IN THIS ISSUE: Office Market Outlook
FEATURING:
Arizona
February 2011
EDITOR’S LETTER Tough competition for occupancy and an absence of construction are factors that are shaping the commercial real estate market across the country, as well as in Arizona. Tenants are taking advantage of the down economy, looking for and buying into higher quality space at lesser lease rates. Construction is virtually nonexistent in the state as builders and lenders wait for vacancies to drop. Experts are predicting little change in 2011 but are hopeful that stabilization will occur in the market within the year and through 2012. Stagnancy may bring a sigh of relief to some building owners who were expecting a crash in the commercial sector similar to the crash in the residential sector. However, a dormant economy offers its own set of challenges: high unemployment rates, excess inventory and lending restrictions. Unemployment will continue to be a drain on the economy in the upcoming year. The glut of vacant space will take several years to absorb, with empty storefronts and offices continuing to take a toll on the industry. And banks will continue to face regulatory pressure in lending as they work to clean up the aftermath of the Great Recession. Building owners, property managers, builders and developers do have some options while weathering this storm. More than arbitrarily cutting budgets, property managers can create asset value by increasing revenue, decreasing expenses, managing vacancies, retaining tenants and improving their company’s performance. By implementing these strategies, property managers may maintain and possibly increase their net operating income despite the economy. Hopefully, 2011 will mark the real end of the Great Recession, and the economy will start to recover by 2012. And those who are left standing will reap the benefits of strengthening their business during these challenging times.
CONTACT Publisher Travis Barrington travis@jengomedia.com
Managing Editor Kelly Lux kelly@jengomedia.com
Editorial Assistant Brooklyn Ashy brooklyn@jengomedia.com
Art Director Doug Conboy
Contributing Writers Jacob Fullmer Nick Davison Mark Strahan Dan Russell Quinton Lamoreaux
Dean Kashiwagi Jacquie Brennan Justin Himelstein Chris Walton Al O’Connor Ruth Darby
Arizona Facilities PO Box 970281 Orem, Utah 84097 Office: 801.224.5500 Fax: 801.407.1602 JengoMedia.com
Managing Editor Arizona Facilities
The publisher is not responsible for the accuracy of the articles in Arizona Facilities. The information contained within has been obtained from sources believed to be reliable. Neither the publisher nor any other party assumes liability for loss or damage as a result of reliance on this material. Appropriate professional advice should be sought before making decisions. Copyright 2011 Arizona Facilities Magazine. Arizona Facilities is a Trademark owned by Jengo Media.
4 I ARIZONA FACILITIES FEBRUARY 2011
Arizona Facilities is a proud member of BOMA Greater Phoenix and BOMA Greater Tucson. BOMA Arizona is a federation of both local associations and serves as the collective membership’s legislative and regulatory advocate. Arizona Facilities is also a BOMA National Associate member.
FEBRUARY 2011
FEATURES Tucson Development: Commercial growth driven by ‘game-changing’ projects
26
6
Sustainable pruning practices favor health, life of shrubs
DEPARTMENTS
20 24 30
Building Information Modeling Save on time, materials
Vendor Relations Putting vendors in charge of facilities management
Office Market Outlook Phoenix will remain a tenant’s market
Phoenix International Raceway: It ain’t over ‘til the checkered flag comes down
14
4 13 17 18 22
Editor’s Letter
28 32 33
Healthcare Facilities
Smart options during the recession
Building Maintenance Life cycle costs important in repairs, upgrades
BOMA Greater Tucson Alternative Energy Solar tax incentives
Boilers New technology enhances sustainable buildings
New emergency call and life safety technology
Building Controls Control systems keep buildings green
Property Management Stand out in a tenant’s market to fill vacancies
On the cover: Downtown Tucson. Courtesy Chance Agrella of Tucson Regional Economic Opportunities, Inc.
ARIZONA FACILITIES FEBRUARY 2011 I 5
By Kelly Lux
D
espite the slump in the economy, Tucson Vacancy Rates is seeing growth and Vacancy Rates Industrial Office development within its YE2006 5.9% 11.9% commercial real estate market, YE2009 11.7% 16.8% albeit slight. Occupancy rates 3Q2010 11.6% 17.3% are holding steady. Absorption is expected to remain positive. Asking Lease Rates And a few major projects in Asking Lease Rates Industrial* Office** this southern Arizona city are YE2006 $6.96 $22.25 driving the majority of the YE2009 $6.36 $20.57 development. 3Q2010 $6.41 $19.35 “The good news is that the *NNN **Full Service Gross worst is behind us and recovery has begun,” said Tim Prouty, managing director of CB positive. This stability leads Tucson's Richard Ellis Tucson. “Yet, Tucson's commercial markets to a stronger commercial real estate market is expected to bounce along the bottom footing than many other cities.” for another year. Occupancies, in The major projects in Tucson, like general, will hold steady and the construction of the UniSource absorption, albeit nominal, will remain Energy Building and the extension of
6 I ARIZONA FACILITIES FEBRUARY 2011
the modern streetcar, are playing a huge role in the development of the area, Retail according to Michael Keith, 7.5% CEO and executive director 11.9% of the Downtown Tucson 12.2% Partnership. The four-mile modern streetcar, which will extend Retail* west of I-10, has a variety of $18.08 funding sources, including $18.99 the Regional Transportation $17.93 Authority and a $63 million federal TIGER. The streetcar will be co-managed by the RTA and the city of Tucson. The project “will literally lay the groundwork for future development on the west side of downtown,” wrote Tucson City Manager Mike Letcher. The streetcar will connect the University of Arizona to the 4th
Avenue commercial district, downtown and the redevelopment area west of downtown and become a big economic driver in the city. The UniSource Tower is the largest project going on in downtown Tucson and is expected to be complete by November 2011. The $65 million building will house Tucson Electric Power and will also have retail and conference space. The project will increase the employee population of downtown Tucson, bringing with it economic revenue as employees lunch and shop in downtown, said Jessie Sanders, a project coordinator for Tucson City. Tucson's growing bioscience industry has also spurred growth in the commercial real estate market in Southern Arizona. Sanofi-aventis recently completed its 110,000 square-foot facility which houses its new research center. The Roche Group will boost the industrial market with the recently announced $180 million, 500-job expansion of its existing Ventana Medical Systems operation in Oro Valley. Other notable commercial projects include the Mercado District of Menlo Park, an urban residential neighborhood with live-work homes and retail and restaurant space, and the Gadsden Development, which is planned to include an 125-room boutique hotel, 400 residential units, office space, a market, restaurants and other commercial development.
Retail is seeing the most activity in the area, with a number of national retail and restaurant chains expanding in the Tucson market, locating in mature, high-traffic areas at attractive rates, Prouty said. As one of the larger retail transactions in Tucson, the Mercedes Dealership is relocating from its old facility to a new one, Sanders said. These “game changers” are helping property and building owners see a bright future and are spurring other pockets of development in the area, said Keith, who believes that “Tucson is absolutely booming despite the worst economic climate in 100 years.” Commercial tenant improvements have been on the upswing in Tucson. Businesses are looking for inexpensive ways to improve their spaces without having to relocated, Sanders said. More than 64 commercial permits for tenant improvements and new construction projects were issued by the city of Tucson Planning and Development Services Department in November 2010, with a total project dollar valuation at more than $24 million. The tenant improvement projects will be significant for the office market where several major tenants are shopping for more quality space at equivalent lease rates, Prouty said. “Tucson is going to be the next hot spot in the West,” Keith said. “People who live here aren't going to recognize their own town in two years.”
More Tucson Stories continued on page 8
Largest Leasing Transactions in 2010 Industrial 1. Highland Valley Partners, 6874 S. Palo Verde Road, 162,478 SF 2. Schletter, Inc., 3761 E. Farnum Place, 65,000 SF 3. TMI Acquisitions, 1625 S. Euclid Ave., 42,500 SF 4. Maracana Indoor Soccer, 555 E. 18th Street, 28,500 SF 5. Lasertel North America, 7775 N. Casa Grande Highway, 21,265 SF Office 1. Tucson Electric Power, One S. Church Ave., 36,320 SF 2. Drug Enforcement Administration, 3285 E. Hemisphere Loop, 30,630 SF 3. Government Service Administration, 2255 W. Ina Road,19,873 SF 4. Tucson Heart Hospital Carondelet, 4892 N. Stone Ave.,18,976 SF 5. Homeland Security/Customs & Border, 4720-4760 N. Oracle Road, 12,580 SF Retail 1. Beaudry RV, 5120 S. Julian Drive, 55,000 SF 2. Ross Dress For Less, 18705 S. Frontage Road, 30,187 SF 3. Orangewood RV, 4710 S. Palo Verde Blvd., 28,500 SF 4. Big Lots!, 18705 S. Frontage Road, 28,074 SF 5. 99 Cent Only Store,4144 N. Oracle Road, 20,040 SF
Tables Source: CBRE Research and CoStar Group
Photo courtesy of Chance Agrella/Tucson Regional Economic Opportunities, Inc.
