The Registry April 2010 Issue

THE

Registry BAY AREA real estate JOURNAL

Annual Life Science Issue Life Sciences Link In pg. 10

Biotechs Test Public Markets pg. 12

Long View Best for IPOs pg. 13 Countrywide Fights Back in San Francisco Superior Court pg. 8

The Refundable Non-refundable Deposit pg. 15

SPECIAL SECTION | IIDA 2010 International Interior Design Association: Northern California Honor Awards Winners pg. 17

Oakland Port: Steady as She Goes pg. 30

San Jose Airport Gets Handy pg. 32

State Takes on LEED pg. 33

Brokers Bend to Market pg. 34

By the Numbers: A Better CMBS pg. 42

Final Offer with Ezra Mersey To Market with One Hawthorne pg. 44

april 2010

速

WE BELIEVE IN LONG-TERM ENERGY,

SUSTAINABLE

MATERIALS, AND LASTING

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Builds it. Believes in it. Learn more about how we approach our projects, at 408-379-5500 or www.sbci.com.

RELATIONSHIPS.

Contents APRIL 2010

2010 IIDA Honor Awards:

Celebrating the Best in Left Coast Design pg. 17 photo b y interior images

6 News Desk

32 Design

A summary of recent planning decisions from select cities, news about the industry and people on the move

8 Residential Market Report It’s a Kind of MGIC

10 Feature Package

Life Science:

• Signs of Life • On the Precipice • The Great Hope of Public Offerings

15 Legal To Have and Have Not

17 Design I nternational Interior Design AssociationNorthern California Presents the 2010 Honor Awards Winners

30 Commercial • Port in a Storm

• Port Side

Hands Up

33 Green Shades of Green 34 Commercial Bigger is Badder 36 Rob’s REality The Three Dwarfs 38 REal People 2nd Annual Crew Careers Event 40 Commercial Lease Report 41 Commercial Sales Report 42 By the Numbers Getting Granny Back 43 Calendar of Events 44 Final Offer | Ezra Mersey

To Market, to Market

The Vibrant Life Sciences pg. 10

Contributors Randall Block To Have and Have Not, pg. 15

Randall Block represents businesses in real estate, commercial and insurance coverage and bad-faith disputes.

He has successfully prosecuted and defended big-ticket cases where more is at stake than the dispute itself. He has appeared on behalf of his clients in state and federal courts from California to New Hampshire. His practice includes arbitration, mediation and workout of disputes in addition to more traditional litigation. He is vice president of finance for the Board of Directors of the East Bay Agency for Children. He is also an editor for the California Real Property Journal.

Aleka Skouras Eisentraut Shades of Green, pg. 33

Aleka Skouras Eisentraut, an attorney with Wendel, Rosen, Black & Dean’s green building and real estate practices, handles real estate, business and land-use matters, including green-building and leasing issues.

She regularly represents landlords, tenants and developers on residential, retail, office, industrial and mixed-use projects, as well as entity formation, investment and general business matters. Eisentraut previously served as in-house counsel for a Northern California developer and is a frequent speaker on green leasing and green-building matters.

Media Partners The Registry would like to acknowledge its partnership with the following organizations:

Rob La Eace The Three Dwarfs, pg. 36

Responding to emergencies as a firefighter in a variety of uncertain situations and diverse neighborhoods taught Rob La Eace a lot about how people should be treated, not only during a crisis, but also in everyday problems. Today, these same skills are an asset to those who work with this San Francisco native in his career as a broker associate with McGuire Real Estate. The tools he puts to work as a firefighter are what makes the difference to the clients La Eace works with as an agent. While it may help that La Eace is the type of guy with a warm smile and a friendly attitude, his professionalism, organization and drive to succeed are what make him stand out in his career. Working in his sixth year in the industry, La Eace is in touch with his clients’ needs and with the city—putting a local’s perspective to work. n

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THE

Registry

TM

P.O. Box 1184 San Mateo, CA 94403 415.738.6434

Letter from the Publisher

Mission Statement The Registry is a real estate journal that aspires to fulfill the need of Bay Area professionals for accurate, unbiased and timely news, analysis and information.

Publisher Vladimir Bosanac vb@theregistrysf.com President Heather Bosanac 415.738.6434 heather@theregistrysf.com Editor-in-Chief Sharon Simonson 408.334.2512 ssimonson@theregistrysf.com Creative Director Karyn Charm Photographer Chad Ziemendorf Writers Jennifer Caterino, Michael Fitzhugh, Brian K. Miller, Diana Samuels, Jessica Saunders, Sharon Simonson Contributors Randall Block Aleka Skouras Eisentraut Rob La Eace Advertising 415.738.6434 Printer Bay Area Graphics www.bayareagraphics.com News news@theregistrysf.com Feedback letters@theregistrysf.com Subscriptions subscriptions@theregistrysf.com Ethics Policy The Registry embraces a strict ethics policy for its staff and contributing writers, including columnists and freelance reporters. No person employed by or affiliated with The Registry has accepted or will accept any compensation, monetary or otherwise, in exchange for editorial content. All information that appears in the magazine is selected solely for its informational value to readers.

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Dear Reader, April is upon us, and if you’re not going to be in Paris, the Bay Area is probably the second best place you could pick. Never mind the great weather, there’s a lot going on in the industry across our region, and if nothing else, it won’t be a boring season.

Recently, there has been a lot of merger activity among commercial brokers. Low revenues spur lower valuations, and consolidation seems to be the only way for anyone to gain any leverage in this market. Goodwill should help offset any profitability, but that’s probably by design. It is not a surprising occurrence, yet it sets the stage for innovation in the industry and posturing for an eventual turnaround.

In our piece titled “Bigger is Badder” on page 34, we explore the proverbial shuffling of the deck and try to understand how the new alphabet soup of commercial brokers will shape the way business is conducted. Brokers are joining global groups, trying to leverage recovery across the globe (mostly Asia) as a way to offset losses in other parts of the world (like Europe and the United States). They claim that big, institutional clients demand a one-stop shop to service all their needs. That may be so, but I was surprised not to see more reference to providing better service and a focus on nurturing their existing client base. After all, when all companies end up doing the same thing, how will we tell them apart?

Perhaps that’s an opportunity that a smaller, more focused player will seize.

One area where the brokerage community will have to pay special attention is a new California appellate court ruling that allows non-refundable deposits to actually be refundable. Randall Block, our columnist from Sedgwick, Detert, Moran & Arnold, explains on page 15 how a recent court ruling sets a new precedent for the industry on how courts will interpret the enforcement of non-refundable deposit agreements. All advisors, including brokers, in a property sale, whether commercial or residential, will have to thread carefully with their clients and help them understand how to maneuver through this new legal field.

This month’s feature focuses on what is probably the Bay Area’s brightest industry at the moment: life

sciences. Hundreds of companies dot our region in search for new cures, procedures and medical devices that enable us to live healthier and longer.

Our region features an impressive mix of four main ingredients that make the life sciences industry tick: ideas, money, talent and most importantly lab space.

As you will see in our feature package that starts on page 10 with a story titled “Signs of Life” by Sharon Simonson, our editor, no other region in the country is as rich as ours in these resources, giving the Bay Area an unprecedented advantage to compete on a global scale. This industry, like all others, is going through its own reformation, but its impact on our well-being, in many ways, is undeniable. Investments continue to pour into novel ideas, and its direct impact on jobs is visible. Optimism in IPO activity, as we’ve laid out in the article by Brian Miller on page 12, is returning. This important step in creation and disposition of companies is the engine that drives the Bay Area economy, and it will help repair the real estate industry across our region.

