VIEW Q2 2015 Headquarters Here: Building Business in San Franicsco by Donna Schumacher

2nd Quarter 2015

Headquarters Here:

Building Business in

SAN FRANCISCO

inside

UBER • WHY SF • SUPER DUPER

INSPIRED BY A TOPIC FOR A FUTURE ISSUE OF THE VIEW?

I N SIDE THIS IS S U E The Impact of Prop M

A Neighborly Intervention

Growth in San Francisco Housing and Commercial Markets

Uber’s New San Francisco Headquarters

Out with the New, In with the Renewed

Headquarters Here: Why San Francisco

Member News

CREW Network Foundation

Restaurant Report: Super Duper Burgers

SpoonRocket 17 A Word from Our Sponsors

THE VIEW EDITORIAL STAFF Managing Editor Associate Editor Angel Editorial Review Contributors

Graphic Designer

Donna Schumacher Angie Sommer Molly Jans Richard Isaac Paula Crow Nina Gruen Lada Kocherovsky Debbie Leifer Peter Pfau Donna Schumacher Rene Shen Angie Sommer Lori Seaberg Mingus

If you have an idea—even a tiny gem of one—please contact us to get the conversation started. We at the VIEW are here to help you project your voice into the San Francisco real estate community. Or better yet, become a member of the VIEW’s team. Interested in a doorway to meet new people, forge new connections, and generally learn about all that is happening with Bay Area commercial real estate? Of course you are. Contact us today—we are just an email away: ds@donnaschumacher.com

CREW SF COMMUNICATIONS TEAM CALL FOR ARTICLES FOR THE VIEW UPCOMING ISSUES 2015 Quarter 3: Life above 30: High-Rise Construction Deadline for articles: July 15 Angel: Helen Duong 2015 Quarter 4: Adaptive Reuse Deadline for articles: October 15 Angel: Debbie Leiffer 2016 Quarter 1: Made in SF: Industrial Use Deadline for articles: January 15 Angel: TBD 2016 Quarter 2: World-Class City: The Role of Culture Deadline for Articles: April 15 Angel: Laurie Gustafson A NGE L P R O FI L E

MOLLY JANS

Director of Operations | Paradigm General Contractors Company: Paradigm General Contractors, Richmond, CA (founded 1990); general contracting, including tenant improvement construction; capital, infrastructure, and seismic upgrade projects; drop-ship and turnkey metal building construction; construction management; and project/program planning Background: University of Colorado, Boulder, BA in Psychology with a minor in Business Administration; UC Berkeley Extension, Construction Management Certificate CREW history: Joined 2002; Membership Committee: New Member Ambassador; Programs Committee: Real Estate Programs Director Charities: Fight for Air Climb, Susan G. Komen, Walk to End Alzheimer’s First job: Short-order cook at the Federal Aviation Administration, Longmont, CO Extracurricular passions: Diving, spearfishing, foraging for mushrooms, vinyl records, home renovating, my cats Travel tips: For a big or remote trip, do a “fake pack” at least a week before you go. Make a list to make sure you have everything; this is also helpful if any luggage is lost. Recent travel highlight: Swimming with a whale shark in the Sea of Cortez, Baja California, Mexico Top SF restaurant picks: Ryoko’s Sushi, Walzwerk, Rosemunde Grill

15 minutes of fame: International Underwater Spearfishing Association, women’s lingcod world record

San Francisco’s Prop M puts an annual cap of 875,000 square feet on new large-size office development projects that can be approved by the City. Unallocated amounts in any year roll over and are available for allocation in following years, on top of each succeeding year’s new allocation of an additional 875,000 square feet. Before analyzing what might happen next, it’s useful to look at the recent numbers in more detail: Prop M allocation of new office space: • Since 2000, when 2,178,504 square feet were allocated, the total Prop M square footage available for allocation grew on a net basis because of a lack of consistently strong market demand for new development. After a bit of a peak of about 1,400,000 square feet approved in 2008, 2009 saw no new use of the Prop M square footage, and only a little over 500,000 square feet were used in each of the next three years after that. • Then in 2013 a record 3,610,469 square feet were allocated, and the market began to speculate whether Prop M would shortly be a factor in how many new projects could be approved in San Francisco in the next few years. • However, in 2014 the Prop M allocation shrank to 321,159 square feet, less than 10% of the 2013 figure. • As of May 1, 2015, the City has allocated 559,203 square feet in the Prop M allocation year that began on October 17, 2014 (referred to as the 2015 allocation year), more than the allocation made for the entire 2014 allocation year. • There are 2,465,571 square feet still available for allocation, with another 875,000 to be added on October 17, 2015, for a new total of 3,340,571 square feet available on that date. • The City reports that 4,174,286 square feet of proposed development is “pending,” meaning that this amount is eligible for consideration by the City for an allocation now. If every single square foot of the 4,174,286 proceeds to consideration for an allocation, there could be a Prop M limit imposed on development during the 2016 allocation year. Existing office space: • Following the record total new construction approved in 2013, 2014 set a record of 1,906,734 square feet of total net absorption of existing office space in San Francisco, a little under the predictions that 2,000,000 square feet of net absorption would be pretty easily achieved. • Jones Lang LaSalle reported that net absorption for existing office space for Q1 2015 was 381,934 square feet.

New construction: • A total of 3,134,205 square feet of new construction is now underway in the city. Of this, 52.5% is preleased. Most of what is being built now won’t come on the market until 2017 or later. Where are we then in this market cycle? Will the 2016 allocation year be the year that Prop M limits new development? The tenant demand for office space has been very strong for four years now. And the response from developers has been to fill the pipeline at a record rate. Of the total amount of new space now under construction, about 1,500,000 square feet, which will come onto the market in 2017 and 2018, remains to be leased.