ARIZONA FACILITIES FEBRUARY 2011 I 7
N
early a decade ago, bioscience was recognized as an industry that was poised to grow in Arizona and benefit the state's economy. In Southern Arizona alone, 130 bioscience companies have been recently identified, ranging from small to large businesses in a variety of bioscience areas. The University of Arizona, a top 15 research University, played a significant role in “driving innovation and discovery,” said Leslie Tolbert, vice president for research graduate studies and economic development for the University of Arizona. In 2008, Roche, a pharmaceutical giant, bought Ventana Medical Systems, a Tucson-based company. Before that, sanofi-aventis, another pharmaceutical giant, had purchased Selectide. Both of the young companies were spin out of the University of Arizona by faculty, said Tolbert. “Now two of the world's largest pharmaceutical companies have facilities right here in Arizona, employing many hundreds of people. That's an amazing accomplishment for Tucson,” Tolbert said. “We clearly are developing an eco-system for bio innovation and serious research and development. ” Bioscience remains a growing industry in the Tucson region with the
announcement of a $180 millionexpansion of Ventana Medical Systems, the recent relocation of the sanofi-aventis research center to a new facility and the expansion of the University of Arizona's BIO5 Institute into a new BIO5-Oro Valley Facility. All of these three major bioscience entities are now located in Oro Valley, a suburb of Tucson. The recent addition of bioscience realty to Innovation Park in Oro Valley, a biotech hub for Pima County, will significantly impact Tucson's economy with Ventana alone bringing in 500 jobs and $640 million in economic impact, said Laura Shaw, senior vice president of marketing and communications for Tucson Regional Economic Opportunities, Inc. “Because of Tucson's strengths in scientific research, coupled with a healthy, growing presence of the industry, we are an emerging bioscience center and a global hub for bioscience innovation,” said Shaw. “The Tucson region has much to offer any company looking to excel in the bioscience industry.” More than $6 billion is produced annually from the bioscience companies in the area. The University of Arizona has $600 million in research dollars, said Tolbert. The University and Pima Community College, with
8 I ARIZONA FACILITIES FEBRUARY 2011
more than 20 academic and technical life science programs, generate a young, educated workforce and firstrate training opportunities, she said. Cutting-edge facilities, such as the Critical Path Institute, a unique collaborative whose mission is to create innovative partnerships in regulatory science that enable faster and safer medical product development, also contribute to Tucson's standing in the bioscience industry. sanofi-aventis Sanofi-aventis relocated to its new, 110,000 square-foot facility in Innovation Park in June 2009. The growing company, which had been present in Oro Valley for two decades, decided to purchase land and construct a new research center since no laboratory space was available in the area. The 11.54 acres for the facility were purchased in 2006, and construction began in 2008. DPR Construction, Kling Stubbins/RSP/ WLB Design Consultants, Genesis Engineers, Sun Mechanical and Commonwealth Electric were all instrumental in the construction of the facility. “The facility enables our local scientific team to enhance the center's impact on the early stages of the
sanofi-aventis’ new facility in Oro Valley. Photo by Mark Pincus.
sanofi-aventis drug discovery pipeline by laying down the foundation for bringing new, effective medicines to patients around the world,� said Early to Candidate Biologist Mark Pincus. With nearly 48,000 square feet of
maintain, said Pincus. A chilled beam system, the first in a sanofi-aventis building in the United States, was installed to cool the building efficiently, one of many energyefficient measures taken in the
Ventana Medical Systems will be expanding its facilities in Oro Valley.
laboratories, and more than 25,000 square feet of office space, the state-ofthe-art facility is nearly double the company's former building on Hanley Boulevard. The energy-efficient research and development facility promotes interdisciplinary and scientific exchange and utilizes operational efficiencies. With offices on one side of the building, laboratories on the other side and common space in the middle, the building and its systems are easy to
construction of the building. The building was designed to achieve Leadership in Energy and Environmental Design Gold from the U.S. Green Building Council and will likely receive the recognition in January 2011, said Pincus. The laboratory consumes 21.5 percent less energy than a conventional lab building. The site lighting reduces the effect of light pollution. The landscape irrigation system was designed to
reduce water use by 50 percent. The urinals are all waterless. Heat recovery was used on the laboratory exhaust to reduce energy consumption. Evaporative cooling was installed, taking advantage of Tucson's dry climate. A solar hot water preheat system was installed on the mechanical heating hot water system. Lowemitting products were used throughout the construction. Overall, sanofi-aventis reduced the facility's carbon footprint by approximately 2.3 million pounds. The BIO5 Institute-Oro Valley When sanofi-aventis moved to its new facility, the company vacated a fully-operational research facility. The BIO5 Institute, a thriving research institute at the University of Arizona, recognized an opportunity to expand their operations to Oro Valley and collaborate with other bioscience companies in the area and purchased the 23-year-old building. BIO5, which brings together faculty from agriculture, medicine, pharmacy, science and engineering, had been running out of lab space on campus and needed a place to move some of its projects, particularly the project led by professor Chris Hulme who is working
continued on page 10
ARIZONA FACILITIES FEBRUARY 2011 I 9
Photo courtesy of Bob Davis of Grubb and Ellis Realty. continued from page 9 to find chemical compounds for the treatment of illnesses including cancer, Alzheimer's and heart disease. “When sanofi-aventis built their new facility, they left behind a smaller building that was beautifully outfitted for drug discovery,” said Tolbert. The University of Arizona purchased the building for $3 million, well below the actual worth of the facility. “It wouldn't have sold for $3 million if the Tucson and Arizona economies were doing well. And we probably wouldn't have been able to afford it.” The 27,000 square-foot facility at 1580 E. Hanley Blvd. comes fullyequipped with laboratory facilities, office space and equipment needed for chemistry labs. The University had to make only a few minor upgrades and renovations, totaling $800,00, before moving two BIO5 teams to the facility, Tolbert said. “It was so well outfitted for this kind of research that what we had to do was quite minor,” she said. “We spruced it up with a few renovations in the laboratory.” The University of Arizona, which
manages numerous research facilities across Arizona, is well-equipped to manage the new facility, Tolbert said. BIO5 will be providing administrative support for grants and managing the operations and maintenance of the building. Rather than having a maintenance crew, maintenance issues will be handled by University staff as they arise. BIO5-Oro Valley will concentrate and streamline the University's drug research efforts, according to Tolbert. The Arizona Drug Discovery Center, the College of Pharmacy, Arizona Cancer Center and researchers from the College of Science will all be housed in the building. The facility will also have incubator space available for start-up companies. Initially, the building will be home to 50-75 researchers, but has potential to grow to 150 researchers. “Having a lab presence so close to major pharmaceutical facilities at Roche/Ventana Medical Systems and sanofi-aventis will offer the UA enhanced research and collaboration opportunities, as well as a potential springboard for new business incubator and technology transfer programs,” Shaw said. Ventana Medical Systems In October 2010, drug giant Roche announced it would be
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expanding Ventana Medical Systems, its cancer tissue diagnostic operations, in Southern Arizona. The expansion is planned to take place over the next five years with the construction of new facilities and a capital investment of $180 million in Oro Valley. Nearly 500 jobs will be created at Ventana due to the expansion. “These new employees will have a huge ripple effect on services and retail, in addition to Ventana purchasing more local goods and supplies,” Shaw said. Roche was encouraged to expand in Pima County through incentives from Pima county, Oro Valley and the state of Arizona, totaling nearly $14 million. More than $8 million were made available through property tax waivers, $2 million in stimulus funds and a waiver of development fees. Other driving factors for the expansion included workforce quality, available real estate, timely planning and zoning approvals, available infrastructure and property tax rates, Shaw said. “This decision by Ventana Medical Systems to expand their U.S. Headquarters in Oro Valley is a testament to the strong relationship Oro Valley has shared with the company for many years,” said Oro Valley Mayor Satish Hiremant in a press release. “The bioscience industry is a key target growth area for Oro Valley's economic development efforts.” As Tucson continues to grow its bioscience industry, these companies will be at the forefront of development in the area, developing along Tucson's “bioscience corridor,” Tolbert said. “It is becoming clear that bioscience and biotechnology are doing well in the state,” she said. “What we are trying to do now is strategically build on the strengths we have so far so that we can maximize our impact.”
T
ucson secured a $63 million federal grant for its modern streetcar during the last week of
2010.