There is more good news in this issue starting on page 17. The Registry partnered once again with the International Interior Design Association of Northern California to celebrate the incredible creativity of our architects and designers. As you will see in this special section, a number of Bay Area professionals worked on tremendously creative projects around the globe that made a lasting impression on the industry and the judges. The association also continues its recognition of young, talented designers. This tradition is an important way to not only underscore the importance of design and architecture but also to encourage talented individuals to pursue their dreams of making lasting impacts on the structures and spaces that surround us. We congratulate all winners of this year’s IIDA awards.

As always, please send us your comments and feedback. We would love to hear from you. I can be reached directly at vb@theregistrysf.com.

Best regards, Vladimir Bosanac

Building Industry Conference Board invites you to their April luncheon

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10th and Market Street, San Francisco Date

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The City Club of San Francisco 155 Sansome Street San Francisco, CA 94104 Speaker

Derrick D. Roorda, SE, LEED AP Senior Associate Principal Desimone Consulting Engineers Buildings RSVP by Wednesday, April 7th: Dolores Glass, Chair Gallagher Construction Services (415) 288-1625 dolores_glass@ajg.com

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News

Desk

Planning News from around the Bay San Francisco 222 Second St. The San Francisco Planning Commission has completed a draft environmental impact report for Tishman Speyer’s proposed 26-story office tower at the southwest corner of Second and Howard streets. The draft EIR found significant unavoidable traffic impacts from the 222 Second St. office project. The commission held a public hearing on the document March 4 and the comment period closed March 15. Tishman Speyer is seeking to increase height and bulk limits on the entire site, which requires rezoning and a General Plan map amendment. The 430,650-square-foot tower would include 4,800 square feet of retail space, expected to be occupied by a restaurant or restaurants, an indoor park and 54 parking spaces on two basement levels. The site is currently a surface parking lot.

Oakland 471 and 477 25th St.; 474 24th St. Drew Mickel has applied to merge three lots into a singe parcel for establishment of an art gallery in a ground-floor commercial space. The proposal would require an interim conditional-use permit and a parcel-map waiver but is not subject to the California Environmental Quality Act. The property is zoned service commercial.

Hayward 2348 Industrial Parkway West Joseph and Sean Mulcahy requested approval from the city of Hayward to operate an auto-auction business on a 6.65-acre site owned by UPS where it formerly operated a distribution center. The property is on the south side of Industrial Parkway between Hall Road and Hopkins Street and is zoned industrial. City planning staff recommended the planning commission approve the application with conditions.

City of Hayward The city council approved extending the initial approval term for development applications from 12 months to 36 months. Planning commission staff believes

the additional time would keep Hayward competitive with other Bay Area cities and give developers more time to obtain financing for their projects. The change affects applications for site-plan review, administrative-use permits, conditional-use permits and variance applications. It applies to all unexpired approvals at the time of the council’s action.

Pleasanton Interstate 680 and Bernal Ave. South Bay Development Co. is expected to go before the Pleasanton Planning Commission this spring to seek approval to make the Pleasanton Gateway office development mixed-use, principal planner Janice Stern said. South Bay wants to add 136,000 square feet of retail, including a Safeway, to the 762,000-square-foot commercial office development on 39 acres. If the modification and rezoning are approved, the office space would be reduced to 589,000 square feet.

San Ramon 4700 Norris Canyon Rd. Sanorris Investments LLC is proposing 128 condominiums and a 17,370-squarefoot service commercial building on a 4.34-acre vacant parcel. The St. James Place mixed-use development is located within the proposed North Camino Ramon Specific Plan Area and has service commercial uses to the north and east and offices uses to the west and south, according to city documents. An environmental review is underway for the project, and the planning commission scheduled a workshop on it in mid-March. The proposal also will require rezoning, major subdivision and development plan approval.

Danville 150 Hill Rd. The Danville Planning Commission approved Davidon Homes’ development plan for seven previously approved lots at 150 Hill Road. The proposed homes will range from 3,906 square feet to 4,845 square feet, with two additional 450-square-foot second dwelling unit cottages approved for two of the lots.

The project has received a mitigated negative declaration of environmental impact under the California Environmental Quality Act. n

Sent to us Podcar Technology Forum Comes To San Jose San Jose has been chosen as the site for an international conference focused on developing podcars, a new type of automated transit technology.

Podcars are small, lightweight, driverless, computer-controlled vehicles operated on an elevated track. The system, also labeled personal rapid transit or automated transit network, is similar to a horizontal elevator. Riders can skip stations to go directly to a destination. Stations are off the main line, so travel is non-stop. The system costs less to build and operate than conventional transit.

Podcar City: San Jose, Innovating Sustainable Communities, will be held Oct. 27 to 29, at San Jose City Hall. The International Institute of Sustainable Transportation, a U.S. non-profit initiated by the Swedish Institute for Sustainable Transportation and California transportation and energy research institutes, is organizing the event. San Jose plans to build the first U.S. podcar system.

REITs Lead Real Estate out of Global Downturn Real estate investment trusts are leading other property investments out of the global economic downturn largely thanks to the resilience of the REIT model, according to Ernst & Young.

A 2010 report covers 16 of the world’s largest REIT markets and includes analysis of total rates of return, market capitalization and debt loads. It also gives an outlook for the global REIT sector.

Since March 2009, REIT markets around the world have seen significant shareprice increases. REITs also have raised billions of dollars in the stock market through secondary equity offerings to reduce debt, recapitalize balance sheets and prepare for the next growth wave.

“The turnaround in the global REIT market in 2009 is best shown by the fact that all REIT markets—except Japan—saw double digit positive returns for the year,” said Robert Lehman, global leader of Ernst & Young’s Real Estate Investment Trust practice.

Bay Area Shopping Centers Win Marketing Awards The International Council of Shopping Centers Inc. has recognized Northgate in San Rafael and San Jose’s Santana Row in its annual MAXI Awards competition.

The awards recognize superior marketing, community outreach, sales promotions and visual merchandising by U.S. retail real estate professionals and companies.

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Northgate won its award in the Grand Opening, Expansion and Renovation category. The council recognizes comprehensive campaigns to introduce or reposition a new, expanded or renovated shopping center. Northgate won for its “Rediscovering Northgate” campaign, spotlighting the transformation from traditional, enclosed center to modern indoor and outdoor shopping environment. Northgate is owned and managed

by Macerich.

Santana Row won for its iPhone application. The campaign created the first iPhone app for a regional shopping center. Within a week of the application’s release, there were over a 1,000 downloads. Santana Row is owned and managed by Federal Realty Investment Trust.

San Francisco Building First in Bay Area to Attain BOMA 360 The Market Center in the city’s Financial District has become the first in the Bay Area to attain BOMA 360 status. The award demonstrates that best practices in all major areas of building operations and management are in place, according to the Building Owners and Managers Association. The property, at 555 and 575 Market Street, is managed by RREEF and CB Richard Ellis Group.

“BOMA 360 goes beyond LEED (Leadership in Energy and Environmental Design),” a program of the U.S. Green Building Council, said Marc Intermaggio, executive vice president for San Francisco BOMA, an affiliate of BOMA International. The award criteria include energy efficiency, strong tenant care, community involvement, safety and emergency preparedness, state-of-the-art operations and efficient management practices.

Brokerage Expands into North Bay with Two Offices Cornish & Carey Commercial/ONCOR International has opened Larkspur and Santa Rosa offices. The Larkspur office, located in the Larkspur Landing Shopping Center, opened March 1 and will be home to 14 agents.

