What all these buildings have in common is plenty of electricity, high ceilings, thick walls, strong floors, and nearby access
to fiber-optic cable - the perfect environment for telecom-
munications firms, Internet service providers, and financial institutions to park their back-office computers.
Access to fiber-optic cable, which can cost as much as $1 million a mile to install, designates the neighborhoods that are ripe for carrier hotels. Prime locations are usually downtown neighborhoods, which tend to already have fiber-optic cable used by banks and financial service companies, and industrial areas near railroad lines, where fiber-optic cable is often buried.

"WON'T LAST LONG"
When the Pinetree Group Inc., a New York-based real estate investment firm, purchased Albany's 11 North Pearl Street for $2 million in 1999, company president Jim Pastreich did not anticipate just how much demand existed for carrier hotels. After about $5.5 million in renovations, the building quickly found tenants who continue to rent more room. Telecom giant Qwest Communications International Inc. has three floors, its competitor Global Crossing Ltd. has two floors, while e-business service provider BiznessOnline. com has a pair of floors. Other tenants include Paging Network Inc. (PageNet) and TimeWarner Telecom Inc.

The demand for carrier hotels and the number of suitable older buildings around the U.S. has tempted large Wall Street investment firms to jump into the market. Earlier this year, Morgan Stanley Dean Witter, through its real estate investment fund, created two companies to acquire, develop, and manage carrier hotels around the world. MetroNexus, based in New York and Paris, will cover North America and Europe, while Global Gateway, based in Los Angeles and Hong Kong, will focus on the Pacific Rim.