The 4-mile modern streetcar project will steer development in Tucson by connecting major activity centers like the University of Arizona, Arizona Health Sciences Center, University Main Gate Business District, 4th Avenue Business District, Congress Avenue Shopping and Entertainment District and the Mercado District. The project is expected to trigger retail, office and residential development and redevelopment along the route. “This is a big deal for Tucson,” said Micheal Keith, CEO and executive director of the Downtown Tucson Partnership. “This was the game changer in other municipalities. Other light rail systems have spurred enormous amounts of private investment. This will be a big economic driver.” Building owners will likely see property values increase along the streetcar route as people work, play and
shop along the line. The increased traffic will also ignite interest in public and private development for new businesses and mixed-use housing. Construction of the streetcar is projected to create 1,200 new jobs, with an additional 1,650 jobs created as a result of construction activities. Research also suggests that 1,480 long-term jobs will be created as a result of the streetcar. The streetcar system will be a fixedguideway electric rail with seven ADA-compliant vehicles that will accommodate bicycles and have easy roll-on access for wheelchairs and strollers. The all-electric streetcar will help reduce air pollution and greenhouse gas emissions. Holding approximately 130 people per vehicle, the streetcar will reduce trips by bus and personal vehicle, reducing congestion and pollution. The nearly $200 million modern streetcar project will be funded with local and federal funds. The Regional Transportation Plan will contribute $88 million for capital and operations costs. More than $60 million will come
from the federal Transportation Investment Generating Economic Recovery Grant funds. The Gadsden Development Co. will contribute more than $3 million for improvements in the Mercado District. In December, Transportation Director Jim Glock electronically signed the paperwork that officially obligates a $63 million federal grant for the modern streetcar. The Federal Transportation Administration announced the potential funding in February 2010. By securing the grant agreement the money is now obligated to the project, Glock said. Although congress could attempt to take away any unspent funding, that is unlikely since they would be more likely to take away funds that are not obligated. "Basically we’re now protected from any sweeps from the new Congress," he said. "It was a long haul to get here." The streetcar remains in the design process. Early project scheduling suggests streetcar service will begin in 2013.
ARIZONA FACILITIES FEBRUARY 2011 I 11
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he construction of the $65 million UniSource Energy Building on the southwest corner of Broadway and 6th Avenue, will be a catalyst for development in Tucson. The new headquarters for UniSource Energy Corporation, which will own and manage the building, will provide 170,000 square feet of office space for more than 400 employees of Tucson Electric Power. The ground floor of the nine-story office building will have nearly 11,000 square feet of retail space. The new building will also have a conference center, meeting rooms and close to 600 parking spaces, some of which will have electric vehicle charging stations. “It is the kind of project that creates the momentum for smaller projects to come in from behind,” said Michael Keith, CEO and executive director of the Downtown Tucson Partnership. While most of the space will be used by TEP, the retail space will allow for new businesses to operate in downtown Tucson. The conference center will be available for community groups, especially non-profits. The whole project will be an asset to Tucson, said Tucson Mayor Bob
Walkup in a press release. “This is going to be a great building with a magnificent design that shows off the best of what we hope to accomplish downtown through strong partnerships with private investors,” Walkup said. “The timely review and completion of this project will help us show this community that downtown Tucson is open for business.” The UniSource Building, which is currently under construction, will be complete by November 2011. The structure will be one of the most energy efficient buildings in Tucson, said Joe Salkowski, media contact for TEP. The long, rectangular footprint of the building will minimize its exposure to direct sunlight. The western side of the building will be equipped with a shade structure, shielding it from the sun. Highefficiency glass and energy-saving lights, HVAC units and other mechanical systems will also be used in the structure. As a leader in renewable energy that is at the forefront of solar power development, TEP will be installing a photovoltaic array that will help power the UniSource building. The number of panels and how much energy will be produced from the array has yet to be determined. “We thought it appropriate to have such a system on our
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corporate home since we have been encouraging our customers to put solar photovoltaic arrays on their own homes,” said Salkowski. A rainwater harvesting system that will ensure all landscaping needs are met with recycled water will also be incorporated into the project. All of these energy-efficient designs will be essential in securing Leadership in Energy and Environmental Design (LEED) Certification for the new building from the U.S. Green Building Council. Not only will the new building allow UniSource to demonstrate its commitment to the environment, but it will also allow TEP to consolidate its employees into one building. “We really do need the space now,” Salkowski said, explaining that the site was chosen for its downtown location and the value of the property. “Our desire to improve the efficiency of our operations really drove this process forward.” DAVIS is the principal design firm on the project, assisted by Tucsonbased Swaim Associates. Ryan Companies is the developer and general contractor of the UniSource building. Ryan Companies is using its in-house design/build services in conjunction with subcontractors to build the shell and interiors of the building. AF
building maintenance
Life Cycle Costs Important Considerations in Repairs, Upgrades By Al O'Connor
I
n the green world in which many facilities and operations managers now function, the meaning of “sustainability” has been slightly altered to include environmental issues and impacts. Although this has been long overdue, the meaning of “maintain or preserve in existence” still includes getting the longest, cost-effective life out of every component of your facility. While most corporate goals now aim to reduce consumption of resources, improve efficiency and move toward environmentally-responsible products and systems, money for these improvements is hard to come by and must be used wisely. The past serves as a reminder of what the challenges are and how forethought and consideration can help fight them off into the future. Age Many of the building components, parts and equipment manufactured today, although often superior in efficiency, cost and design, are just not built to last. Time has had its chance to wear out even well-maintained roofing, plumbing, mechanical and electrical systems on many buildings built during the commercial real estate boom of the 1980s. Obsolescence Facility managers and engineers know how difficult it can be to find repair parts and components for any variety of aged building components. Systems like card access, building automation and fire life safety, to name a few, continue to advance at such a rapid pace that support for systems even five years old can become costly and difficult. Labor Costs Labor costs for many specialized vendors have easily doubled and even
tripled in two decades. Strong competition and technologies are moving so quickly that many companies have little time or money for employee training. Even skilled and seasoned trades have a hard time keeping current on systems only a few years old. Lower Budgets As newer facilities that were designed for sustainability come on line, they feature energy advantages as well as lower maintenance costs on newer equipment. These properties can show operating costs that are difficult for older properties to benchmark against. With the commercial real estate slowdown taking place during the past few years, many owners also do not want to spend capital improvement dollars. When they do, they expect to see an improvement on NOI. Each of the above four categories offers lessons on what to consider when making a decision. Getting the biggest bang for your buck can be as easy as using tools that have always been at your disposal. Before you make the next repair, replacement, improvement or upgrade consider several simple items in addition to life cycle costing and time value of money. Talk to others in your industry network. How has their support been from a specific company? Was the company overly expensive? Question your vendors about products they use. What’s good and bad? And what new technology is on the horizon? A field technician can be the best reporter regarding any product. Do research as to the quality of past products and service from the manufacturer and servicing company. Have they been around long? Will they be around when you need them? Make sure more than one company can service any installation you consider. Request
more warranty than may be offered prior to making a capital decision. Purchase extra or support components. Many manufacturers and vendors are taxed on inventory items they have in stock, because of this, they are reluctant to keep a large stock of older equipment on hand. When you require an urgent repair, this can add lead time and expense. If you intend a long life for a VFD, BAS, EMS, FLS or any other system or component, find out from a field tech what is likely to go bad and buy extra (within reason of course). If it is cost effective, having this part on hand in the event of future failure could be invaluable.wh When trying to get money from an owner or asset manager for a repair or upgrade, be sure to calculate in the cost of maintaining the troublesome or failing system being replaced. Also represent the potential loss or damage that could occur if the improvement is not made. Explain the long-term benefit of a higher-cost, sustainable improvement as opposed to the least expensive option. In the end, improving a project long term always increases its value more than a patch or a short-lived repair. Reward quality manufacturers and vendors with repeat business. Let them know the reason for your loyalty. Learn from the past decisions you have made and try not to repeat the bad ones. Consider any oversight made and focus greater attention to that aspect of the decision this time. Al O’Connor, chief engineer at the Great American Tower in Phoenix, has worked in commercial real estate as a facility and property manager for 17 years. He teaches building design and operation classes for BOMA Greater Phoenix and BOMA International. He can be reached at 602.358.2085. AF
ARIZONA FACILITIES FEBRUARY 2011 I 13
14 I ARIZONA FACILITIES FEBRUARY 2011
D
uring PIR’s two annual NASCAR Sprint Cup weekends, more than 65,000 seated ticket holders descend upon this desert oasis – 20,000 of which put on the brakes and set up RVs and trailers for an entire week. So running an operation like this takes more than turning the lights off at night. There’s traffic control for upwards of 37,000 cars, a full-service BASHAS’ Supermarket to feed temporary residents and fans and training of 1,300 seasonal employees. With threeand four-day events, management puts in days of planning to be ready for the checkered flag to come down. A New Approach to Temporary Labor To handle the increased employee base demanded by the large patron population, Lee Baumgarten, director of operations, said his company shifted away from “untrained contractors” about six years ago. He saw the benefits of having return employees. “If you do that, it gets better year after year.” To accomplish this, PIR reached out to nearby military units and community organizations. Many non-
profit organizations now use race days as a fund raiser with their members donating their wages to the group. The result is a reliable, temporary workforce that provides a better experience for the patron. “Here you’ve got an officer in the Air Force selling you a hot dog with a smile. We just don’t order 20 people and put them here and there,” Baumgarten said. The process has been so effective that 80 percent of their seasonal staff returns for subsequent events. The idea has also taken root outside the track. The parking company PIR hires follows suit in their hiring process. Keep Your Arms and Hands Inside the Ride To ensure the safety of the more than 100,000 patrons who attend the races, PIR starts preparations early. The Department of Homeland Security and FBI provide a vulnerability assessment on nearby areas of concern, such as a nuclear power station 20 miles away and a chemical treatment plant. PIR has their own 24-hour, 150person fire department, a full-time sheriff ’s department, an ambulance service and four doctors and multiple
Carl Edwards doing his signature backflip at Phoenix International Raceway after his Nov. 14 Sprint Cup victory.