The Santa Rosa office, located in the Waterfall Towers at 2455 Bennett Valley Road, opened in March and will house six professionals. Senior Vice President Haden Ongaro will manage both offices with a focus on office, R&D, industrial and investment sales. He is expected to add experts in retail and multi-family. n

PEOPLE on the move Analyst Researcher Returns to Colliers Brad Van Blois has joined Colliers International’s Urban Landlord Partners as a sales associate and analyst. He most recently served as an appraiser at Integra Realty Resources Inc., a national commercial real estate appraisal, valuation and advisory firm with San Francisco offices. Prior to Integra, Van Blois worked for nine years at Cushman & Wakefield in San Francisco holding various positions, including Northern California research manager. Before C&W, Van Blois was the director of research at Colliers International, San Francisco.

American College of Construction Lawyers Selects President-Elect Farella Braun + Martel partner Deborah S. Ballati has been elected president-elect of the American College of Construction Lawyers.

She will be the first female ACCL president. Ballati served as chair of the American Bar Association Forum on the Construction Industry from 2002 to 2003. She is currently an arbitrator for the San Francisco Superior Court and the American Arbitration Association and has served as a Judge Pro Tem in the San Francisco Superior Court.

Commercial Brokerage Expands On Peninsula Grubb & Ellis Co. has added an industrial team to its Peninsula office. Mike Davis (top, left) and JP Custodio (top, right) join the company as vice presidents; Michael Draeger (bottom) joins as an associate.

Davis was a senior vice president at Coldwell Banker Commercial and is a top real estate broker in San Mateo County.

Custodio began his commercial real estate career with Coldwell Banker Commercial in 2001. He has leased and sold more than two million square feet of space throughout the San Francisco Bay Area.

Draeger has four years of commercial real estate experience.

Top Producer Jumps to Cornish & Carey Michael Maffia (left), Putnam Daily and Justin Stark have joined Cornish & Carey Commercial/ONCOR International to form the C&C Leased Investment Group—Maffia Team, based in San Francisco. The group joins the brokerage’s existing investment sales platform, led by President Erik Doyle.

The Maffia Team will continue to focus on the sale of properties leased on a net basis to national, international and regional companies.

Cassidy Turley BT Partner Inducted into Broker Hall of Fame Jim Kovaleski, a managing partner at Cassidy Turley BT Commercial’s San Jose office, has been inducted into the Association of Silicon Valley Brokers’ Hall of Fame. He was recognized for his leadership in real estate, helping to fulfill the Silicon Valley’s economic development goals. He has been an ASVB member since 1985 and served on its board since 2004.

Fitzgerald Abbott & Beardsley Adds Associate Oakland-based Fitzgerald Abbott & Beardsley LLP has hired Daniel B. Newbold as an associate in its Estates & Trusts and Tax Practice Groups. Previously an attorney with San Jose’s Hopkins & Carley, Newbold brings several years experience in estate and trust administration, probate, tax and succession planning.

Women in Construction Recognize Palo Alto Manager Debbie Fleser has been honored by the National Association of Women in Construction. A vice president for BCCI Construction, Fleser manages BCCI’s Palo Alto office, overseeing a regional team and supervising service delivery.

The award acknowledges Fleser’s years of service, innovation in the workplace and exceptional contributions to the business and other women in the industry. Fleser’s commercial construction career spans more than 26 years.

Chicago Brokerage Association Crowns San Francisco Broker The Council of Real Estate Brokerage Managers has announced its new president-elect, Brian Matza of Zephyr Real Estate in San Francisco. The council is a nonprofit for managers, brokers and owners affiliated with the National Association of Realtors.

Matza has been a real estate broker since 1984. He represents clients in the sale and acquisition of probate/estate, small commercial, residential and income properties. n

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It’s a Kind of Amidst an avalanche of defaults, private mortgage insurers are refusing to pay claims.

By Brian K. Miller

N

o private mortgage insurers survived the Great Depression.

Their survival this time around hinges on their ability to successfully deny billions of dollars in claims filed by the lenders they were created to protect. The two sides are now going toeto-toe in courts across the nation as each tries to minimize losses amid the worst financial crisis since the Great Depression. Two of the biggest players prior to the downturn—Countrywide Mortgage Co. and Mortgage Guarantee Insurance Corp.—are going at it in San Francisco.

Private-mortgage insurance is vital to the nation’s housing and mortgage markets. The operations of Fannie Mae and Freddie Mac—the nation’s largest secondary-market purchasers of single-family residential mortgage loans—are heavily dependent on private mortgage insurance.

Both Fannie and Freddie are restricted from purchasing conforming mortgages with loan-to-value ratios above 80 percent without some type of credit enhancement. Primary mortgage insurance underwritten by private mortgage insurers is the most used for their single-family mortgage purchases.

Despite being arguably less culpable for the mortgage crisis compared to others, private mortgage insurers still covered too many highrisk loans of too many high-risk borrowers. As a result, they are sustaining losses so severe that they are forced to operate based on waivers from capital requirements in order to continue to write new business.

The hope is that as the housing market rebounds, they can generate enough money from new premiums to get back on their feet.

During good times, private mortgage insurers make a lot of money, but in bad times, the industry can fail. During the Great Depression, it buckled under the weight of a nearly 50 percent mortgage default rate. Until 1957, government was the only source of mortgage insurance. That year, the Mortgage Guarantee Insurance Corp. was established, and between 1957 and 1973 all U.S. states (California in 1961) passed legislation allowing for private mortgage insurance, according to the Federal Housing Finance Agency.

Now bad times are back. Lenders in 2009 repossessed a record 2.82 million American homes, nearly a quarter of them in California according to RealtyTrac Inc. And the trend is not subsiding. One in every 21 California housing units is in some stage of foreclosure, and lenders are expected to take back at least three million homes in 2010, RealtyTrac estimates. As a consequence, nearly all of the nation’s mortgage-insurance firms have experienced huge financial losses and seen precipitous declines in the volume of new insurance written. Higher premiums are not nearly enough to make up the difference. Private mortgage insurers

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have paid $20 billion in lender claims over the past three years, according to industry trade group Mortgage Insurance Companies of America.

To limit losses, insurers have been working hard to limit claims.

Private mortgage insurers and financial guarantors that insure pools of loans have hired forensic auditors to pore over thousands of mortgage files searching for faulty documentation and any evidence to rescind policies.

Financial guarantors now expect several billion dollars in recoveries from previously paid claims from mortgage originators while mortgage insurers’ cancellation rates have shot up to 25 percent. That compares to historic averages of approximately 7 percent, according the Moody’s Investors Service. The rescissions cause lenders to buy back their loans from Fannie and Freddie, which aren’t allowed to own high-loan-to-value mortgages without insurance coverage.

Industry-wide, Moody’s estimates that mortgage insurers have rescinded approximately $6 billion in claims since January 2008 and could rescind $2 billion to $4 billion more in the next few years. In response, lenders have been taking them to court.

Calabasas, Calif.,-based Countrywide, the largest mortgage lender in the country and the nation’s only remaining independent lender until the crisis, filed suit against Milwaukee, Wis.,-based MGIC in San Francisco Superior Court in December. Countrywide alleges that MGIC, after reaping hundreds of millions of dollars in premiums through its participation in the housing boom, is now adopting unreasonable interpretations of its policy language to avoid paying claims. MGIC “jointly participated in selecting the types of loans that would be insured,” Countrywide asserts, and fully cooperated with lenders as the industry began to offer a broader range of mortgage products.