Where are we then in the market cycle now? Except for a small dip in 2013, the demand for office space has been extremely strong for four years now. However, Jones Lang LaSalle recently reported that the size of the sublease market (i.e., the available space that is sublease space) increased by 37.4% in Q1 2015 as companies that grabbed as much as they could a year or two ago put portions of that space out for lease until the companies expect to actually need it. In late May the San Francisco Business Times reported that there are about 1.7 million square feet of sublease space available, the biggest sublease office market since Q4 2009. This may all be good news for the several start-ups that the San Francisco Business Times also recently reported as having an urgent need for space in the 50,000–100,000 square foot range. But what does this say to developers who might be considering a new project? Will they continue to be motivated to fill the office pipeline while the sublease market and competition for a Prop M allocation are both increasing? That depends on how developers view tech demand right now. In this current business cycle, tech has provided 75–80% of the commercial real estate demand. Has that demand been largely sated at this point? Growth in the available sublease space to the largest it has been since Q4 2009 suggests that demand may be close to a tipping point. PwC recently caused a stir when it announced that all the new construction will further raise supply by about 6%, which will lead to excess space and perhaps downward pressure on rents. Cushman & Wakefield seemed to agree with this assess(continues on page 18)

Photos rendered by SteelBlue.

Few modern office buildings have been constructed in the city’s South End Historic District, the former warehouse area immediately south of the Bay Bridge. But San Francisco– based SKS Partners and Mitsui Fudosan purchased a rectangular site there, located at the southern edge of Rincon Hill. Brannan is a busy east-west street with a number of historic office and residential loft buildings; De Boom is a pedestrianoriented alley at a higher elevation, close to South Park. SKS and Mitsui Fudosan asked Pfau Long Architecture to design a contemporary building that would appeal to single or multiple tech tenants. This meant a sensitive intervention that would work with the older brick buildings nearby but also be as flexible as possible for unknown users. We decided to reflect the topography of the hill in the design and weave a circulation system that permitted entrances on both streets. What would be cooler than an address of One De Boom? The main entrance on Brannan will have a staffed reception lobby, while the De Boom entrance will be for employees and have its own lobby, which will help further activate this wonderfully scaled alley.

engineers, Tipping Structural Engineers, used an innovative post-tensioned shear wall system. Typically, the post-tensioned system is used in horizontal slabs. Placing the system vertically enables it to take more stress than a typical shear wall, so the building needs far fewer shear walls and offers a more open and flexible floor plate.

What would be cooler than an address of One De Boom? A 4,500-square-foot atrium will serve as the main social space for the building and allow all of the office floors to receive daylight from two directions. A glass canopy that is open around the edges will allow the space to naturally aspirate, so it does not need a mechanical system. Developed by Los Angeles–based Enclos, the asymmetrical canopy will have a birdlike form that contrasts with the building’s rectangularity. The cable system for the canopy has now become part of the branding for the building. The form drops down at one end so storm water runoff can flow into a cistern that will irrigate the plantings. Within the courtyard, landscape architects Meyer + Silberberg Land Architects will position a mix of permanent and movable seating.

To solve the various challenges of the site and program, we created a diagram with essentially two buildings, linked by a single circulation core. It was important that the 15,000-squarefoot floor plate could work for any kind of company, whether The two buildings step up the hill, which permits a roof deck a start-up or something more well established. on the Brannan side that offers spectacular bay views. The two highest floors on the north side have a different glazing As such, the clients wanted a structural system that would pattern than the rest of the building to take advantage of this permit relatively open floor plates. The project structural (continues on page 5)

to the patterns found in the older brick and masonry buildings while admitting large amounts of daylight. The building’s siting, window glazing, high-performance insulation, solar panels, daylighting, and sustainable materials cause the team to anticipate a LEED Platinum rating, which appeals to potential tenants but is also the right thing to do. All that focus on sustainability, flexibility, and quality paid off when Splunk, which offers a platform for analyzing machine data, leased the entire building before it was finished. Perhaps 270 Brannan will be renamed the Splunk Building when the company moves in later this year!

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For more information please visit www.270brannan.com.

(continued from page 4) vista. It took some innovative engineering from the structural engineers to accommodate this elegant design solution. The larger aesthetic challenge for the project was to create a contemporary building that would appeal to tech tenants but also respect the surrounding historic district. A German ceramic panel manufactured by Moeding was selected as the primary cladding material on the street elevations. To provide some variety and sparkle, two colors were selected; careful placement of the colors gives the appearance of a random pattern and relates to the irregularity of nearby brick buildings. The rhythm and pattern of the window openings relate

About the Author Peter W. Pfau, FAIA, LEED AP, founding principal of Pfau Long Architecture, Ltd. in San Francisco, has earned a reputation as a modernist who balances conceptual rigor with a love for building craft. Peter was a founding principal of Holt Hinshaw Pfau Jones in 1985 and was involved many of that firm’s award-winning projects, including the Astronauts Memorial at Kennedy Space Center. In 1991, Peter established Pfau Architecture, Ltd. (now Pfau Long Architecture, Ltd.), an atelier-sized design firm in San Francisco. The firm works on a range of projects, including exposition and museum spaces, educational facilities, office buildings, restaurants, places of worship, and single-family and multiunit housing. Peter’s recent work includes designing the James R. Herman Cruise Terminal in a Joint Venture with KMD Architects, the SPUR Urban Center, and the Magnes Museum of Jewish Art and Life in Berkeley.