nurses ready in three on-site medical centers. An emergency line allows fans to text message a 12-person command center where people are ready to respond to problems. “We can handle anything from a leaky toilet to a bomb threat,” Baumgarten said. Just as important as guest safety, Baumgarten’s team is responsible for ensuring visiting celebrities can make it around the track safely. “We have to be able to tackle any challenge the facility throws at us that may cause a delay or cancellation of event,” he said. Equipment is on hand to patch asphalt or rebuild a fence. In the event of a power outage, the track and visiting media providers are prepared to work entirely off the main electric grid with their own back-up systems. Keeping a Clean Slate Cleaning crews stay up all night in between race days to gather and sort through trash for recyclables. In 2010, 62 tons of waste, or 846 cubic yards, were recycled. That’s 733,000 drink containers, 100 cases of plastic bags and 24 tons of cardboard. “It’s $20,000 per year savings on waste fees, but more importantly, removal of tons of items from the waste stream,” Baumgarten pointed out. PIR uses approximately one million gallons of water just to keep down dust in their dirt parking lot. Nearly 270,000 gallons of human waste and 18,000 gallons of cooking grease circulate through the facility annually. The raceway is currently connected to a series of water wells and septic tanks but is making plans to switch to city services. The switch will move them off a septic system that costs $100,000 to empty twice annually and will allow them to provide better water for guest services. With 80 percent of their halfmillion dollar energy bill accumulating
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ARIZONA FACILITIES FEBRUARY 2011 I 15
continued from page 15 during just more than 4 percent of the year, Baumgarten is looking for new approaches to cut energy costs throughout the off season. “We joined a program that we can voluntarily offer to shut down areas of our facility (in the summer) so (the power company doesn’t) get a brown out. It’s a new program we haven’t tried yet.” Making the Trip Getting to and from the facility presents unique challenges. For the possible 37,000 cars headed to PIR on big race weekends, creating traffic plans and obtaining government approval is a year-round process. With only two major roads and seven lanes of switchable in-bound/out-bound traffic, Baumgarten said they create a “well-orchestrated event by every government agency you can imagine.” For the past 10 years, PIR has also operated a park-and-ride program out of Cricket Wireless Pavilion, located 12 miles away. With about 10 percent of guests opting for the nominal $7 fee, a car load can park and ride one of the 70 buses to take them to their own express entrance gate. The operation
runs at a loss but keeps another three or four thousand cars from clogging the lanes. A Photo Finish To exceed the expectations of the fans who support the facility, PIR is working with Avondale City on a long-term development agreement that will improve on their infrastructure delivery and create a new zoning standard that better meets their needs. The move could be helpful for all players involved: A recent Arizona State University study indicated PIR’s activities bring more than $400 million into the area each year. And although it may take only 29.5 seconds to make it around the one-mile track, that level of economic impact takes careful planning and effective delivery on behalf of the facilities managers. “I think there’s a monumental difference between a stick-and-ball event and NASCAR. This is more of a lifestyle,” Baumgarten said. “An NFL game gets 65,000 attendees, but they do so for only three or four hours. Our event is alive and well for five days.” AF
16 I ARIZONA FACILITIES FEBRUARY 2011
By the Numbers • 50 full-time employees • 1,300 part-time event staff • 15,000 – 20,000 fans camping during races • 7,500 RV parking stations • 37,000 parking capacity • 65,000 reserved seating capacity • Tickets from $25 to $117 • 50 corporate suites • 80% of annual energy bill accumulated in two weeks • 1 million gallons of water used annually for dust control • $500,000 annual energy bill • 25 restrooms • 1,000 portable toilets rented for big events
BOMA of Greater Tucson PMB #140; 3305 N. Swan Rd #109 Tucson, AZ 85712 Office: (520)299-4956 Fax: (520)299-6431 bomagt@comcast.net www.bomagt.org
Mission Statement: To actively and responsibly represent and promote the interests of the commercial real estate industry through effective leadership and advocacy, through the collection, analysis and dissemination of information, and through professional development.
PRESIDENT’S MESSAGE I am proud and excited to be leading our association in 2011. BOMA of Greater Tucson has quite a few exciting events planned for the first quarter of the year. We kick off on Tuesday, Jan. 18, with the annual BOMA/IREM joint economic forecast. Our keynote will give an overview of the national economy and how it affects Tucson, along with lending and development in today’s real estate climate. In February, we always look forward to our joint luncheon with IFMA. This should be an informative meeting with speakers on the new Tucson Certificate of Occupancy Ordinance and emergency preparedness tips. The March luncheon meeting will focus on HR liabilities for small businesses. Our annual trade show in April will showcase BOMA associate members and their services. And, of course, we have a full schedule of education classes planned. I invite everyone to join us. Check the BOMA Greater Tucson website (www.bomagt.org) for a full schedule and to register for any of these events. Gay Jarvis
BOMA Greater Tucson RECENT EVENTS:
2010 Officers: Gay Jarvis, President
October 26: Halloween Family Mixer and Trade Show
Dana Elcess, Secretary Andrea Krug, Treasurer Mona Deane, Past President
October 31: BOMA Team for American Cancer “Making Strides”
2011 Schedule Jan. 18: BOMA Greater Tucson and IREM joint economic forecast Feb. 22: BOMA Greater Tucson and IFMA Southern Arizona joint meeting March 29: BOMA Greater Tucson meeting April 26: BOMA Greater Tucson annual trade show All events will be held at the Sheraton Tucson Hotel, 5151 E. Grant Road, Tucson, Ariz.
Membership Benefits Membership in BOMA Greater Tucson is all about opportunity to learn, to grow and to affect positive change in the building ownership and commercial property management industry. BOMA Greater Tucson links real estate professionals to the information, networking and education they need to succeed. Here are a few of the benefits members enjoy: • Be part of a powerful team • Build Important Relationships • Boost Your Knowledge and Skills
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• Stay Up-to-Date on the Industry • Enjoy Exclusive Networking Opportunities • Access a Worldwide Industry Network
• Advance Your Career and Hire the Right People • BOMA Membership Saves You Money
ARIZONA FACILITIES FEBRUARY 2011 I 17
Photo courtesy of Ameri-Skills Solar Training
Building Owners take Advantage of Tax Credits with Solar Power Arrays By Nick Davison
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n today’s economy, building owners and facility managers are always looking for new ways to reduce their company’s tax liability, increase their monthly cash flow, protect their building against rising energy costs and increase their building’s value to prospective buyers. The good news for Arizona building owners is that installing a solar power array on their rooftop will allow them to take advantage of federal and state investment tax credits, utility solar incentive programs, solar capital equipment depreciation and Sec. 179 expensing to offset tax liabilities. The federal government is currently offering commercial businesses a 30 percent investment tax credit on the entire cost of installing a solar power array on a building’s rooftop. Arizona
provides a 10 percent solar tax incentive up to $25,000. Utility companies offer an upfront rebate incentive for small commercial solar systems under 30 kilowatts and a performance-based incentive for larger solar power arrays. On Sept. 27, 2010, President Obama signed the Small Business Jobs Act (H.R. 5297) into law, reinstating the 50 percent depreciation bonus for 2010 (retroactive to the beginning of the year) and increasing Sec. 179 expensing levels to $500,000 for 2010 and 2011. In addition, the Senate version of the "Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act of 2010" (the "Bill") contains a one-year extension of the Section 1603 Treasury Grant program. Though the maze of solar tax
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incentives, utility solar incentives programs and depreciation schedules may seem complicated, with the right financial spreadsheet, a building owner and their certified public accountant (CPA) can enter their last 12 months of electric billing information and determine whether or not investing in a solar power array provides a good return-on-investment in less than 20 minutes. Most building owners with a tax liability are surprised to learn that with the incentives available the total cost of installing a solar power array on their rooftop can be completely paid off within four to seven years, and the improved cash flow resulting from the lower energy costs can be reinvested in their business. Producing free solar energy provides a competitive advantage as
alternative energy the competition’s energy prices continue to rise. A company’s solar power array energy production remains free for 25-30 years. Additionally, the benefits of “going green” can be leveraged to generate free, positive publicity that will attract new customers. For example, if an Arizona car dealership installed a $500,000 solar power array, the dealership would receive a $150,000 federal investment tax credit, a $25,000 Arizona tax credit and $171,700 worth of expense and depreciation tax benefits. The energy savings of the 100-kilowatt system for
the first six years would be $146,242. The solar system would pay for itself in less than five years. The side benefit would be enabling them to market their car dealership as a “green business” to the local community, which could be tied in nicely with their hybrid car marketing campaigns. Nick Davison is the CEO and president of Smart Solar Solutions. Smart Solar Solutions is an Arizona-based, fullservice design and solar installation firm specializing in turnkey solar photovoltaic electric power systems for commercial rooftops and parking lots. AF
Free Solar Tax Seminar The Solar Tax Strategies for Building Owners Seminar, hosted by Arizona Solar Power Society, will be held from 6:30 to 7:30 p.m. on Thursday, Feb. 3 at the Wyndam Hotel, 50 E. Adams Street, Phoenix. Dan Hoskin, Smart Solar Solutions VP of sales and marketing, will explain solar tax incentive and utility solar rebate programs and answer questions for building owners. RSVP at 602.326.0940.
