, however, commercial real estate professionals can learn a lot from the popular social media site. Toro first learned about Google Fiber and the large and growing demand for Internet bandwidth on Twitter two years ago.
Commercial real estate broker Duke Long of the Indianapolis-based Duke Long Agency publishes an annual list of the “top 10 most influential commercial real estate people on social media.” Toro made the 2013 list; to his surprise, he was the only person on the list who was a principal in a commercial real estate company. (Long cited Atlantic Station as “the best example of digital online retail project promotion I have ever seen.”)
“I am involved in Twitter because it is the ultimate filter for news and for various interests I have,” says Toro. “I have 3,000 followers today. It is amazing to me that the commercial real estate industry, as vast as it is, doesn’t have more representation online.” In addition to Atlantic Station news, Toro tweets and retweets videos, articles and reports about local and national commercial real estate trends as well as pictures and news from industry events.