Growth in San Francisco Housing and Commercial Markets:

The Good News and the Bad News

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THE GOOD NEWS San Francisco has attracted—and can continue to attract—highly skilled 18–34-year-old “millennials,” because of its significant level of retail, service, and entertainment amenities. The ability to walk, bike, or use public transit to work is also a plus for this group. Many of these millennials currently get around the higher housing costs by their willingness to double or triple up—and of course, some get help from Mom and Dad. Also, given their tendency to spend what they earn, their much higher starting salaries, compared to the majority of workers in their age group (often in the $80,000$120,000 bracket), boost the San Francisco economy. It has been estimated that each highly paid tech worker has a multiplier of five, meaning that each of them creates five additional jobs due to their expenditure patterns. Secondarily, there is an increasing number of high-income boomers attracted by the same amenities. As a result, we continue to see some affluent boomers trading their larger but more distant suburban homes for a condo in San Francisco. Quite a few of these boomer households also have a second home “in the country,” while yet other boomers do hold on to their suburban home and use their SF condo as a pied-à-terre. The post-2000 increase in housing demand has both been encouraged by and served as a catalyst for the significant increase in the office supply, as well as additional retail businesses and services. Many major high-tech companies feel pressured to locate in San Francisco in order to be able to attract the best and brightest millennial tech workers, as there is always a shortage of the most competent. In addition to the relatively recent addition of two million–plus square feet of major tech companies in San Francisco, including Twitter, Zendesk, Salesforce, Zynga, and Uber, an additional four million square feet of new office space is currently under development, 60% of which has already been leased. Much of this new office development is taking place in the Mid-Market and Transbay areas. THE BAD NEWS Since the mid-’70s, decades of restricting housing development, along with rent control ordinances that keep an estimated 30,000 rental housing units off the market, have led to a huge gap between the supply and demand for housing. Meanwhile, the potential for constraints on office production has existed since the passage of Proposition M, which puts an annual cap of 875,000 square feet on new large-size office development projects. The recession somewhat dampened the upward pressure on housing rents and prices, while it also hid the effect of Prop M. But with the end of the recession, the demand for both office space and housing has surged, raising housing costs still further and bringing the potential impact of Prop M sufficiently close to

The real estate industry is asking “How do we retain talent in San Francisco, given its ever-escalating living costs?” When I’m asked this troubling question, my response is to present the “good news” and the “bad news.” In the long term, which one wins out is primarily a political, not economic, issue.

push up office rents. There are currently about nine million square feet of office space in the planning stages, but Prop M would limit this proposed future office development to approximately two million square feet. As millennials enter their thirties, it is anticipated that their amenity preferences will change, particularly if they have a child (although fewer than 40% of the professional middle class are expected to have children). Safety, good schools, the quality of mass transit (particularly Muni), and the lessening of traffic congestion will increase in importance. Many of these family households will seek larger living spaces elsewhere in the Bay Area, where they can get more space for the buck, including a yard for their child and/or dog. They will continue to move to nearby East Bay communities like Walnut Creek and Oakland. (Last year, Oakland had the most significant rental and condo percentage price increases in the Bay Area.) Each new development in these communities has had an upward price effect on the well-located existing stock. In the near future, we may also see a shift in the makeup of households in suburban and exurban communities. The outer suburbs will increasingly house lower- and middle-income millennial households. Many of these—particularly Hispanic households— are multigenerational, which permits the parents to travel further to their jobs as the grandparents take care of the children. As professional millennials age, an increasing number will seek lower-cost living in secondary “brain hub” cities with high levels of amenities. Austin, Denver, Provo, and Raleigh appear to fit this definition today, but more competitors to the Bay Area’s dominance in high tech will appear in the future if we don’t improve the transportation and education deficiencies that exist today in San Francisco. So how do we retain talent in San Francisco? There is no easy answer—there will always be tradeoffs between San Francisco’s opportunities and its challenges. But we all know what needs to be accomplished; the question is, will we do it?

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About the Author Nina J. Gruen is principal sociologist at Gruen Gruen + Associates, a research-based urban economic real estate and development services consulting firm with offices in San Francisco, Denver, and Deerfield, IL. She has pioneered the use of behavioral research in conjunction with the analysis of demographic data to forecast user reactions to real estate projects. She has conducted many productive, innovation-identifying studies for real estate investors and developers, as well as local, state, and federal agencies.

UBER’S NEW SAN FRANCISCO HEADQUARTERS The app-based ride hailing service company Uber is building a one-of-a-kind technology campus in the heart of Mission Bay, inhabiting a significant portion of the site previously owned by Salesforce. Having grown too fast to be contained by their MidMarket digs, Uber is taking the challenge of new construction. Designed by SHoP Architects from New York and Studio O+A from San Francisco, the new 423,000-square-foot campus is an impressive complex of individual transparent buildings stitched together by dramatic glass bridges. Carved up on the inside by towering atriums, the complex is a visual metaphor to the Uber business motto of transparency, both as a company and as a workforce. It is sure to become an icon of the innovative and groundbreaking territory of San Francisco business.

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thoughtfully designed to command prices the old downtown could have never imagined,” says Turnbull. The Mills Act helps cover project expenses and is economically beneficial to buyers of historic buildings or current property owners who have recently made building improvements. Page & Turnbull completed a Mills Act application for 1019 Market Street, currently the headquarters for the software company Zendesk, including a Historic Structure Report that includes the scope of work, a brief history of the building, and recommendations for restorations.

Photo by Tim Griffith.

Recently San Francisco has seen a growing number of tech companies acquiring older, historic buildings and turning them into creative office space meccas. In the process, these forwardlooking companies are single-handedly preserving some of the city’s most architecturally significant structures. Yet while they are ideal and beneficial as creative spaces, these historic structures offer many challenges and rewards to the teams faced with transforming century-old buildings into tech-savvy offices.