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Building Information Modeling can Save on Time and Materials By Dan Russell
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uilding Information Modeling (BIM) is a design and construction application that replaces standard 2D construction drawings with multi-dimensional computer models. These models allow project teams to identify and resolve issues before a construction project begins, ultimately decreasing time, material and cost inefficiencies caused by change orders, construction delays, equipment fabrication and more. Because the program is electronic, BIM allows for changes in real-time, thereby eliminating waste and conserving paper and materials for drawing and table-top models. BIM’s additional benefits include cheaper equipment prefabrication (shop built and field installed) and a completed design, offering a clear picture of the finished product, which gives clients and owners the opportunity to virtually tour their projects before they build. Here’s a closer look at how BIM
works and benefits the building process as well as project owners: Here to Stay There is a perceived notion that BIM is only for the big leagues. Some smaller subcontractors have been reticent or unable to invest in the technology. But BIM is only in its infancy and will be around for a while. Consider CAD’s role in the early 1980s. By the 1990s, every major project built was designed and fabricated using CAD software. By 2020, BIM will be the standard by which projects — even single-family homes — are designed and delivered to maximize resources, minimize waste and employ a sustainable construction approach. Productivity and Efficiency During Construction BIM’s application goes well beyond the completion of the model. In the field, superintendents have the
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opportunity to be involved in trade coordination and to integrate the CPM schedule with the BIM model, which provides a visual of how and when multiple trades are working in the same area at the same time. This visual schedule makes it easier to solve field issues and ensure proper installation and sequencing of building components. This also avoids clashes and maximizes the productivity of trades. BIM minimizes field changes and decreases costly change orders. In the event an unforeseen incident arises in the field, models can and must be updated to reflect the field change. Each discipline affected by the change should then update its model to reflect current field conditions. Keeping models updated diminishes the impact of the change on the project timeline, providing a real-time electronic visual of the new layout and schedule for a work sequence in a given area.
building information modeling Streamline Coordination Trade coordination clashes are common in the building industry. The most common clashes happen among mechanical, electrical, plumbing and fire protection in the space between the ceiling and the structure above, such as piping hitting ductwork, ductwork hitting structural beams, or mechanical shafts being too small to accommodate the amount of equipment set to run through them. Using BIM for trade coordination involves checking the geometry in each disciplines model against the geometry in other disciplines' models. Doing this shows superintendents where different components are hitting each other and helps the disciplines in question shift equipment to avoid each other and keep the project running smoothly. BIM also helps avoid clashes related to scheduling. A BIM model can be used to ensure proper task sequencing, such as seeing whether the underground conduit has been completed in an area prior to laying the foundation system, or to see whether the mechanical subcontractor has finished installing ductwork above the fire protection system so the fire protection subcontractor can begin work. This is always useful, and particularly so when a project is on a tight timeline.
information from each disciplines model into a single software platform at the end of the project. Facilities Management and O&M In summary, BIM has become a valuable tool that makes facility design and construction more efficient. The big question then is, how can this tool be used after construction for the lifecycle of the facility? These models inherently contain a wealth of data, and facility owners and managers can tap into this data and link it to FM and O&M tools. Essentially, the model becomes a web-based graphical interface between a central database and existing management tools. This use of technology can allow facilities staff to use tablet PCs and PDAs to access facilities data from the field. For example, you could right click on a chiller in the model and select from a menu of choices such as commis-
sioning documents, O&M manuals, building control system or maintenance records. Selecting the maintenance records option would take you to data specific to that piece of equipment in another application like IBM's Maximo. All told, BIM is a tool that streamlines the construction process from start to finish and beyond, allowing clients, owners and project and management teams to maximize productivity and collaboration. The application's impact on the industry is expected to increase in the years to come. Dan Russell, LEED AP, is the director of construction technology at Sundt Construction, Inc. He has been with Sundt for 15 years. He can be reached at 480.293.3000 or dnrussell@sundt.com. For more information on BIM, visit www.sundt.com/building-informationmodeling-bim. AF
Used in As-Built Models Most projects are still doing asbuilts or record drawings. However, some progressive facilities owners are asking for as-built models because they want accurate 3D representations. When considering the as-built model, it’s important for clients and owners to be aware that each designer and subcontractor may be utilizing different modeling software. Software tools that work well for design and engineering are not necessarily the best tools for creating the fabrication-type models subcontractors need to run fabrication equipment. To get a true as-built model, it’s best for one company to combine all of the ARIZONA FACILITIES FEBRUARY 2011 I 21
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he “go green� concept aimed at minimizing the negative environmental impact of society has permeated nearly every industry in the United States. Changes in the economy, such as the rise of gas and utility prices, have caused the average consumer to think outside the box in terms of energy consumption. Increased environmental awareness and focus on energy efficiency have driven the marketplace toward more sustainable construction practices. High performance building has paved the way for new adaptive technologies in the world of plumbing and HVAC. Over the last several years, the boiler industry has caught on to this concept and is now riding the wave of energyefficient, low-emission products. Boiler manufacturers are finding innovative solutions to meet the demands of a nation determined to go green. One such solution is known as condensing boiler technology. Condensing boilers have evolved from a once mysterious creature into a widely recognized and field-proven technology dedicated to increasing energy efficiency and sustainability.
Technology Overview Condensing technology is based on the theory of recovering lost heat which escapes out of the flue exhaust in a boiler system. During the combustion process, water vapor is created that in turn captures heat from the flue gases. These hot flue gases are then vented out the boiler flue and into the atmosphere. Traditional, non-condensing boilers might see exhaust temperatures upwards of 400 degrees Fahrenheit. A condensing boiler system seeks to lower the exhaust temperature by recovering the latent heat of vaporization. This is achieved by lowering the entering water temperature (EWT) to the boiler. As the EWT drops below 130 degrees Fahrenheit, the water vapor in the stack begins to condense out, and stack temperatures begin to drop. Lower stack temperature means less heat loss, which translates into higher thermal efficiencies at the boiler. Although the concept seems simple, the proper application of available products is key to a successful condensing boiler system that is both energy efficient and sustainable.
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Adequate attention must be given to all vital components of the condensing boiler design, including metallurgy, burner modulation and combustion controls. Material used for construction of the heat exchanger is of utmost importance, since the condensate forms a highly corrosive substance known as carbonic acid. The heat exchanger comes in direct contact with the condensate and must be designed to resist the acidity. Although stainless steel is the weapon of choice for a variety of manufacturers, cast aluminum alloy holds a much better track record worldwide in terms of durability and more efficient heat transfer. Burner modulation and combustion control strategies also play an important role in the overall system performance. A throttling gas valve and forced draft fan with a variable frequency drive (VFD) facilitate burner modulation; the ability to vary the firing rate based on water temperature. This capability allows the boiler to reduce its net heat output during periods of lower demand, as
boilers opposed to on-off firing which employs an “all or nothing” approach. Burner modulation is critical when operating a boiler in condensing mode because lower firing rates yield higher efficiencies. In addition, condensing boilers are often installed in what is called a modular system. This means that in place of one large boiler, several smaller boilers are staged in a series to accommodate the overall system demand. The master boiler control communicates to other units in the cascade and determines when to fire the boilers and at what firing rate. In the boiler industry, this is called load matching. Load matching ensures that the boiler system is outputting just enough energy to satisfy the load. Excess BTUs or waste heat is kept to a minimum. When burner modulation is coupled with condensing boilers in a modular array, facility owners can be certain they are getting the most out of every dollar spent in energy. Real World Application The Tucson Marriott University Park Hotel, located at The University of Arizona’s main gate, was confronted with a challenge common to a myriad of other hotels and resorts throughout Arizona. The introduction of extremely
hard water into the domestic hot water system was causing the build-up of scale in the boilers. This led to inefficient operation and shortened equipment life. These damaging effects of scale ultimately resulted in additional spending on fuel bills and maintenance. Mathematics of this sort does not add up to a green or sustainable design. A clear solution was to apply the principle of indirect heating to a condensing boiler system design. Two aluminum-alloy condensing boilers manufactured by Patterson-Kelley were installed, along with a plate-and-frame heat exchanger package. The heat exchanger served to isolate the boiler water from the domestic hot water loop. This allowed for indirect heating of the domestic water through the plate-andframe, which eliminated the risk of producing scale inside the boilers. Low operating temperatures of the domestic hot water system also proved to be a perfect match for the condensing boilers. Return temperatures around 100 degrees Fahrenheit have yielded thermal efficiencies as high as 96 percent. In addition, the boilers were equipped with ultra-low emission burners, which produce less than 9 ppm NOx at high fire. In this case, the low emission feature was a fringe benefit to go along
with the more obvious perks of energy savings: lower maintenance costs and a longer life span. Conclusion The Marriott University Park project in Tucson is evidence that condensing technology can be the source of greater energy efficiency and sustainability by design. Appropriate metallurgy, fully modulating burners and modern combustion control strategies are the means by which condensing boilers achieve such sustainability. Reducing fuel consumption and emissions, while providing a longer lasting, more durable product is the goal of manufacturers in the boiler industry today. Proper utilization of available technologies is necessary in furthering the developments of high performance building, and will result in a society more capable of meeting the demands of an ever-changing world. Quinton Lamoreaux is the engineered products manager for McCook Boiler & Pump Co. He has a bachelor’s degree in civil and environmental engineering from Brigham Young University. He can be reached at 520.623.5788. AF
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Putting Vendors in Charge of Facilities Management The Facilities Manager Model Implements Logic-based Process in Building Management By Dean Kashiwagi
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he Performance Based Studies Research Group (PBSRG) has been studying the delivery of services to owners/clients/buyers since 1994. The technology is called the best value Performance Information Procurement System (PIPS) and the Performance Information Risk Management System (PIRMS) and is based on the Information Measurement Theory (IMT).
