The Real Deal New York

Building owners grab a piece of broadband action

Landlords demand revenue share, flat monthly fee to permit improvements
May 12, 2014 01:25PM

Building owners may be the biggest roadblock for New York businesses looking to improve their Internet and broadband access.

The process of rewiring properties to provide faster services typical ranges from a few hundred to a few thousand dollars enough, according to Crain’s, but a number of landlords are hesitant to make the adjustment without a share of revenue or flat monthly fee. The reluctance ultimately leaves tenants with fewer choices and higher prices — and landlords with a source of additional rent.

“We’re not cutting into the building, not drilling, just using existing conduit, but they want to charge us $1,500 a month to bring in this tiny cable,” Shrihari Pandit, chef executive of Stealth communications, located in a Midtown building where a would-be client has requested improved service, told Crain’s.

Charging rent on fiber is a habit from the dot-come bubble days, when startup broadband companies looked to wire as many buildings as possible. Owners in turn viewed fiber as a source of revenue, but grew anxious when a number of startups began to struggle and left building-clogging cables in their wake.

The New York City Economic Development Corporation’s WiredNYC, an initiative started last year with backing from real estate scion Jared Kushner, rates properties according to broadband quality and general infrastructure. The hope is that the certification program will give would-be commercial tenants an overview of the broadband choices a building offers.

“More and more brokers are going to be aware that [the quality of broadband service] is going to be one of the deciding factors for tenants,” Mona Weisberg, director of real estate of cable-television operator RCN Business, told Crain’s. [Crain’s]Julie Strickland