Perhaps the most appealing quality historic buildings offer tech companies is adaptable creative office space. Versatility is necessary for tech companies that are constantly growing and evolving; their space must be flexible and easily changeable for future uses. “Generally, older buildings in downtown are reinforced concrete or steel frame with concrete floors and relatively tall floor-to-ceiling heights,” says Turnbull. “They were built to allow finished ceilings to be hung below the concrete to conceal infrastructure and wiring. The new aesthetic removes finishes and allows for the raising of ceiling height, changing

Page & Turnbull founder and chairman Jay Turnbull says that part of the historic building boom can be attributed to the appeal of contrast. “When most of the offices downtown are slick and plastered, it feels edgy and counterculture to have bare brick, exposed ducts, and concrete floors.” Such creative spaces, characterized by brick and timber, high ceilings, plenty of natural light, and unusual floor plans, allow companies to instill their own creative brand. And branding in the tech world is a key component to developing a successful company. One allure to companies is how strongly these creative spaces appeal to young professionals living and working in the city. Millennials have shown a great interest in urban living; this is sometimes referred to as the “Friends” or “Seinfeld” effect. From vibrant food and entertainment districts and innovative art scenes, to involvement in community organizations and easy access to public transportation, city life is extremely appealing to young professionals, trumping the traditional suburban campus in Silicon Valley. Thus many companies have moved their headquarters to the city, where their employees want to live. Another incentive for companies moving their headquarters into refurbished historic buildings is cost. With the help of tax credits and the Mills Act (a California economic incentive program for restoring and preserving qualified historic buildings that are privately owned), restoring buildings has become very cost efficient. “Buildings are being carefully undressed and

Photo by Bruce Damonte.

the character of the space.” Historic buildings also have the capability of controlling one’s environment through operable windows, which new buildings no longer offer. For example, 140 New Montgomery, an Art Deco–style building currently occupied by Yelp and Lumosity, offers operable windows. The building recently underwent a renovation; Page & Turnbull served as the preservation architect and returned the building’s interior public spaces to their original condition, including maintaining the historical building’s T-shaped entrance, which includes an elevator lobby with a highly detailed polychrome ceiling, bronze entry doors, backlit glass, marble floors, and a terracotta façade. Tech companies often utilize nontraditional methods to create unique office environments. Sliding barn-style doors, roll-up (continues on page 9)

Photo by Bruce Damonte.

(continued from page 8) garage doors, and system walls within larger spaces, as well as pods, have all become popular. Other ways of maintaining unusual work environments include bleacher-type seating and open activity areas. Page & Turnbull was the historic preservation architect for the renovation to 1355 Market Street, which currently houses Twitter’s headquarters. With vast open floor plates, the collaborative office space is able to house the entire company. “As newer buildings strive to achieve a 30’ daylight penetration,” says Turnbull, “historic buildings maintain light through central light wells that allow for cross-ventilation and daylight penetration.” For example, Pier 3, which Page & Turnbull preserved as part of the historic Piers 1½, 3, and 5 restoration, has a large open floor plate with waterfront views. Currently the headquarters of Bloomberg, the space retains great natural light while preserving the nautical character of the old shipping pier. Although renovating historic buildings provides multiple incentives and benefits to its occupants, design challenges can arise during the process of restoring decades-old structures. Some issues are well known and expected, such as the aging materials of the structure; outdated electrical, mechanical, and elevator systems; limited load-bearing or seismic performance; and voracious energy consumption. External factors can also slow the renovation process, including lengthy public reviews when substantial changes or additions to a building are sought or difficulties obtaining the financial incentives that are necessary to complete a project. Yet there are solutions to these design problems. One is choosing buildings that retain enough of their original qualities to attract occupants and users but that can also adapt to the

present day in tangible ways. “Today we have the technology to strengthen structures,” says Turnbull. “Systems, now even more compact, can be threaded through the most unlikely spaces.” Structural solutions include the introduction of new materials, creation of green environments, and demolition of partitions and hallways. Financial incentives can also be granted, speeding up the restoration process. Using these tools, architecture firms are able to overcome problematic issues that arise during restoration to create beautiful buildings. “What is left until technology is able to print buildings into being while we break for coffee,” says Turnbull, “is our continued responsibility to utilize the best of our inherited environment as we confront tomorrow.”

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About the Authors

Debbie Leifer, LEED AP, has been an active member of CREW SF since 2007 and is currently the Program Committee’s program director for the leadership extension series. As Director of Marketing & Business Development at Page & Turnbull, she takes an active role in establishing the strategic direction of the firm, working closely with ownership and all three offices. Lada Kocherovsky is a 2014-15 CREW SF board member and has been an active member of CREW since 2009, having served as the team lead of the Programs Committee. As a principal at Page & Turnbull she focuses on design and management of rehabilitation and adaptive reuse projects. Page & Turnbull is a full-service architecture and planning firm specializing in historic preservation with offices in Los Angeles, Sacramento, and San Francisco.

HEADQUARTERS HERE:

WHY San Francisco

Reflections on the relationship between the unique qualities of San Francisco and the businesses we nourish here, from two rapidly expanding companies that continue to choose to be headquartered here. © 2015 Donna Schumacher, Donna Schumacher Architecture

TEA COLLECTION: Interview with Leigh Rawdon, Cofounder and CEO Tea Collection is one of the largest women-owned businesses in San Francisco. Since Tea Collection launched its unique line of “globally inspired children’s clothes for the little citizens of the world,” its story appears to be a fairytale of accolades and limelight: the Earnie Award in 2003, one of San Francisco Business Times’s Fast 500 (Fastest Growing Private Companies in the Bay Area) in 2011 and 2012, the Cribsie Award in 2013, and one of Inc.’s Fast 5000 in the country.

Emily Meyer, Chief Creative Officer and cofounder, Tea Collection

But it’s more than just great design that has fed its success. There seem to have been some pretty savvy marketing strategies at work as well. With more than $40 million in gross earnings for 2014, Tea Collection is well on its way to establishing a national brand with global appeal.

DS: Let’s start with your personal story, since without you there would be no Tea Collection. How did you come to be living in the Bay Area?

LR: Truthfully, it was love. I moved here to be with my now-hus-

band after I graduated from Harvard Business School. A lucky happenstance, because it was here that I met Emily Meyer, my cofounder, who also came to the Bay Area for love! Her husband and my husband were friends way back when at Stanford Graduate School of Business.

DS: How did Tea Collection come about? LR: Emily had been working at Esprit and was ready to launch

a clothing line of her own. I instantly recognized the potential of the product and went to work on marketing. At that time, it was physically taking the merchandise to the stores in a suitcase. I still clearly remember mustering up the courage to walk in through those boutique store doors to make the pitch. It seemed intimidating, but with the strength of our designs, it became easier and easier with each success.