“MGIC never expressed significant concern to Countrywide about its underwriting practices until after the real estate market had collapsed and claims started to be made at an increasing rate,” Countrywide says. “As long as the real estate market remained relatively strong, and claims levels remained moderate, MGIC was happy to collect premiums on loans that were made based on existing underwriting practices, about which it was fully aware.”

On Jan. 26, MGIC chairman Curt Culver told analysts that during 2008 and 2009 the company rejected approximately $100 million of Countrywide’s claims. “The rescission practices disputed by Countrywide are no different than our general rescission practices, and we have not changed our general rescission practices in response to the lawsuit,” he said.

Jack Guttentag, professor of finance emeritus at the University of Pennsylvania Wharton School and the self-titled Mortgage Professor (www. mortgageprofessor.com), is conflicted about the case. In 2008, he penned an article defending private mortgage insurers as “the players who stayed clean.” He contends, however, that private mortgage insurers “did insure some risky loans that would not have been acceptable to them earlier.”

“Countrywide went the furthest in flouting the rules, from everything I have read, but not paying off on insurance is a bad precedent that will weaken the mortgage-insurance industry because it won’t be as valuable to lenders as they previously thought it was,” Guttentag said.

Specifically at issue is an “incontestability” policy provision. Countrywide says the clause means MGIC cannot rescind coverage for a loan or deny a claim unless it can prove Countrywide or another first party involved in originating the loan knowingly made or participated in misrepresentation. Countrywide contends that MGIC has now decided that the burden of proof actually falls on the lender and that its rescissions and claim rejections have been based on “second- or third-hand accounts … or unsubstantiated hearsay.” Countrywide wants a jury to settle the dispute.

According to Jesshill Love, a partner a Ropers Majeski Kohn & Bentley in Redwood City (Jesshill Love is a member of The Registry’s Editorial Board) and an expert in business and real estate litigation, San Francisco offers the likelihood of a favorable jury.

“A company like Countrywide will look into the jury selection issue very diligently prior to filing any type of high-level litigation in the same vein as companies will choose venues in Texas for patent litigation,” he says. “San Francisco has historically had a very liberal jury pool.”

The lawyers for each side did not respond to requests for comment.

Until 2007, private mortgage insurance policies were among the most profitable types of coverage sold by property and casualty insurers. From 2004 to 2006, members of trade group MICA reported a profit margin of at least 35 cents for every premium dollar collected, according to BusinessWeek.

When things go bad, however, they go worse for mortgage insurers. According to its year-end report filed at the end of January, MGIC Investment Corp. has been spending $3.02 on claims and expenses at its mortgage business for every $1 it collects in premiums. And, that is after rejected claims reduced its costs by $1.2 billion in 2009, a rejection level it admits it may not be able to maintain.

MGIC lost $280.1 million in the fourth quarter, up from $275.6 million in the same year-earlier period. Nearly 18.5 percent of MGICinsured loans were delinquent at the end of the 2009, compared with 16.9 percent at the end of the third quarter, 12.4 percent at year-end 2008 and 7.45 percent at year-end 2007.

MGIC’s stock price remains more than 90 percent below its all-time high of $78.94 achieved in 2004, and its future is uncertain. The company recently advised that its efforts to write new mortgage insurance through a sister company are “driven by our belief that in the future MGIC will not meet the minimum regulatory capital requirements to write new business.”

Indeed, the outlook for the entire industry sector will remain negative throughout 2010, according to Fitch Ratings. The agency’s perspective incorporates expectations for continued high prime-mortgage delinquencies coupled with home prices that are unlikely to rebound in the near term, causing elevated default and loss rates.

“The longer-term outlook for the industry remains uncertain and is likely to be tied to the ultimate future form of the GSEs (government

sponsored enterprises Fannie and Freddie) and their demand for private mortgage insurance,” Fitch states. New private capital is preparing to enter the market unburdened by past practices, it says.

Historically private mortgage insurance has fulfilled two roles, Guttentag says. One was to diversify risk geographically, which they could do because they operated nationally. The larger exposure was particularly valuable for a system with thousands of small lenders. Now that most of the loans being written are sold to Fannie or Freddie or underwritten by the FHA, all entities with a national scope, that function has mostly gone away.

The other long-standing reason to use private-mortgage insurers is that they can reserve against future default losses more effectively than lenders or other players can, Guttentag says. That is because as insurance companies, they do not have to pay income taxes on the 50 percent of their premiums they place into contingency reserves. A bank cannot do the same.

“That’s still a viable function—maybe even more important than it ever has been,” Guttentag says, though again, insurers’ decisions to try to evade client claims will also undermine it.

As for the future of Fannie and Freddie, Guttentag believes they will change very little in the short term because they are essential to any near-term housing recovery.

“Not paying off on insurance is a bad precedent that will weaken the mortgage-insurance industry because it won’t be as valuable to lenders as they previously thought it was.”

Jack Guttentag, professor of finance emeritus, University of Pennsylvania Wharton School

“Nobody knows at this point what is going to happen with Fannie and Freddie, least of all [U.S. Rep.] Barney Frank, and that’s a real conundrum because they are a major part of the system now as some three-fifths of all loans being originated are going to the agencies,” he says. “There’s no possible way to reconstruct what they are that isn’t going to interfere with their ability to continue functioning, and they are absolutely needed; the housing system would collapse without them.”

On Feb. 24, just before the deadline for their response to Countrywide’s complaint, MGIC filed a demand for arbitration. A hearing is set for April 2 in U.S. District Court in San Francisco. Countrywide wants the case remanded to state superior court in San Francisco.

MGIC says Countrywide loans defaulted at a disproportionately higher rate than those of other mortgage lenders. In recent years, Countrywide loans have defaulted at more than 150 percent of the rate associated with other lenders MGIC insured. MGIC claims its investigations reveal that Countrywide submitted thousands of applications for insurance that were ineligible for coverage or were riddled with materially false information.

Based on the evidence it obtained during its research, MGIC has exercised its right to rescind or deny coverage of approximately 1,400 Countrywide claims at issue—at least so far—in the dispute. n

april 2 0 1 0

theregistrysf.com 9

I

Signs of Life

Real estate adapts as the life-science sector manages recession and structural change.

By Sharon Simonson

10 theregistrysf.com

april 2 0 1 0

magine that you are experiencing early stage Alzheimer’s but that you don’t know it yet. Increasingly, your doctors may. Driven by advances in medical knowledge and information technology, doctors today can “see” neurologic disease at work in living people, “in some cases before the diseases even begin to express themselves clinically,” says Stephen L. Hauser, chairman of the University of California, San Francisco Department of Neurology.

With work and collaboration, these insights should lead to better treatments and even cures, he says. If all goes as planned, some of those cures will materialize in the latest addition to UCSF Mission Bay: the $200 million Neurosciences Laboratory and Clinical Research Building.

At the heart of the mushrooming campus, the building is as fitting a symbol as any today of the change in the global health care industry from hospitals to pharmaceutical companies to biotech and medical-device firms. While the building promises to be packed with state-of-theart equipment, more important is the diversity of people and disciplines that will occupy it.

Progress fighting neurologic disease has been slower than advances against cancer and cardiovascular disease, Hauser says. The reasons are complex, relating to the market and difficult medical problems. To solve the riddle, the basic structure of the intellectual model must change, he says. “I am speaking about patients, research physicians, basic scientists, experts in information technology, bioengineering, imaging and stemcell biology—all of the technological drivers coming together.”