the delivery of their food services, the sports marketing, their document control, the outsourcing of their IT networking services, long distance education and help desk services. From the first three contracts, the vendors identified the value of the new best value processes at $100 million over the next 10 years (difference in the revenues that ASU will receive over the next 10 years that is written into the best value contracts).
Performance Information Procurement System: What makes the technology lucrative to owners/buyers of services? • Minimizes up to 90 percent of the client project and risk management transactions. • Vendors make up to 100 percent more profit, but deliver it at a lower cost. • Value and performance increase, and cost and risk decrease.
• 98 percent of more than 700 tests (1994-2010) have high customer satisfaction, no vendor created cost or time deviation, and are delivered at a low cost. • Client does not need to know the exact product/system/ solution they are looking for, they just need to know what they think they want.
The majority of testing occurred in the construction industry. Since 2007, Arizona State University, under the direction of Ray Jensen and procurement director John Riley, allowed the testing of best value PIPS on non-construction services. From 2007, ASU, proceeded to use PIPS on
Another dominant test has been with the General Services Administration (GSA) in the heartland region (Kansas City). They have a four-year plan ($800,000 grant) to implement the best value PIPS system into the GSA system. Their interest is peaked by the:
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• Measurement of performance and deviations on every project. • The ability to accurately measure their entire organization’s performance using vendor risk information. • The ability to minimize project cost and time deviation. • The potential to increase their delivery of projects with 10 times the efficiency. The University of Minnesota has been using best value PIPS for the past five years. As a result of their performance, Minnesota changed their law to deliver construction using the best value PIPS methodology. Five other government entities in Minnesota are now testing the process. A federal organization has been testing best value PIPS for the longest period of time. Without addressing the procurement of the service, it has used the deductive logic to motivate contractors to do the following: • Pre-plan to manage and minimize risk. • Assist the government participants in the project to be accountable, doing the right things at the right time. • Have a plan (in terms of performance and time), help the government to do things in the right order and time and document the source of any cost and time deviations on the project. • Project cost deviation has been minimized by 50 percent by knowing the 10 riskiest projects weekly, of 300 projects at 26
vendor relations different sites, with a budget of more than $300 million. The Western States Contracting Association (WSCA), of which Arizona is a member, has sponsored tests with the states of Idaho, Alaska and Oregon. They include a $200 million ERP system procurement, a $30 million DMV system for the Idaho Department of Transportation (IDT) and a test to purchase a software package for the Oregon facilities group. PBSRG has also had an international reach as the Dutch national government is running the largest best value PIPS test (delivering one billion Euro value critical highway renovations). Best value PIPS tests in all industries has resulted in huge efficiencies and value for the buyer/clients. PBSRG is also ready to assist the largest and most influential contractor/developer entity in Malaysia, who wants to integrate their entire supply chain, from the development to the maintaining of the properties. PBSRG has also run tests in Gaborone, Botswana, in the southern section of Africa. The next country which will test PIPS/PIRMS is Canada, as the University of Alberta
will be implementing and testing PIPS. The PIPS/PIRMS technology (processes, use of performance information and deductive logic) is licensed through AZ Tech, the technology licensing arm of Arizona State University. PIPS and PIRMS is different from all traditional project delivery systems due to the following: • It minimizes the management, direction and control of the buyer’s organization on the vendors. • It minimizes the communication, documentation and paperwork. • It proposes that the vendor is the expert and should know what the end product is, why it is required and how it will be delivered. • It proposes that expert vendors can see the delivery of the service from beginning to the end, regardless of the perceived technical complexity, and can break it down into simple tasks that the client can understand. • Creates transparency so the client can quickly identify which vendors can perform and which cannot. PIPS/PIRMS works because it aligns expert resources against requirements. It motivates the vendor
to think in the best interest of the client, and at the same time maximizes the vendor’s profits. Lessons learned from 16 years of testing best value PIPS include: buying on price is a “blind man’s game,” a high performer can always deliver a better value and the client is his own worst enemy because they cannot tell the difference between good and bad vendors, and they try to bring the high performing vendors risk by arbitrarily trying to get them to reduce their price. Dean T. Kashiwagi, professor and director of Performance Based Studies Research Group at Arizona State University, is an expert in optimizing the delivery of construction and other services using performance information. His structures/processes simultaneously minimize project/risk management functions up to 90 percent, increased vendor profit as much as 100 percent, increased performance to 98 percent and decrease costs. AF
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tremendous amount of attention within the landscape industry is being given to the benefits of applying practices and methods that promote sustainability. As defined for landscape applications, sustainability employs practices which strive to preserve limited and valuable natural resources such as water and plant materials, reduce waste generation, strive for longevity and maturity of plant materials, promote re-use and practices which regenerate natural systems, reduce and prevent air, water and soil pollution. Landscape is nature and should be treated naturally. Sustainable maintenance is not about letting the landscape take over; it is about properly managing the landscape using the plants natural form and growing patterns according to the designer’s intent. Landscape professionals do their best to use flowers, groundcover, shrubs and trees that will live in harmony with their environment. Although ever evolving, it has taken
years of trial and error to develop a palette of native and non-native plants that are aesthetically pleasing and that will thrive in the local environment. Few topics in landscaping generate more discussion than how to prune a shrub. Past practices have dictated shearing and shaping of shrubs. Society has forced the perception in the landscape industry into thinking that if you don’t follow the practices of theme parks and create shapes out of the plants and trees, the job is not done properly. In order for sheared plants and trees to survive, irrigation principles must switch supplemental watering systems into primary watering systems to help compensate for the damage done by these practices. In addition, using the shearing method to control growth continually robs the plant of leaves, hindering its ability to convert nutrients into food. Lack of shade at the core of the plant allows more moisture evaporation, creating a need for more supplemental water. In turn, this increases growth, requiring even more shearing. As the
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plant grows faster to replenish sheared foliage, the diameter of branches increase over time and become “woody.” Eventually the shrub becomes unhealthy, is more prone to disease and the life span is shortened. Possibly the most abused shrub is the sage species because it is common and easily sheared into shapes. Many neatly trimmed sage bushes are nearly see through due to shearing. Consider the colorful alternative of proper pruning techniques so you can see the green or silver leaves accentuating the brilliant purple blooms. Improper maintenance in the desert southwest, including portions of Arizona, California and Nevada, can be the most damaging. Plants in these areas tolerate difficult circumstances such as limited irrigation water supplies (which have high mineral and PH content), high temperatures and minimal rainfall. Misguided maintenance practices further compound the impact of these conditions and create unnecessary damage to plant materials, diminishing the value of the investment.