DS: Why was San Francisco the right place for your business?

Leigh Rawdon, CEO and cofounder of Tea Collection

LR:

We started in Palo Alto initially because it was where we were, the two of us in Emily’s dining room—on the same table we now have in our office. Her rental house was across the street from the garage where Hewlett-Packard got its start. Tour buses would go by announcing the spot, and we made jokes that someday our house would be on the tour too. But (continues on page 11)

designs are globally inspired, and while we work to foster an international connection and curiosity, our clothing is easy to wear and practical for kids. An important asset of being in the Bay Area was our early adoption of social media in our toolbox of marketing efforts. Both Facebook and Pinterest have worked with us to study how we are using their products to engage customers and create social connections that engender brand loyalty. If we were not in the epicenter of social media developments, we likely would have been slower to adopt these strategies.

DS: Was your potential customer a part of your decision to be headquartered here? I noticed that you don’t have a flagship store in San Francisco. This leads me to believe that your brand is more national than local and the San Francisco customer isn’t a driving force in your choice of headquarters. Photo courtesy of Tea Collection

LR: We do have some fantastic Bay Area–based representation;

for example Fiddlesticks, right here in Hayes Valley, is quite successful with our product. But we are most definitely a brand that appeals on a national level. Almost right away, we landed a contract with Barneys and were sold across the country, eventually to hundreds of boutiques across the country. Our web presence is a major component of how people find us, so our customer is anywhere we can ship. Social media is an important component of our marketing and growth. Our most loyal fans are found in all parts of the country. Check out our new Instagram page to get an idea of how enthusiastic our fans can be.

DS: As Tea Collection continues to grow, do the rising costs of (continued from page 10)

San Francisco make you consider relocating the headquarters to another part of the country or other parts of the Bay Area? How do you envision your expansion?

as soon as it was more than the two of us and some shipping boxes, we knew we needed to be in San Francisco.

LR: Rising costs are a challenge, but the heart of the business

Photo by Hideaki Hamada

San Francisco was absolutely where we wanted to be. First of all, there is a strong legacy of independently minded consumer brands headquartered in San Francisco: Levi Strauss, the Gap, Williams-Sonoma. San Francisco has a reputation for brands that make their own way, pave their own path. We are part of taking that tradition to the next generation. Our office was located briefly on Third Street in the Dogpatch, but it wasn’t long before we moved just a mile away into our present space on Arkansas near the California College of the Arts (CCA) in Potrero Hill. CCA is an important and rich resource for us. My partner is very actively involved with the students of CCA, which is a pipeline for young, fresh talent in both the design and marketing sector. We are fortunate in that as we’ve grown, we have been able expand where we are, taking over the adjoining space and knocking down a few walls. The Tea Collection brand fits well with the open-minded and inclusive approach that epitomizes San Francisco. Our clothing

will always stay here. We do have some parts of the process that happen in other areas: shipping and fulfillment is in Dallas, customer care is in Boise, and manufacturing is overseas, but the design and marketing focus will always be here.

DS:

What do you consider to be the greatest challenges of being located in San Francisco?

LR:

Public transportation is highest on the list. It is challenging to get to our location via public transportation. Parking is also challenging. The cost of living is of course also an issue. I want to be sure that our team can afford to live in our city with a lifestyle that makes them want to stay in San Francisco and grow at Tea.

DS: Each year, your designers travel for inspiration for the next

season. The catalogs are an interesting combination of a magazine and a catalog. I found myself flipping through the pages, sometimes thinking of travel rather than children’s clothes. Any comment on where Tea Collection is going next?

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LR: Hmm, I wonder…

Above: Paul Cainey and...

Above left to right: Mark Gainey, CEO and cofounder of Strava; Michael Horvath, president and cofounder

STRAVA: Interview with Mark Gainey, Cofounder and CEO When an app name becomes a verb, you know you are onto something. Such is the case with Strava, a dynamic new platform for a digital community of endurance athletes. By nurturing the competitive beast at the heart of a person drawn to the elusive goals of distance and speed, Strava has taken over as the go-to app for the biking and running communities in the brief window of its existence, since its inception in 2009. By breaking routes into separate measureable segments, Strava has found a key to motivate professionals and weekend warriors alike to not only compete with themselves (by comparing rides and runs taken on different days) but also with other members of the Strava community over time. The coveted Queen of the Mountain (QOM) and King of the Mountain (KOM) are already institutions that one can imagine only growing in stature as time goes on.

DS:

Letâ&#x20AC;&#x2122;s start with your personal story, since without you there would be no Strava. How did you come to be living in the Bay Area?

MG: After graduating from Harvard with a major in art history, I moved to the Peninsula for a job opportunity with a venture capital firm. It was the early nineties and finding a job was a feat in itself. I jumped at the chance to be a part of what was happening in technology and happily moved to Palo Alto. I grew up outside of Reno, so California was familiar to me.

As an example of start-up businesses that are driving much of the economic engine of San Francisco and becoming global powerhouses, the Strava story provides important clues to the potential of future economic development in the City.

DS: How did Strava come about? MG:

After several years at a venture capital firm, talking to hundreds of entrepreneurs, I realized that I too wanted to be an entrepreneur. I teamed up with Michael Horvath, a close friend from Harvard, and began brainstorming ideas. One of our first concepts was an early version of Strava, but this was long before smartphones and apps, so the technology wasnâ&#x20AC;&#x2122;t quite there. Instead, Michael and I cofounded Kana Communications in Palo Alto, an Internet CRM software provider. After taking Kana public and then several years in the philanthropic sphere, Michael and I returned to our initial idea. We had met on the crew team at Harvard, so we were interested in finding a way to motivate and entertain athletes. We wondered if there was a way to use technology to rekindle the competitive spirit that had once fed our athleticism so easily.