Welcome to the health care future and the future of one of the Bay Area’s most important industries. From its roots in the highly vertical days of big pharma and blockbuster drugs, the life-sciences industry is undergoing rapid change. The days when pharmaceutical behemoths acted as the industry’s central command are fast-receding to reveal a much larger industrial cluster in which pharma is but one part. Traditional partners in biotech, medical-device companies, academia and research institutions remain, but new classes of companies including Silicon Valley information technology firms, large retailers and nonprofits are joining them. “[T]he locus in Pharma 3.0 will be patients,” not big pharma, says Ernst & Young in “Progressions: Pharma 3.0,” its 2010 report on the global pharmaceutical industry.

Since 2007, IT behemoths Google Inc., Apple Inc. and Microsoft Inc. have created services aimed at helping consumers take care of their health, Ernst & Young says. On March 1, San Jose-based Cisco Systems Inc. introduced its HealthPresence long-distance medicine platform.

The system not only allows doctors and patients to see and speak to one another remotely, it allows the collection of real-time vital signs such as blood pressure, pulse rate and blood-oxygen levels. Patients and doctors both see images taken with an ear, nose and throat camera. Both doctor and patient can hear the patient’s heartbeat. The system also incorporates electronic records that a patient can access after the fact. “It takes health care to a different dimension,” says Christopher Barker, communications manager for Cisco’s Global Health Practice.

rendering and photo o f D r . H auser C O U R T E S Y O F U C S F

Such devices also produce reams of data that, if organized, could in turn engender more medical advances. So do patients armed with mobile phones, the Internet and other electronic devices where they can research health topics, correspond with health care providers, receive reminders to take medication from devices embedded in the pill itself and monitor, in real-time, indicators such as blood sugar levels.

The Bay Area life-sciences cluster boasts a lot of first positions. With the new, 237,000 square-foot neuroscience building and the existing Arthur and Toni Rembe Rock Hall building, UCSF will have one of the biggest neuroscience complexes in the world with more than 400,000 square feet, said Nobel laureate Stanley B. Prusiner, director of the Institute for Neurodegenerative Diseases, one of the programs that will be based in the UCSF building.

The Bay Area has more standing lab building square footage than any other U.S. life science market: 28.5 million square feet, according to Green Street Advisors in Newport Beach. The next largest market, the eastern corridor between Pennsylvania and New Jersey, has 18.5 million square feet, and the Boston-Cambridge cluster has 15.3 million.

The region also supports the largest number of medical-technology companies of any in the country, E&Y says. Last year, Ernst counted 219 medtech companies in Northern California. That compared to 123 in Southern California, the next largest market. Medtech includes medical-device, diagnostic, drug-delivery and analytic-tool companies.

Of the 10 fastest-growing occupations in San Francisco and San Mateo counties, five relate to biology, medicine and science. In the decade ending 2016, the fastest-growing job class is projected to be biomedical engineering, according to the state. The counties will add 2,150 life-science jobs for a total of 7,690. Another 1,650 medical scientists, earning a median of $88,000 apiece, will be added in the same time for a total of 5,340. Medical scientists are researchers who study disease and human health not practitioners who treat patients.

Venture capitalists continue to view the life-sciences sector with favor—more favor even than clean tech. Total venture investing, a particularly important metric to the Bay Area, was down 37 percent last year to $17.7 billion, its lowest level since 1997, according to a MoneyTree Report. But the decline in biotech financing was much less profound.

Down 19 percent year-over-year, biotechnology still captured $3.5 billion in 2009, the most of any investment category, PricewaterhouseCoopers and the National Venture Capital Association say. Medical devices, the third-largest investment sector, took in $2.5 billion. The overwhelming majority of Northern California medical-technology companies are venture-backed, Ernst says. Venture investment in clean-tech companies fell 52 percent last year.

How all of this impacts the sector’s real estate is evolving, says John Stewart, an analyst with Newport Beach-based Green Street Advisors Inc. As big pharma reinvents itself, large companies are merging. At the same time, research is being decentralized, with big pharma relying less on the traditional model of growing new drugs in-house to buying more of its pipeline from independent biotech companies. That means less demand for big campus space and more for start-ups, he says.

“Only two in 10 drugs make it, and it costs more than $1 billion to get each drug through the [Food and Drug Administration] process,” Stewart says. “It is a better strategy [for big pharma] to buy the winners rather than incubating all 10. This way they can pick off the one that makes it. Essentially they are outsourcing risk.”

Stewart tracks Alexandria Real Estate Equities Inc. and BioMed Realty Trust Inc., both large real estate investment trusts supplying office and laboratory space to the Bay Area life-sciences industry. Alexandria dominates development at Mission Bay, where at build out, it expects to have invested $1.4 billion to create 2.7 million square feet of space, an 85 percent market share, according to Green Street research. Alexandria is responding to new realities, particularly at Mission Bay, Stewart says.

“They have short-term, plug-and-play space that is divisible into smaller suites. That has been a focus, and they have incubated some start-ups as well.”

Alexandria Chief Executive Officer Joel Marcus told analysts on his last conference call that the company also is moving forcefully into partnerships with higher education. “Given endowment challenges, there is even more reason to think about using their land for something other than just traditional academic buildings,” he said. He promised a major announcement of “a signature building on a major university campus that would be credit-tenant leased in a majority to that university but with an exciting set of [other] tenants” as well. Alexandria has an existing relationship with the Massachusetts Institute of Technology in Cambridge. MIT is one of the company’s largest tenants, and Alexandria owns additional development property adjacent to the MIT campus.

San Francisco’s McCarthy Cook & Co., the co-developer of the new UCSF neuroscience building, is achieving something similar. In this case, the university owns the land and will lease it long term to developers Edgemoor/McCarthy Cook Partners, according to a UCSF news release.

Edgemoor is the development arm of the general contractor, Clark Construction Group. None of the lease costs are expected to come from the state. Instead, they will be paid through philanthropy, research grants and other funds. At the end of the lease term, the building becomes the university’s. Internationally renowned architect Skidmore Owings & Merrill LP is the designer.

Above: UCSF Neurosciences building at Mission Bay Opposite page: Stephen L. Hauser

continued on page 14

“I am speaking about patients, research physicians, basic scientists, experts in information technology, bioengineering, imaging and stem-cell biology—all of the technological drivers coming together.”

Stephen L. Hauser, chairman of the University of California, San Francisco Department of Neurology

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theregistrysf.com 11

By Brian K. Miller

B

ay Area biotech and pharmaceutical companies are among those probing public markets. Hayward’s Anthera Pharmaceuticals Inc. went public in March this year; others have yet to file SEC forms but are on radars.

Anthera is developing products to treat respiratory, cardiovascular and autoimmune disorders. It sold shares to the public on March 4 at $7 a share and was holding its own in the days that followed. The company has a drug ready for final trials and two others ready for Phase II trials.

BNet Pharma, an industry Web site, asked bankers and venture capitalists late last year which companies they believe are the next biotech IPO contenders. Two of the five are from the Bay Area: Menlo Park’s Pacific Biosciences Inc. and South San Francisco’s Portola Pharmaceuticals Inc. Those two and two more, Kalobios Pharmaceuticals Inc. in South San Francisco and IZumi Bio in San Francisco, made a top15 list of 2009 up-and-comers published by FierceBiotech, another industry Web site.

Pacific Biosciences has raised $188 million of venture capital in the past two years and $260 million all told. It introduced its realtime DNA sequencing platform in February at a Florida conference.

