A couple years ago, Kevin Keating plunged into developing telecom buildings, just as the trend in locating communications equipment in vacant downtown structures was taking off.

Now his downtown L.A.-based Telecom Real Estate Services is realizing a windfall from those investments.

Vancouver-based 360networks Inc. is buying 1 million square feet worth of buildings in downtown Los Angeles, Atlanta and Dallas from Telecom for $118 million in cash and $26 million in 360networks stock. The transaction is expected to close in the next few weeks.

In addition, 360networks has options to acquire more buildings more than 900,000 square feet worth in L.A., Denver, Austin, San Antonio and Houston from Keating's firm.

Keating first got into the telecom segment while working as a broker at Cushman & Wakefield, where he represented numerous clients in the industry. "I saw the lack of quality space and decided to create a better model," Keating said.

He formed his own company with private capital and started developing a better mousetrap with a "carrier hotel" project in Dallas, outfitted with a huge amount of power capacity, space for equipment and special ventilation. Then last March, Keating began renovations on the old Robinsons department store building at 600 W. Seventh St. in downtown L.A.

Wolfgang Kupka of Vista Realty Advisors said Keating's vision has paid off. "It's like he's on a mission," Kupka said.

The 400,000-square-foot Robinsons building had been shuttered for several years and was owned by private investors. There were no takers from the retail world in subsequent years both Target and Price Club passed on it.

Then along came the demand from telecom companies, which have paid top dollar to lease in excess of 1.5 million square feet downtown to house switches and equipment for high-capacity networks. Much of that is in empty, older office and department store buildings (the old Bullocks being another example). Further facilitating the conversions is a major fiber-optic trunk lines that runs underneath downtown streets.

Keating's group has invested in excess of $30 million to renovate the Robinsons building with a major seismic retrofit and massive power upgrade. "The capacity is unbelievable," Keating said.

The building is also being added to the city's historic register and having its exterior restored. "We're taking an old dog and it's going to be a beautiful building," Keating said.

The tenants which include 360networks, ICG, Nextlink and Qwest are investing another $200 million in improvements and will move in by the fall. The building is 100 percent leased (including a non-telecom tenant Rite-Aid, which will be the ground-level retail tenant).

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