DS: Why San Francisco? MG: You know, itâ&#x20AC;&#x2122;s funny, because neither Michael nor I live in San Francisco. I still live in Portola Valley and Michael lives in Hanover, New Hampshire. San Francisco was the best spot for the core development team, and we wanted our location to be convenient for them. Our start-up office was in a small space in

(continues on page 13)

(continued from page 12) the Mission, after which we moved over to the Chronicle Building on Mission by Fifth. After a few years we settled into our present home at Third and Brannan. South of Market works well for us, a central location that is a reasonable commute from all directions: close to the train for connections to the South Bay, a ferry and bike ride from the East Bay, and central for those living in the city.

DS:

Did your anticipated user base influence your choice of headquarters location? We are a young, athletic city, where participation in outdoor activities is almost a given, matched by an assumed level of technological savvy. Did you anticipate an easier adoption of the platform here, given that demographic?

MG:

Initially, yes, San Francisco was an important springboard from which to launch. Our approach was to target one sport to the exclusion of others, and in San Francisco, this allowed us to drop into a loyal and committed preexisting community. We wanted to get it right first, to go narrow and deep. But once that initial push caught on, our members were global, not local. At this point, more than 70% of our members are international. Much more important to us is that San Francisco and its surrounding communities continue to be at the forefront of the talent pool, whether it be design, engineering, marketing, or other critical skill sets required for a rapidly growing start-up. It’s all centered here.

DS: As Strava continues to grow, how will the rising cost of real estate influence your thoughts about remaining headquartered here?

MG:

Rising costs are a challenge. At our current growth rate, we will quickly outgrow our present space. Bicycle storage alone (most Strava employees are Strava members as well) does add up. San Francisco will always remain our hub. It is the right place for us. But we are looking at several options for the future, some of which involve expanding our San Francisco space. We are data-driven people, in the business of statistics, so we are studying the numbers. For example, how many employees live in the East Bay? Perhaps a flex office in Oakland would be a positive alternative. We already have satellite offices in Hanover and London; perhaps we should expand in the direction of our members, many of which are based in the UK and Europe. Or perhaps we will consider other American cities that align with the Strava lifestyle, like Portland, Denver, or Austin.

DS:

What do you consider to be the greatest challenges of being located in San Francisco?

MG:

Public transportation is still a hit-or-miss affair, parking is difficult, and yes, so is the sheer cost of living here.

DS:

I recently switched from long-distance running to swimming. Any timeline for when swimming might be launched?

MG: Hmm, I wonder…

•

About the Author

Donna Schumacher is the founder and creative director of Donna Schumacher Architecture (DSA), a boutique architecture practice for small-scale commercial and residential work in the Bay Area. DSA projects range from one-of-a-kind signature elements for architectural interiors, utilizing Schumacher’s background in fine arts, to small projects requiring to complex projects requiring multiple permits, tapping into her thirty years of experience with the San Francisco building department. DSA has recently introduced Art Consulting to its roster of services. Schumacher has been the Managing Editor for the VIEW since 2012.

MEMBER Angie Sommer

news

Congratulations to Angie Sommer, senior engineer at ZFA Structural Engineers, who is now the assistant editor for the VIEW, CREW SF’s quarterly publication. She joins the current head editor, Donna Schumacher, assisting in procuring articles, liaising with authors, and overseeing final publication.

Angie is a licensed structural engineer who has been with the San Francisco office of ZFA Structural Engineers since 2011. Her work encompasses a wide range of projects, such as commercial, residential, educational, and correctional facilities. With ten years of experience in the field, she focuses on effective communication with clients and coworkers, thorough and efficient structural design, and understanding the global impacts of each project. In her spare time, Angie enjoys reading, writing, and traveling. She has authored Broccoli and Chocolate (broccoliandchoco-

late.com), a San Francisco food and restaurant review blog, for over five years; is a cofounder of Copy Muse (copymuse.com), a small collective of copywriters; and cofounded Vow Muse (vowmuse.com), a service that helps people construct ceremonies and pen the perfect wedding vows. ZFA Structural Engineers has five offices in Northern California: Santa Rosa, Sacramento, San Carlos, Napa, and San Francisco. Established over 40 years ago, ZFA has refined the art of providing innovative, practical design solutions for projects in a variety of sectors for both private and public clients. ZFA’s Santa Rosa office specializes in the design of wineries in the Napa and Sonoma Valleys and public schools throughout the Bay Area, while the San Francisco office has a broad range of expertise, including sophisticated seismic analysis for the retrofit of existing buildings. The San Carlos office specializes in collaborative delivery methods such as design-build, and the newest office in Napa has been dedicated to evaluating and rebuilding structures damaged in the 2014 Napa earthquake.

HELP US MEET OUR GOAL—

Make a Donation to the CREW Network Foundation! Make a donation in any amount to the CREW Network Foundation to help the San Francisco chapter reach the 2015 goal of 50% membership participation!

• Industry research that helps close the compensation and advancement gaps for women in CRE, informs our industry, measures the progress of women, and guides CREW’s strategic initiatives

CREW SF is one of over 70 CREW chapters across North America—a network of over 9,000 members. CREW Network Foundation, a 501(c)(3) organization, is the only foundation that dedicates its resources solely toward advancing women in commercial real estate (CRE). The Foundation provides the following:

• Career outreach to educate women and girls about career opportunities and provide mentoring opportunities

• Scholarship programs supporting future women leaders in CRE as they pursue university-level education; to date, $520,000 has been awarded to 66 women

Donate online:

Former Secretary of State Hillary Clinton has praised CREW for its rigorous data-driven approach. CREW’s research shows that when women succeed, businesses succeed, and this information changes behavior. This year CREW SF has donated $10,000 to the Foundation—100% of our 2014 holiday auction proceeds. Each CREW SF board member has made an individual donation. We now ask that our members make individual donations to the Foundation in whatever amount they choose.

www.crewnetwork.org/foundation.aspx

RESTAURANT

REPORT

Photos by Ashley Batz.