The six-foot-wide, 1,900-pound machine is reportedly capable of mapping the human genome in less than three hours. It expects to be shipping the first 10 beta units late this year. The company’s ultimate goal is to whittle the mapping time to just 15 minutes. At the event, PacBio Chief Executive and Chairman Hugh Martin hinted strongly that he is positioning the company for a public offering.

Portola Pharmaceuticals has raised more than $200 million in venture capital and has cut a $575-million deal to sell Novartis Pharmaceuticals Corp. an anti-platelet drug now in Phase II trials.

Portola also has agreed to sell Merck KGaA a Phase II anticoagulant for $470 million, according to BNet. It has three preclinical programs underway in thrombosis, cancer and inflammatory diseases, according to FierceBiotech. The company reportedly has enough money to fund itself for the next few years.

South San Francisco’s KaloBios Pharmaceuticals is developing therapies to fight bacterial infections in cystic-fibrosis patients and to treat autoimmune diseases like asthma and rheumatoid arthritis.

Chief Executive David Pritchard told Fierce Biotech last summer that “it looks like there might be an IPO window” in 2010.

Last year’s merger of iZumi Bio, a research firm specializing in stem cells, with Pierian, a similar company, formed iPierian Inc., now in South San Francisco. The merger is meant to speed development of regenerative therapies. In February the new company announced the addition of Michael C. Venuti as its president and chief scientific officer. n

12 theregistrysf.com

april 2 0 1 0

Bay Area Biotech Companies Poised to go Public Anthera Hayward IZumi Bio San Francisco KaloBios Pharmaceuticals South San Francisco Pacific Biosciences Menlo Park Portola Pharmaceuticals South San Francisco

photo b y C had Z iemendorf

Bay Area life science companies look to public markets.

Precipice

On the

The Great Hope of Public Offerings

The market looks to IPOs to create companies to fill buildings.

By Brian K. Miller

L

ong-term Bay Area residents know what strong venture-capital investment and public-market financing can do for real estate. At the end of the millennium, Silicon Valley landlords and home owners got a front-row seat. The one-two from VC investment and an explosion of initial public offerings rendered a gusher of company creation. In 1999 and 2000, more than 400 companies a year went public, according to the Wharton School of the University of Pennsylvania. Their demand for work space and Bay Area housing pushed commercial vacancy rates below 5 percent and hurled housing prices into the stratosphere.

In the last two years, however, the regional economy has suffered in part due to a weak IPO pipeline. Only 121 companies total went public in the United States in 2008 and 2009, according to IPOScoop.com. In the four preceding years, more than 200 went public each year. A stronger flow of newly public companies won’t solve commercial property’s serious problems. But “it sure would help,” says Erik Doyle, president of brokerage Cornish & Carey Commercial in Santa Clara (Erik Doyle is a member of The Registry’s Editorial Board).

The outlook for IPOs improves the longer your perspective, says John Fitzgibbon Jr., owner and publisher of IPO Scoop, which tracks the IPO market. “Scoop” stands for “[Wall] Street Consensus of Opening-Day Premiums.”

“It all has to do with the stock market,” Fitzgibbon says. “It is the wind, and it is either in your face or at your back. You also need an industry sector to be hot.”

Right now, technology is hot.

As of early March, the14 IPOs so far this year (including three Bay Area companies) were trading on average 4.13 percent higher than their issue price; the last 100 IPOs were trading 9.44 percent higher, both far better than the Nasdaq Composite Index during the comparable periods, he said.

Doyle says the companies on his radar screen include Palo Altobased social networking site Facebook Inc. In November, it created a stock structure that many believe to be a precursor to going public.

If it is successful, it could prompt San Francisco-based Twitter Inc. and Mountain View’s LinkedIn Corp., also social networkers, to follow suit. San Francisco user-review site Yelp Inc. also seems a candidate as does Internet telephone-service Skype Technologies S.A. EBay sold 70 percent of Skype to private investors late last year.

“We’re beginning to see the IPO market showing signs of life but nothing near a consistent profit” says Ralph Shaw of Portland, Ore., Shaw Venture Partners. Shaw’s investments helped launch Costco Wholesale Corp. and Mountain View-based Actel Corp., a programmable chip maker.

The cycle starts with venture capital. Total venture investment fell precipitously in 2009 to $17.7 billion, the lowest level since 1997.

Still, California companies took in $8.86 billion, half the venture dispersed nationwide. Nearly 80 percent came to Silicon Valley, according to Thomson Financial, which produced the data for the National Venture Capital Association and PricewaterhouseCoopers LLP. According to their report, seven of the 10 largest venture investment deals in the U.S. last year involved Bay Area companies.

Of the last 100 U.S. IPOs, eight involved Bay Area companies, five of which are trading above their offering price, according to IPO Scoop and SEC filings. They include Sunnyvale network-security company Fortinet Inc.; San Francisco’s OpenTable Inc., an Internet-based restaurant reservations company; ArcSight Inc., a Cupertino software company; and San Francisco-based Visa Inc. The next 100 IPOs could easily include a dozen or more Bay Area companies, several from the clean-technology industry. Silver Spring Networks Inc. in Redwood City makes automated software for utility companies for measuring and controlling energy use in homes and businesses. Fremont’s Solyndra Inc. is a solar-panel manufacturer. Tesla Motors Inc., which is moving from San Carlos to Stanford Research Park, makes electric cars. All three were top venture money recipients in 2009.

Tesla and Solyndra have filed prospectuses with the SEC. Silver Spring Networks has not but still may be closer to an IPO than either of the other two. The company has selected managers for an initial public offering midyear, according to a March report in Dow Jones Clean Technology Insight. It also has attracted approximately $250 million in venture money, including a $105-million round in December. continued on page 16

“When you’re on your back looking up, everything looks good.”

Mike Selfridge, regional manager, Silicon Valley Bank

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theregistrysf.com 13

Signs of Life

Bay area lab space

continued from page 11

San Francisco 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0

0%

1.46%

5.72%

5.72%

Q309

Q409

South San Francisco Q109

Q209

6,000,000

9.71%

10.67%

8.36%

7.46%

Q309

Q409

18.21%

18.01%

16.35%

Q209

Q309

Q409

5,000,000 4,000,000 3,000,000 2,000,000

Emeryville/Berkeley

1,000,000

6,000,000

0

5,000,000

Q109

Q209

4,000,000 3,000,000 2,000,000

5.74%

6.41%

5.78%

6.81%

Q109

Q209

Q309

Q409

1,000,000 0

Mid-Peninsula 6,000,000 5,000,000 4,000,000 3,000,000

19.27%

2,000,000

South Peninsula

1,000,000

6,000,000

0

5,000,000 4,000,000

5.64%

9.61%

9.56%

8.43%

Q109

Q209

Q309

Q409

Q109

3,000,000 2,000,000 1,000,000 0

East Bay North 6,000,000 5,000,000 4,000,000 3,000,000

23.07%

26.76%

27.19%

27.19%

Q109

Q209

Q309

Q409

2,000,000

East Bay South

1,000,000

6,000,000

0

5,000,000 4,000,000

36.12%

38.71%

40.08%

41.90%

3,000,000 2,000,000

n Vacant

1,000,000 0

n Leased

% Vacancy Rate Q109

Q209

Q309

Q409

Source: Cornish & Carey

14 theregistrysf.com

april 2 0 1 0

None of this is to say that the life-sciences industry has escaped the wrath of the recession.