landscaping The more natural method of pruning favor the health and longevity of the plant. The intention of most landscape designs is to achieve a more natural, less structured look which contributes to the long-term goal of achieving a landscape that can be managed with less water requirements, reduce waste generation, better wildlife refuge and better aesthetics, resulting in sustainability. Renovation style pruning applies principles to promote an aesthetic appearance of shrubs and groundcovers in a designed urban landscape. Typically, this consists of pruning the shrub approximately 1/2 to 1/3 of its intended size. This type of pruning permits plants to grow back into the space throughout the following growing season. Shrub renovation allows people to enjoy the seasonal color provided by a variety of plantings used in open spaces and landscape areas. No pruning is required when plants are in bloom and should certainly not be dictated by a monthly or bi-monthly schedule. Pruning is necessary for safety related issues, such as plant materials that encroach over sidewalks, obstruct lines of sight at intersections and driveways or that block signage. For instance, an Orange Jubilee can grow in excess of 8 feet by 5 feet in as little as two growing seasons. When
the shrub exceeds the intended height for the location, it can be selectively pruned prior to exceeding the height, or if it is the proper season for this species, renovation style pruning is recommended. Use of this method will allow the plant to grow, bloom and protect itself from the sun naturally with its leaves. Sustainable landscape management is not only about shrub and tree pruning methods. It encompasses testing and treating various soil conditions, turf management, irrigation repair and maintenance, water runoff, fertilization and pesticide and herbicide applications. Combining a good sustainable landscape design with proper landscape and water management can create an aesthetically pleasing atmosphere that enhances its surroundings. Board members from the Arizona Landscape Contractors Association (www.azlca.com), Matthew Johnson of Asset Landscaping, Will Periera of Blue Star Resort & Golf, Dave Spector of TLC and Judy Gausman of ALCA, contributed to this article. All participated in the review and editing of “Sustainable Landscape Management” and are involved in the day-to-day operations of their respective landscape management firms. AF
Improper pruning techniques
Standards for Landscape Care Outlined in Book The Arizona Landscape Contractors Association (ALCA) recently adopted the “Sustainable Landscape Management; Standards for Landscape Care in the Desert Southwest,” written by Janet Waibel, a licensed landscape architect and certified arborist. The publication contains information about the best recommended practices that are known to achieve high-quality results when properly applied to typical situations. A committee consisting of ALCA members, representing landscape management and landscape supply firms, worked extensively to edit and advise the book with regard to content and efficiency for practical use. The book is suitable for industry professionals, property managers, homeowners associations and others who care for or invest in landscaping. “It is our desire for every professional involved with landscape management to read and understand these principles and standards in an effort to elevate the quality and professionalism within the communities and cities we live and work,” said Will Pereira, ALCA board member.
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Wireless vs. Hardwired for Healthcare Facilities New Technologies in Emergency Call and Life Safety Make Installation Easier By Jacquie Brennan
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ireless technology is not new. Starting with the earliest commercial radios in the 1920s to the introduction of cell phones in the early 1980s, wireless technologies have been used for years in our homes, cars and work places. Now, advancements in wireless technologies have made installing emergency call and life safety systems an easier undertaking. At its basic level, an emergency call system uses a button to alert the appropriate people that a user needs help. For years, alerts were simply a light switch with a hole drilled for a string that, when pulled, turned on a light and a siren to notify that assistance was needed. Today, computer-based systems can track a person’s movement and send an email to an iPhone. Before wireless became the “must have” technology, the introduction of computers was the biggest thing to hit the emergency call market. Now, the computer is the most common link between monitoring devices and the pagers or telephones used for notification. Computers allow data recording and reporting, provide more flexibility in changing settings, enable tracking of login and personnel and offer some types of redundancy. However, they also have limitations, requiring security updates, patches, being subject to failure and having a limited lifespan. Computers greatly enhanced functionality but also made choosing the right system more complex. Similarly, the advent of wireless has added another layer of complexity. Wireless has become the hot product, offering many benefits. Some things
that should be explored before purchasing a wireless system for your building. This may be as simple as checking with state regulations. While regulations are catching up with the available technology, hardwired systems are still required in some states due to limitations of some of the earlier wireless technology.
There are three main advantages to wireless: 1. It is hard to beat both in terms of actual cost and time to install; 2. It provides flexibility by allowing you to move devices more easily; and 3. It offers greater expandability, enabling you to add on to your current system with greater ease. These features have resulted in the widespread popularity of wireless but should be weighed against some of the constraints of the technology. While installation is almost always cheaper, operating costs can be higher. In comparison to their hardwired counterparts, the wireless devices themselves are more expensive and tend to have a shorter lifespan, reflecting the more rapidly changing technology. Once installed, a wireless system will require more maintenance and
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incur greater recurring expense. Without a hardwired power source, devices will use batteries, and batteries need to be changed. Wireless systems tend to offer a lower level of supervision than the hardwired alternatives, since battery constraints limit the ability to constantly monitor the devices. When it comes to reliability, the nature of wireless makes it susceptible to interference. Cell phones drop calls. Radios make a squawking sound when cell phones are next to them. Wireless might not be an appropriate choice if your facility’s physical structure or location is such that interference is always going to be an issue. Concrete and steel buildings will find wireless signals are more limited and may require additional infrastructure to ensure reliability. Commercial kitchens, microwaves, elevators, mirrors and large fishtanks are also known to interfere with wireless signals. If you do choose a wireless system, a number of frequencies are available and the best for your facility will depend on your requirements and preferences. Lower frequency bands have been around the longest and are more established. This equates to lower costs and a greater availability of parts. The bandwidth dictates how fast data can be transmitted, but typically, the higher the bandwidth the more power is needed, requiring more battery maintenance. Many paging systems fall into the 456-460MHz land mobile category. 902-928MHz is reserved for radiolocation, which is what many call systems fall into. Cordless phones are now available in the 2.4 GHz and
healthcare facilities 5.0GHz range. Does it make them better because they are on a higher frequency? Not necessarily, part of it is just that the band may be less crowded because it was recently released and fewer manufacturers produce in that range. Higher frequency are generally faster but have a shorter range, while the lower frequency, as a rule, have the best range. For many facilities a hybrid option, including hardwired call stations and a wireless backbone that enables you to add devices and pendants, might be the best choice. This does increase installation costs but provides the reliability and lower operating costs with the flexibility and expandability of a wireless system. Prior to selecting a system, an analysis of the needs and infrastructure of your building in comparison to the pros and cons of the technology needs to be
completed. The location, structure and purpose of your facility, your capital budget and operating budget constraints, your tolerances on reliability versus flexibility or expandability and how long you expect your system to last will all influence your decision when choosing between hybrid, wireless or hardwired options. When choosing an emergency call system remember not all technologies are created equal, and just as important, no two facilities’ requirements are the same. Jacquie Brennan has been active in the design, implementation and operation of hardwired and wireless nurse call and emergency call systems during the last 13 years. Brennan is currently vice president of operations for Vigil Health Solutions, Inc., which specializes in providing call and monitoring solutions for long-term care facilities. AF
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Phoenix Forecast
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Office Market Outlook Steady Recovery Bringing Activity Back Gradually By By Ruth Ruth Darby Darby
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he office market started to heal in 2010. While slow, it was an improvement. Building on gradual quarterly gains, 2010 finished with positive net absorption of less than 500,000 square feet for the first time in more than eight quarters as the market leveled out and stayed there. Absorption will increase in 2011 due to many economic factors such as job growth, interest from out-of-state companies and the surplus of foreclosures that are currently in somewhat of a holding pattern. This will give the market the boost it has so desperately needed. Phoenix will remain a tenant’s market throughout 2011 and into 2012. Rates will continue to fall through third quarter 2011 when rents will start to level out. Vacancy will start to decrease slightly and out-of-state tenants will come back to Phoenix for its business-friendly environment and declining real estate prices. An increase in jobs will follow as a precursor to positive absorption gains. New construction will be nonexistent through at least 2012 as the market rebounds and spaces are absorbed. This could take several years due to the glut of vacant space. With more than 12 million square feet of new speculative completions added during the last five years, in addition to the challenging real estate market, it will take some time for the market to bounce back. In 2011, tenants will have the opportunity to make attractive deals on space by taking advantage of lower rents and more concessions. Out-ofstate tenants will continue to migrate to Phoenix as they did in the past for the business-friendly atmosphere, lower real estate costs and affordable, educated employment base. This will breathe new life into the Phoenix economy. Landlords will renew tenants for
office market forecast
the short-term, enabling them to increase rents when the market rates trend back up in early 2012 and beyond. Landlords will remain aggressive with low rental rates and more concessions through 2011 to win new business. The scales will start to tip slowly back in their favor later in the year, creating more of a balance between their expectations and those of tenants. Tucson Forecast A diversified economy makes Tucson a prime growth area as the market continues to improve. Tucson has a good economic foundation that will serve as a catalyst when the market returns. The city is an emerging world leader in solar technology, home to the fastest growing privately held aerospace company, as well as a successful technology hub. The University of Arizona, situated in the center of the city, provides a well-educated employment base for companies looking to relocate here. The commercial real estate market was comparatively steady through 2010 with no major ups or downs in
