Building Bridges

May 1, 2001
Smart Detroit promotes alliance partnerships, educational programs, and global communications.

Work hard. Work smart. For the San Diego-based real estate investment firm Capstone Advisors, pooling the resources and expertise of such companies as Qwest Communications, SunTel Services, and WorkPlace Integrators/Steelcase is a sure bet for success when the goal is to offer tenants and area businesses the finest in high-tech business centers.

In May 1998, Capstone Advisors looked at a number of buildings in the central business district of downtown Detroit. “There were things happening in the marketplace of the central business district that were changing the dynamics of the real estate market,” says John Keba, senior vice president of asset management for Capstone Advisors and owner of the Penobscot building. Among the rejuvenation projects in the downtown were:

• The relocation of General Motors’ corporate headquarters to the Renaissance Center.
• The relocation of Compuware’s world headquarters.
• Construction of the MGM Grand and Circus Circus professional gaming and entertainment complexes.
• Construction of the new Tiger stadium ballpark.
• A proposed football stadium, located next to the new baseball stadium scheduled to begin construction early this summer.

It was noted, during Capstones Advisors’ due diligence, that a number of high-tech telecommunications companies were already tenants of the Penobscot building. Many of them were web-host companies with few employees. “We found these companies hidden in the basement and on multiple lower floors of the building,” says Keba. “They were there because of the fiber-optics and infrastructure of the building. The Penobscot building has access to three separate sonet rings of fiber. Many cities only have one sonet ring. We just happen to have three in Detroit,” he explains. Additionally, the Penobscot building offers a variety of other technologically favorable characteristics that include:

• Floor load capacity of up to 1,250 pounds per foot.
• Generous ceiling heights.
• Ample column spacing.
• Accessible lower floors.
• Three separate power feeds from the local utility.

“If one grid of power goes down, there are two other alternate grids [able to operate as redundant power sources]. In the history of the building there has never been an outage. We are totally self-supporting,” says Keba. “In line with that, we have back-up generator locations and fuel storage areas off-site.” Tenants of the Penobscot building also take comfort in an advanced security system — complete with security monitoring cameras and card access.

According to Keba, the focus then shifted from technology to alerting the marketplace to what was happening in downtown Detroit. “We’ve had CEOs of major telecommunications companies telling us that what we have here is something special. There are only a handful of buildings in the entire country that can do what we can do, house what we have, and are as technologically advanced. What we wanted to do was showcase the technology, to help break the paradigm and improve Detroit’s image,” he explains.

With the help of Qwest, a broadband Internet communications company, Smart Detroit was able to position itself as a showcasing center for mainstream business. “The building owners came to us with the vision of creating a different kind of facility downtown,” says Jill Brady, sales director for Southfield, MI-based Qwest. “They wanted to provide a different level of technology to the tenants and to the building. They wanted to put together a place where there was a facility for education and where people could come and learn about technology and also buy technology inside the building.”

“We’re the fourth largest long-distance provider in the United States. Essentially, what we’re moving toward is offering a complete one-stop shop of communications services. Through our acquisition of US West Communications, we’re going to offer local telephone service, in addition to long-distance telephone service, any type of Internet web-hosting, and other types of data access,” says Matt Barkett, corporate spokesperson for Qwest.

Keba’s vision for Smart Detroit is that it will be a source for business leaders to become educated on how technology is changing, how they can adopt technology into their business plan, and how the use of integrated telecommunications can improve business. “The showcasing center is an education and training facility. It’s not a sales center. We’re not selling anything other than the fact that [businesses] should be downtown in the Penobscot building,” explains Keba.

Within the Smart Detroit concept is a second component, a global conferencing center. “We say global because it’s hooked into the World Wide Web and the Internet,” adds Keba. “With all the alliance partners we’ve brought together, we have built an assortment of high-end global boardrooms, conference rooms, and videoconferencing rooms, as well as seminar and training rooms for corporate training and education. Each room, whether it seats two people or 75 people, all have a common thread: a plug in the wall that connects to the rest of the world via the Internet. Our bandwidth access allows us to perform complete studio broadcasting all the way down to a single person sitting at a desktop surfing the Web.”

The Smart Detroit conferencing center is a tenant amenity training and seminar center. Instead of hosting events at area hotels, tenants log in on the Web and conduct videoconference meetings with other sales offices utilizing the equipment, projectors, and laptops — all without ever leaving the building.

Qwest is the broadband Internet communications provider that brings the information capabilities into the Penobscot building. It is from that point that Rochester Hills, MI-based SunTel connects the internal world to the external world. “SunTel is a systems integrator,” says Gary Jackson, president of SunTel. “We put together communications systems for businesses that allow them to access various types of information: telephone systems, voice systems, local area networks (LAN), wide area net-
works (WAN), audio, video, and dataconferencing.

“We handle all of the hardware products and services inside of an office, a building, or a business. Once [tenants] want to connect to the outside world, they need to locate a provider such as Qwest. Our product connects to the outside carrier,” he notes. “We were involved directly with the building owner, which gives us a much more strategic relationship to move people in and out of that building smoother, easier, and with much better access to everything we might need when installing a communications system.”

For businesses planning a relocation, communications is an important consideration. Tenants take a close look at what speed and bandwidth are available at the locations they’re moving to. “Having access to the Internet and other types of high-speed communications is so important that offering tenants real plug-and-play opportunities is essential to attracting and retaining good tenants,” explains Jackson.

The SmartOffices portion of Smart Detroit is a generic executive office suite with all the amenities such as a receptionist, mail service, copy service, overnight delivery, and postage handling. “The owner was looking for leading-edge products to incorporate into the vision of how flexible, functional office space should look and perform,” explains Jeffrey Block, senior consultant of Advanced Solutions at Grand Rapids, MI-based Steelcase. “The building owner chose the Pathways line of office furniture, wall units, and access flooring, noting that the system would adequately support the type of infrastructure proposed by Smart Detroit.”

Every desk in a SmartOffice is outfitted with T-1 lines for top levels of service. A real selling point? T-1 lines are included in the cost of rent and are less than the normal cost of the T-1 line on the open market. For installation, T-1 lines may be $1,200; here, rent for the space might be $600. “Capstone’s goal was two-fold: first, to create a space that would demonstrate the flexibility and accessibility of plug-and-play adaptation; second, [to develop] a process that would create value for the tenant through product durability and ease of reconfiguration. The Pathways system gives the tenant control of the space without the expense of hiring someone to reconfigure a space as businesses grow and expand,” says Block.

Within the Smart Detroit concept, the team felt there needed to be some changes made in the way business was done. “We have put together Smart Detroit, not only as a repositioning tool for the real estate, but also as a fundamental concept of how we do business at Capstone. We believe that it is our role to make our tenants successful,” says Keba. “It’s also our role to play a part in the daily life of our tenants. Whether that’s providing furnishings, telecommunications access through Qwest to greatly reduce pricing, or how ever we’re setting that up, that’s our concept as a landlord.”

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