Though it remains a darling of venture capital, the absolute drop in dollars invested coincides with a larger turn to austerity across American enterprises and households that has become an industry touchstone, too. For Bay Area start-ups, that has meant making “due with what you have or finding facilities that most meet your needs then doing minimal renovation,” said Long Nguyen, a project executive for Skyline Construction in Santa Clara. Nguyen is an architect and a laboratory and production-facility expert.

Mergers and acquisitions, including Roche Holding AG’s purchase of South San Franciscobased Genentech Inc., also are not doing his industry any favors, Nguyen says. As an executive who worked for life-science companies for two decades, Nguyen knows the patterns well.

Merging companies are typically driven by an expectation of savings, which inevitably produces layoffs and real-estate consolidation. “Genentech for years has been like a golden goose for certain contractors,” he said. How Genentech and Roche will behave going forward is a looming question. Nguyen expects some relief as the economy recovers.

His optimism appears well-placed. According to MoneyTree, fourth-quarter venture funding for biotech rose 10 percent to $1 billion compared to the previous three months. Medical device funding also rose 13 percent quarterover-quarter to $719 million.

Scott Morrison, a well-known and respected E&Y executive based in Palo Alto who follows biotech and medtech, agrees. Both have been able to raise billions of dollars in new funding in the last eight months, with most of it going to public companies. Private companies are next, he says.

“Both are still growth industries,” he says.

The Bay Area’s long-term business and cultural ties to Asia will drive local growth too.

Asia will be a source of additional funding and an obvious expansion market as more people move into the middle class and as China steps up health-care quality and availability for its citizens. “Chinese companies may want to use the Bay Area as a beachhead to launch their companies in the United States, and they will build on the natural affiliation that is already there in the high-tech industry,” Morrison says. n

legal

To Have and Have Not A new California appellate court ruling finds that non-refundable deposits are in fact refundable.

By Randall Block

I

n a decision sure to raise a few eyebrows, the California Court of Appeal has ruled that a seller of real property must return a non-refundable deposit.

The dispute arose out of plaintiff Bradford Kuish’s agreement to purchase William and Rhonda Smith’s Laguna Beach home for $14 million. In the agreement, Kuish was required to make two non-refundable deposits totaling $620,000, with which he complied, although he later decided not to purchase the home. After the escrow was cancelled, the Smiths accepted a backup offer and sold the property for $15 million to a third party. The Smiths, however, refused to return Kuish’s deposit, and he sued.

Despite issuing a ruling that would surprise many experienced California real estate brokers, agents and attorneys, the court found in favor of Kuish by relying on established precedent. The court ruled that a non-refundable deposit may only be retained by a seller to the extent and in the amount that the seller incurs damages as a result of the breach. Real estate brokers and agents should take care to advise their clients that in today’s California, a non-refundable deposit is not really non-refundable.

The effect of the ruling is broad. It applies equally to residential and commercial real property sales. And, it applies on a going-forward basis and to past transactions. Brokers, agents and attorneys who have represented buyers in transactions where sellers retained a deposit after a buyer’s breach should review the transactions to determine whether the buyers have a right to recover a deposit they thought was lost.

The appellate court analyzed the issue in light of damages suffered by the seller. The seller’s main measure of damage is the difference between the contract price and the property’s value at the time of breach. During a period of flat or rising property values, where the seller sells the property to another buyer for a price equal to or greater than the value of the contract, there are no loss-of-bargain damages.

Relying on a 1951 California Supreme Court decision, the Court of Appeal found that allowing a seller to retain a deposit where there are no damages would result in an invalid forfeiture. The Supreme Court decision involved a seller who sought to retain a down payment after the buyer breached an agreement. In the case, the buyer agreed to purchase two lots for $18,000.

He made a down payment of $2,000 but later repudiated the agreement and demanded return of his money. The seller cancelled the escrow and sold the two lots to a third party for $20,000. The Supreme Court concluded that be-

cause the seller “resold the property for $2,000 more than [the original buyer] had agreed to pay for it, it is clear that [the seller] suffered no damage as a result of the buyer’s breach. If [the seller] is allowed to retain the amount of the down payment in excess of its expenses in connection with the contract [he] will be enriched and plaintiff will suffer a penalty in excess of any damages he caused.” Although the decision did not involve the term “non-refundable,” the issues were otherwise identical.

Following the Supreme Court, the appellate court in the Laguna Beach case determined that the non-refundability provision was unenforceable. It found that any provision by which money or property would be forfeited without regard to the actual damage suffered constitutes an unenforceable penalty. As such, a deposit kept by the seller after resale of the property for more than the original contract amount is a penalty absent a showing of actual damages. The court was plainly concerned that a contrary result would mean that the more money a purchaser tendered to the seller (that is, the more a purchaser had performed), the greater the penalty would be. Such a result fails to consider the degree of culpability, and its severity increases as the seriousness of the breach decreases. Thus a purchaser who breaches a contract before making a down payment or deposit would suffer no penalty, whereas one who has almost completely performed under the contract would suffer the maximum penalty.

Nor can forfeiture be justified as punishment for willful breach. The law does not generally authorize punitive damages for breach of contract, even where the breach has been willful.

The effect of the ruling is broad. It applies equally to residential and commercial real property sales. And, it applies both on a going-forward basis and to past transactions.

Finally, the court found that to construe the term “non-refundable” to mean that the seller was entitled to the full amount without regard to actual damages would be tantamount to creating a liquidated-damages provision.

Although the Kuish parties agreed the contract did not contain a liquidateddamages provision, the court discussed briefly the requirements for such a provision. The court noted that a liquidated damages provision in a contract for the sale of real property is presumptively valid if the amount of damages agreed upon is a reasonable estimate at the time the parties entered into the contract; but, a liquidated-damages provision is enforceable only where the parties, at the time they entered into the contract, would have had great difficulty determining the actual damages resulting from a future breach.

For brokers, agents and attorneys who represent parties in real estate transactions, the Court of Appeal has made clear that a non-refundable deposit is not really non-refundable. A seller who wishes to keep a down payment if the buyer breaches the contract should not use a non-refundability provision to accomplish that end. Liquidated damages may be enforceable under the proper circumstances. However, if the seller’s goal is to retain a sum certain for agreeing to sell real property, an even better way to reach that goal is through an option contract. An option payment is by its very nature non-refundable, and as long as it is a true option, it will provide the most protection for a seller who wants to keep a deposit if the buyer decides not to go through with the purchase. n Randall Block can be reached at 415.781.7900 or randall.block@sdma.com.

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theregistrysf.com 15

The Great Hope continued from page 13

300 250 200 150 100 50 0

Several other Bay Area companies have already filed to go public.

The most likely near-term IPO may be Palo Alto’s Financial Engines Inc., which advises people on retirement planning. Others include Petaluma’s Calix Networks Inc., which makes optical-networking technology to help phone and cable companies increase the capacity of copper and fiber networks; Meru Networks Inc. in Sunnyvale, which makes equipment and software used to build wireless networks; and Codexis Inc. of Redwood City, which creates chemicals used in the drug and biofuels industries.

Not everyone is sanguine. Mike Selfridge, regional manager for Santa Clara-based Silicon Valley Bank, which finances venture-backed companies, says the IPO market has gotten much tougher for small companies. “When Intel went public, they were a small company valued at $53 million and their IPO was for $8 million. What if Intel had been sucked up by some competitor in Asia?”