San Francisco has become one of our country’s great food meccas over the years, as more and more Bay Area restaurants are awarded Michelin stars, James Beard Awards, and other notable recognitions. With its close proximity to the Pacific Ocean, start-up culture propelled by dedicated industry leaders, and varied and authentic influences from a myriad of immigrant cultures, San Francisco does food like it does so many other things: uniquely, wholeheartedly, and unapologetically. While the whole country seems to be moving toward more sustainable practices and asking meaningful questions about where their food comes from, California has been on the forefront of this evolution for many years. San Francisco in particular is a known haven for innovative contributors and mindful trendsetters regarding environmental movements for food and other consumer products. Super Duper Burgers is one of many players in this game—alongside other vendors ranging from fine dining to confections to produce—of those who cater to a crowd with an endless curiosity for the why, how, and where of the foods they eat.

Super Duper Burgers’ motto is “Fast food burgers, slow food values,” and since they opened their doors in 2010, they’ve been making their mark on the San Francisco food scene, though owner Adriano Paganini mentions that it took a bit of time for Super Duper Burgers to catch on. “The restaurant was at first not received well, as the quality of ingredients (grass-fed beef, ground daily, etc.), meant higher prices than fast food restaurants.” But it didn’t take long for SF to discover the secret. “We spent a lot of time educating around the reason behind the prices on our menu,” Paganini explains, and that seems to have resonated with guests. Super Duper’s food isn’t priced like other fast food chains because the food—and the experience—isn’t like other fast food chains. Indeed, while they still use the term “fast food” to describe their services, Paganini prefers the less familiar but more welcoming term “fast casual” to properly describe their style. And San Franciscans are buying it; no less than a cult following has evolved for this particularly special breed of juicy burgers and retro décor. While Super Duper’s focus is always the food, it definitely makes an effort to showcase its SF-aligned values in everything it does. Each of its locations—currently six in San Francisco, two (continues on page 16)

(continued from page 15)

each day, free-range chicken breast sandwiches, organic veggie burgers, homemade pickles, and milkshakes made from Straus cream from Petaluma, Super Duper has tapped into the market for higher-quality food made from organic, local ingredients that San Franciscans cherish so well. And beyond the grub, they seek out sustainable building materials and use 100% compostable packaging to keep their carbon shoe size to a minimum. Their website states it short and sweet: “We care about our environment just as much as we care about our burgers.” Though San Franciscans sometimes think ourselves quite special, when asked if Super Duper Burgers would do well in other places, Paganini confirmed that he thinks it would. He made the point that people everywhere want good food and are increasingly willing to pay for it. “Everyone likes burgers, and milkshakes, and fries,” Paganini noted, and that’s perhaps the simplest ingredient in the recipe of Super Duper’s success. Even though they don’t have plans to expand to outside the Bay Area, it seems as though the sky is the limit for a wellmade (but not well-done) burger. But for now, San Francisco can enjoy Super Duper’s yummy burgers and fries while we still have them all to ourselves.

•

About the Author

in Marin County, one in San Jose , and another opening in Los Gatos in the fall—displays vintage-style, hand-painted posters depicting menu items and ingredients, which are essentially an illustrated guide to what makes them a cut above the rest. (And, in case you were wondering, those cute posters are made locally.) Boasting offerings such as Niman Ranch beef ground fresh

Angie Sommer is a senior engineer at ZFA Structural Engineers, a medium-sized engineering firm with five Bay Area offices and a broad range of experience in the commercial, residential, educational, retrofit, and correctional sectors. In her spare time, she writes restaurant reviews for her blog, Broccoli and Chocolate (broccoliandchocolate.com); helps people write wedding vows and construct ceremonies via her business, Vow Muse (vowmuse.com); and is a cofounder of a small collective of copywriters, Copy Muse (copymuse.com).

TARGET MARKET: SAN FRANCISCO

SPOONROCKET

© 2015 Rene Shen, SpoonRocket Delivery has long been an option in San Francisco, but waiting over an hour for greasy pizza is not longer the only option. SpoonRocket, founded in 2013, is a Y Combinator–backed start-up that delivers healthy, high-quality meals within 15 minutes through its mobile app and website. Currently serving San Francisco, the East Bay, Seattle, and San Diego, SpoonRocket is revolutionizing how people eat—and by extension how they structure their day—by delivering good bites at the speed of light. With a curated menu that changes daily, it’s the go-to option for many people in SF. Why SF? San Francisco sets the standard by which all other cities are measured for healthy options such as vegetarian or gluten-free. However even today, eating healthy at restaurants is an expensive endeavor in San Francisco. Furthermore, spending time to shop for groceries, prepare ingredients, cook, and clean up is also a luxury that many can’t afford. This is what makes SpoonRocket such an enticing option: the lure of quick, easy, healthy food that meets the needs of so many San Franciscans. Another component that makes San Francisco a successful breeding ground for SpoonRocket is a changing demographic from the new influx of tech workers. As San Francisco is among the most fertile breeding grounds for new technologies, companies using websites and mobile apps to deliver fast, healthy meals are thriving, as these young tech-savvy professionals prioritize convenience above all else when making their meal decisions. Whether it’s the short 15 minutes they have to eat between meetings or cravings in the middle of the night, these new users are reshaping SF’s food scene into a landscape that looks to apps like SpoonRocket to provide their meals. Photos courtsey of SpoonRocket.

Like all great ideas, the initial success of SpoonRocket (and the word of its growth trajectory at Y Combinator’s Demo Day) quickly spawned a number of copycat followers. All these companies entering the space simply highlight the enormous opportunities in the area of healthy meal delivery and further validate the vision of SpoonRocket founders Anson Tsui and Steven Hsiao. About the Author Rene Shen is the VP of Finance and Head of Growth and Data Science at SpoonRocket. A graduate of Harvard University, he spent eight years in New York City investing in biotechnology companies prior to moving to SF. SpoonRocket is currently headquartered in Berkeley.