absorption or vacancy overall. The market will show improvement in vacancy and absorption numbers as 2011 progresses. Construction will remain at low levels with the largest project being the 235,000-squarefoot UniSource Energy Services/ Tucson Electric Power Tower, scheduled for completion in the fourth quarter of 2011. The unemployment rate was 8.8 percent during October 2010, and is expected to creep up one more basis point in 2011, where it will level out by year-end. Job growth will come from the healthcare, tourism and high-tech industries, which will
come back to life as consumer confidence improves. Economic indicators such as retail sales are expected to increase, nearly doubling from the 4.6 percent annual increase in 2010 to 9.6 percent in 2011. Housing continues to struggle, as Tucson ranks first in the state of Arizona and 41st in the nation for foreclosures. The number of home foreclosures was cut in half during 2010 and will continue to fall through 2011 as the economy heals and banks work with homeowners via short sales or loan modifications. The region’s low cost of living will help offset other economic concerns until the market fully recovers. The market will strengthen in 2011 due to residential population growth and several established and growing industries such as aerospace, solar and healthcare, supporting the recovering Sun Corridor. Ruth N. Darby is the director of research services for Grubb & Ellis Company Phoenix. She has more than 10 years of experience in the commercial real estate industry. She can be reached at 602.343.7426. AF
ARIZONA FACILITIES FEBRUARY 2011 I 31
building controls
A Fully-Functional EMS Control System Keeps Buildings Green By Mark Strahan
O
ne well-known benefit of an Energy Management System (EMS) or a Building Automation System (BAS) is the ability to help control energy costs. When a building without an energy management system is retrofitted, it is not unusual to save 10 to 15 percent of the total energy required to operate the building prior to the retrofit. With utility rebates of up to 50 percent of the project cost available in most areas it is a no-brainer to consider retrofitting an existing building. EMS control systems in existing buildings must be maintained to continue realizing energy savings because individual components in older systems fail as they age. As this happens, the building will inevitably drift out of control and energy usage increases. In worst case scenarios, mechanical yards and other air conditioning equipment may be operating 24/7 just as if an EMS control system were never in place. If energy costs have increased and maintenance dollars are tight, it may be tempting to replace some components of the EMS control system with cheaper parts as they fail. This is seen most often in water source heat pump (WSHP) applications, where an EMS control board has been replaced with a programmable thermostat attempting to achieve similar results at a reduced cost. This approach is not recommended because it disables other benefits received by maintaining the integrity of the EMS control system. Consider the following benefits. Integrated control of the entire HVAC system helps avoid tenant complaints and unnecessary service calls while maximizing energy savings. WSHPs controlled by standalone programmable thermostats do not communicate with the EMS control system. This may result in locking out
the compressor in the WSHP if there is ever a heating or cooling call from the thermostat and the central plant has been turned off by the EMS. If a lockout occurs, a service call will likely be required to restart the water source heat pump. Now what? This condition will only repeat if the situation is left as it is. One alternative is to bypass the mechanical yard controls so the cooling tower and condenser water pumps operate 24/7. This choice negatively impacts energy costs and increases wear on the mechanical system. A better choice is to replace failed EMS controls with ones that communicate with the EMS. Keeping the EMS control system intact allows all WSHPs operate in conjunction with the mechanical yard, avoiding unnecessary service calls and tenant complaints. Remote access allows checking a system to determine what level of response is required. With stand-alone controls, someone must physically go to the unit and determine if it is operational. An EMS control system with temperature sensors in the discharge air of each WSHP unit allows remote checking. With internet access, you can log on and check without leaving your office or home, even if it is after hours. If an area is calling for cooling or heating, the discharge air temperature of the corresponding unit will indicate if it is working correctly or not. This capability saves an incredible amount of time. It will also eliminate service calls to your HVAC vendor to check units that are functioning normally. Temperature trending allows you to evaluate and respond to tenant comfort complaints. When a tenant comments about comfort in the space, it is relatively easy to trend the temperature in the space to determine if the tenants concerns are justified. The ability to know if and when temperatures are
32 I ARIZONA FACILITIES FEBRUARY 2011
outside of the lease requirements will help bring a speedy resolution to any comfort concerns. You can’t do that with a programmable thermostat. Scheduling and temperature set point changes are much simpler and far less labor intense with an EMS control system. Global temperature or schedule changes are murderous with standalone controls. Imagine the labor involved to reprogram 100 thermostats (100X15min/60 = 25 hours). An EMS controls system with global override capability would take about 15 minutes to reprogram the entire building and is far less mind numbing. EMS control systems are significantly more resistant to tenant tinkering. Standalone controls require constant oversight to be sure the programs and set points have not been tampered with. In one building surveyed, 23 of the 26 programmable thermostats were overridden to run 24 hours per day at the tenant desired temperature set point. When the building was retrofitted, the owner realized a 10 percent decrease in energy usage, even while allowing significant after hours timed override of the setback temperatures. Since EMS controls use a zone sensor without programming capability, temperature set points and allowable offsets can only be changed through the EMS controls system. This eliminates tenant tinkering with the “thermostat.� Mark Strahan is a 35-year veteran of the HVAC industry and is currently an account manager with Burt-Burnett, Inc., an HVAC mechanical service and digital controls contractor. Mark can be reached at 480.695.4168 or Strahan@burtburnett.com. AF
Valley Commerce Center, a Fenway Properties building in Phoenix, at 4745-4747 N. 7th Street. Photo courtesy Dale Hameister Photography.
Filling Vacancies
Standing Out in a Tenants’ Market By Justin Himelstein and Chris Walton
O
ne look at the numbers confirms it’s a tenant’s market when it comes to leasing office space in Arizona. The amount of available office square footage in metro Phoenix is at an all time high, with an overall vacancy rate of more than 27 percent. Rental rates continue to drop, with overall rates in the Valley around $25 per square foot for Class A space and $19 per square foot for Class B space. These rates are expected to dip further, with rental rates bottoming out sometime in 2011 or early 2012. The biggest challenge comes in the continuing lack of demand for space as net absorption was negative for six of the first nine months in 2010, and overall net absorption was only at 30,700 square feet through the first nine months of 2010. For building owners, those numbers may seem insurmountable. But before you lock the front door and walk away, you need to know there are tenants actively looking for office space in
Arizona. However, tenants who are shopping for office space in today’s market are smart. They understand they can upgrade to newer, nicer locations at prices that are below what they are currently paying in older, second-generation buildings. The trend of tenants looking to upgrade their address is known as “flight to quality,” and it is driving the majority of the deals in today’s market. While there are plenty of new, never occupied buildings to pick from, tenants are not necessarily only shopping these buildings, but they are using them as a baseline when they are comparing properties. As a landlord, you have to position your vacant office space to compete with new, first-generation space if you want to have a chance of tenants signing leases in your property. Invest in Spec Suites Invest in spec suites by turning a second- or third-generation, 10,000 square-foot space into four or five smaller suites. “Spec suites” typically
range from 1,200 to 5,000 square feet and offer a clean, modern office space for tenants to immediately occupy. Focus on the details: new paint, flooring, lighting and common areas such as lobbies, hallways and bathrooms. Tenants are looking at all aspects of a building. They want to see great landscaping, clean common areas and buildings with great “curb appeal.” If your building has a monument sign, offer sign space as a concession for tenants whose overall square footage wouldn’t have been considered in the past. Other concessions, including free rent, free covered, reserved parking and ample tenant improvement monies, are a reality in today’s market. Be Available Owners who make themselves or a representative available to meet with potential tenants during a showing provide a level of confidence for potential tenants. California-based
continued on page 34
ARIZONA FACILITIES FEBRUARY 2011 I 33
continued from page 33 Fenway Properties, which owns multiple office properties in Arizona, is a great example of availability. Company Owner Larry Jackel makes it a point to meet new tenants in person, joining potential tenants in meetings and tours whenever possible. He goes above and beyond to work with brokers and tenants to get a deal done and make tenants feel comfortable during the entire process. Jackel understands the challenges of today’s economy and offers tenants the appropriate market concessions. Show Financial Stability The market challenges have created a new scenario where tenants want to look at an owner’s financial stability. Landlords have always required financial statements from tenants, but today’s tenants need to know their property owner is financially strong and more than capable to cover their
property management tenant improvements and fully compensate their real estate advisors. Rely on Industry Experts Hire the right real estate landlord brokers to market your property. They are going to be your best marketing asset. Their knowledge, industry connections and market expertise will get more lease transactions completed for you. Be sure to also develop relationships with tenant representation brokers and make them aware that you will pay market commissions if they can bring you a viable tenant. Tenants actively looking for office space, whether it’s relocation, renewal or “recast” of their current lease, are going to look to tenant representation brokers as the expert for office space needs.Tenant rep brokers schedule property tours, analyze lease proposals, lease documents, provide financial analysis and guide their clients in making
34 I ARIZONA FACILITIES FEBRUARY 2011
important real estate decisions. With large blocks of office space available and lower rental rates, a desirable climate and a well-educated and available workforce, metro Phoenix is positioned to attract companies looking to relocate or add to their current operations. These factors should improve leasing as the Valley looks to 2011 and beyond.
Justin Himelstein is vice president and Chris Walton is senior vice president of the Office Services Group of Cassidey Turley BRE Commercial. They can be reached at 602.954.9000. AF
Q U A L I T Y FA L L P R O T E C T I O N
wall anchors
roof anchors
horizontal life lines
Work safe. Stay anchored. Creating a safe workplace for suspended work on the outside of your facility is a critical requirement. It is imperative that your property meet OSHA regulations and ANSI guidelines for fall-protection. American Anchor staff is uniquely qualified to assist you in meeting today’s demanding and often confusing OSHA and ANSI fall protection regulations. With over 700 completed projects across the county we have the experience you want. American Anchor will work closely with you to insure your property and your contractors are protected from harm. U The finest quality fall prevention equipment in the country U Stainless steel and hot dipped galvanized construction U Inspections and Certifications of existing systems U Professionally engineered and installed during construction or retrofit to any existing rooftop U Call us for a free evaluation of your current project and avoid costly liability
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