(continued from page 3) ment, saying that it sees a weakening in the office market but no reason to panic and predicts that rents will continue to rise in 2017 before dipping a bit in 2018 (when all that new construction is on the market). Continuing tech demand for space is dependent, of course, on how the area’s technology companies are doing. Google made Wall Street more than a little nervous in January when it announced that while it continues to grow, its rate of growth has slowed and yet its expenditure on early-stage R&D has ballooned. The good news/bad news from Facebook is that while the growth in its number of users has slowed, it is earning more per user. And Apple, that innovation and growth powerhouse, now has a P/E ratio averaging around 15, suggesting that the market doesn’t believe that at this stage Apple’s unbelievable story can realistically continue.

Maybe we’re at an inflection point in the real estate cycle. But I would agree with Cushman & Wakefield that there is no need to panic. We’re not likely to fall off a cliff. Rather, we’re more likely to see things cool off a bit, flatten out some. But who knows, maybe Apple will hit its usual home run with the new watch. Or, even more exciting, maybe Google will quickly be able to bring a driverless car to a broad commercial market. (If there were a Google store, I’d camp out overnight to be among the first to get one of those!) With that—and only a moment to catch our breath—we’ll be off and running again on a new cycle of innovation with all the benefits (and challenges) that brings to our local economy.

•

About the Author Paula Crow is a real estate attorney at Sedgwick LLP specializing in the legal needs of users of commercial real estate. at Sedgwick LLP. Her work focuses on commercial leasing and acquisitions and sales. She has represented companies on sites throughout the United States and Canada, as well as in Asia and Europe.

A WORD FROM OUR SPONSORS

AND THAT WORD IS... Leadership

Customer Focus

Dedication

As San Francisco’s go-to water and environmental hazard response firm, Ideal Restoration prides itself on being a good corporate citizen and a leader in the community. Working with the Salvation Army to create job opportunities for veterans returning to civilian life and donating remediation services to lowincome homeowners in need are how we give back to the city we call home. San Francisco Mayor Ed Lee praised Ideal last year in his State of the City Address for our new 28,000-square-foot headquarters in San Francisco’s Bayview district, as well as our work with veterans.

At Skanska, a full-service construction firm with five offices in California, we believe in creating value for our clients by relentlessly pursuing excellence in everything we do. Leadership within the firm is charged with exciting the passion and vision of employees for delivering the best service in the industry and supporting a mindset focused on listening and understanding the needs of our market.

Dedication has defined Sedgwick for more than 80 years. We are dedicated to providing our clients with extraordinary service and excellent value. We are also dedicated to promoting a collegial atmosphere, working collaboratively across legal disciplines to seamlessly meet our clients’ needs and advance their interests. Our interdisciplinary real estate team includes attorneys with expertise in commercial real estate transactions, corporate real estate, finance, construction, retail, environmental issues, land use, bankruptcy, business, and litigation. Partner Randy Block is the incoming chair of the Executive Committee of the California State Bar Association’s Real Property Section.

Being San Francisco’s largest emergency restoration firm requires the dedication and support of many people, especially since we commit to being on site and ready to work anywhere in the city within 60 minutes. Our clients and their tenants depend upon us, and we don’t take them for granted. We invest in state-of-the-art training, communications, and equipment in order to offer our clients the Ideal solution for their emergency response needs. We’ve worked hard for over 40 years to become San Francisco’s leading water and environmental hazard emergency response firm. Keeping San Francisco safe is what it’s all about.

To do this, we employ several critical skills and principles. Curiosity helps us seek a deep understanding of the client. Listening and flexibility drive us to develop products and services focused on our clients’ successes. We don’t just provide a vision for a new service or product; we cocreate solutions openly with our clients, and we do this through finding a positive, understandable, joint language and constant communication. Most importantly, our clients’ success is at the top of our mind throughout this process. In order to put our clients’ needs before our own, we must have empathy, self-awareness, and flexibility. We work to create mutual trust, so that we can build long-lasting relationships that make our work feel worthwhile. Skanska serves its clients by combining the resources of a national company with the knowledge that comes from more than 90 years of living and working in the Golden State. With offices in 33 metro areas, Skanska is one of the largest general contractors, developers, and construction managers in the country. For more information about our customerfocused service, contact Julie Hyson at Julie.hyson@skanska.com.

We are also dedicated to our people and our communities. Our rich culture of empowerment aligns with CREW SF’s mission to develop and advance women as leaders in the commercial real estate industry. It is not just talk: we devote significant resources to inclusion and diversity initiatives and pro bono efforts. We recently celebrated the ten-year anniversary of the Sedgwick Women’s Forum, a nationally recognized program fostering professional growth and addressing the unique challenges women attorneys face. In addition, for seven consecutive years, Sedgwick has earned a 100% score on the Human Rights Campaign Foundation’s Corporate Equality Index for our policies and practices promoting LGBT workplace equality. Sedgwick is also dedicated to CREW SF and is proud to be a Platinum Sponsor. We are honored that partner Laurie Gustafson serves as the 2015 President of CREW SF. Sedgwick is honored that partner Laurie Gustafson serves as the 2015 President of CREW SF.

cb2 Builders GCI General Contractors Grosvenor Holland and Knight Hudson Pacific Kilroy Langan MBH Architects Page and Turnbull Pankow Paradigm Prudential Richlen Sheppard Mullin The Swig Company WRA

JOIN US!

THE FUTURISTIC THINK TANK 20 Years and Beyond!

July 15, 2015 11:30 am to 1:30 pm

City Club

155 Sansome St. San Francisco

CREWSF proudly presents a Futuristic Think Tank to explore our panelistsâ&#x20AC;&#x2122; thoughts on how social policy, planning strategies, economics, technology, international influence and culture have shaped development in San Francisco and project 20 years into the future and beyond. Members $50 Guest $75

Thank you to our Sponsor:

Gabriel Metcalf SPUR

AnMarie Rodgers San Francisco Planning

Sean Randolph

Bay Area Council Economic Institute

Marsha Vande Berg MV Advisory