IPO Ac

Year

250 200 150 100 50 0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: IPOScoop.com

Another potential counter to the benefit of a stronger IPO market is the new global order. “I think you could have a lot of IPOs in the Bay Area and have a lot of companies growing at very high multiples and still not see a lot of real estate and job growth,” Selfridge says. “There’s still a correlation with strong growth and real estate, but it may not be as pronounced today as it would have been 20 years ago.”

A November 2009 report by public company auditor Grant Thornton LLP casts doubt on the long-term health of U.S. stock exchanges overall. “A wake-up call for America” shows an absolute 22 percent decline in the number of listed companies on the New York, NASDAQ and AMEX exchanges from 1991 to 2008. Allowing for inflation-adjusted GDP growth, the listings are down 53 percent. Total U.S. listings peaked in 1997 at 8,823; there were 5,401 at the end of 2008.

“The Great Depression in Listings” has been caused by “… an array of regulatory changes,” the report says. The changes “were meant to advance low-cost trading, but have had the unintended consequence of stripping economic support for the value components” that can support small-cap companies, the report concludes.

As for people’s optimism about 2010 initial offerings, it’s mostly relative to the past two crummy years, Selfridge says. “When you’re on your back looking up, everything looks good.” n

16 theregistrysf.com

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play Best in Show & Play Honor Award The Royal Hawaiian Hotel, Waikiki, HI Firm: Philpotts & Associates, Inc., Honolulu, HI Client: Kyo-ya Hotel & Resorts Project:

UPDATED CLASSIC: Fondly known as the “Pink Hotel” to islanders and visitors

Design Team: Marion Philpotts-Miller, Lowell Tom, Lynn Arriola

Project Team: General Contractor: Swinerton Builders

alike, the challenge of this historic renovation was to satisfy all of the different audiences – the client with Asian sensibilities, the operator with stringent brand standards, the new user group with expectations of what luxury means today, a historic preservation group with nostalgic ties, Kama’aina with local and cultural ideals and the Mainland visitor with romantic visions. Add an aggressive schedule and a scant furniture budget and you have the challenge that faced the Royal Hawaiian Hotel.

Architect: WCIT Architecture

Special attention to the hotel’s signature pink hue was addressed by maintaining the old color but reinterpreting it in unexpected ways through wall coverings, paint and fabrics. Various shades of green were added to bring the tropical location inward, blurring the line between interior and exterior. In order to bridge the historic restoration issue while adding contemporary elements, Modern Classic furnishings were selected to complement the landmark hotel. Nods to traditional island patterns and furnishings are seen in the stylized wall coverings, whicker lanai chairs and Koa style front desks. The classic Moorish lines of guest room furnishings, made fresh with modern lacquer finishes, complete the balancing of old with new.

Photographer: Art Gray

Play Merit Award Four Seasons, Bora Bora, French Polynesia Firm: BAMO, San Francisco, CA Client: TB Promotion Project:

SOUTH SEA ESCAPE: Placing value on the views as well as its cultural

context, the resort’s design honors its incredible location without a thematic approach. Inspiration is drawn from elements specific to Bora Bora, including local tools, small utilitarian furniture and adornment including feather, bone, carving and, of most importance, tattoos. Design motifs find their way into textile patterns, wood work carving and artwork selections.

Project Team:

Pamela Babey, Anne Wilkinson, Jon Kastl, Carmen Bringas, Elaine Hwa, Martin Oestlund, Libby Duckworth

Architect (On-shore and PA): Didier Lefort Architect Associates Architect OW Bung. & Beach Ste: Pierre-Jean Picart Architect Landscape Architect: Burton Landscape Architecture Lighting Designer: Bouyea & Associates, Inc.

Structural Engineer: Nagamine Okawa Engineers Landscape Architect: Walters Kimura Motoda Furniture: McGuire, Tommy Trend, A. Rudin & Century Furniture Carpet: Decorative Carpets Project Manager: Rob Roy, Rider Levett Bucknall

“The design team really understood our design philosophy and was able to deliver a comfortable, beautiful and functional design with a surprising twist; not the predictable hospitality product.”

client statement

Spa Consultant: ESPA Furniture/Mirror: EuroAsia Furniture: Maxalto, Perfect Pieces Fabrics: Valley Forge, Upper South Studio Photographers: Barbara Kraft, Peter Vitale

SPECIAL SECTION

Design Team:

Mechanical Engineer: E. D. Ayson Engineering

play PLAY Honor Award Wexler’s, San Francisco, CA Firm: Aidlin Darling Design, San Francisco, CA Client: Matt Wexler Project:

SMOKE HOUSE: Showcasing the nouvelle barbeque cuisine, this renovation

transformed a dark and cavernous space into a modern dining setting. The design’s focus is a dynamic undulating ceiling installation evocative of smoke, charred wood and bones. Originating from the rear of the dining space, the installation literally bridges the gap between old and new before billowing out the front entry to form an awning that delicately floats through the historic façade without touching it. Inside, a restrained palate of rift-sawn oak and zinc is warmed by the honey glow of the lighting. These agrarian materials are treated with an uncharacteristic level of refinement analogous to that of the cuisine, yet the neutral envelope allows the small plates of impeccably prepared food “[The] simple architectural to take center stage.

ceiling detail draws you into the space.”

Design Team:

David Darling, Joshua Aidlin, Roslyn Cole, Shane Curnyn, Adrienne Swiatocha

juror comment

Project Team: Metal Casework Subcontractor: Kingfisher Zinc & Copper Works

General Contractor: Northern Sun Structural Engineer: Berkeley Structural Design Lighting: Revolver Design Hardware Consultant: Ingersoll Rand Security Technologies Kitchen Consultant: TriMark Economy Restaurant Fixtures

Wood Casework Contractor: Cabinetworks, Inc. Lasercut Fabricator: Laser Alliance LLC

Signage: Daily Minefield

Mirror Fabricator: Supreme Glass Co.

Metal Subcontractor: Chris French Metal, Inc.

Photographer: Matthew Millman

PLAY Notable Award craft LA, Los Angeles, CA Mark Horton / Architecture, San Francisco, CA Client: Craft Restaurant Project: Firm:

GOLDEN TOUCH: Emulating the curved building façade which houses it, the

main dining room embraces patrons with walls that arch into ceilings. A warm, muted pallet of natural stone, wood, etched glass, natural-fiber ceiling panels and standing seam bronze cladding is accentuated with bold strokes of color in the bar and dining furnishings.

Design Team: Mark Horton, Daniel Mason, Peter Bentel, Thomas O’Conner

Project Team: Design Architect: Bentel & Bentel Kitchen Consultant: Alliance Food Equipment

Mech/Plumbing/ Engineering: Antieri Haloossim & Mattingly

Acoustic Ceiling Treatments: Southcoast Acoustical

Structural Engineer: Citta

Custom Wine Wall: Pacific Westline

Acoustical Engineering: Charles Salter, Assts.

Custom Bar Manufacturer: Pacific Westline

Custom Millwork/ Custom Furniture: Pacific Westline

Photographer: Mark Darley

work WORK SMALL Honor Award One & Co, San Francisco, CA Firm: Cary Bernstein Architect, San Francisco, CA Client: One & Co Project:

ARCHITECTURAL PORTRAIT: The design of this collaborative workspace reflects

the industrial design firm’s identity and process: the integration of formal precision, innovative program interpretation and functional performance. A rigorous design language is established within the variable conditions of the old industrial building where both new construction and eccentric older shell retain their individual identities. The restrained but highly textured palette mediates between old and new and serves the client as a laboratory for sensory exploration. A new walnut and glass-clad conference room at the center is a warm and glowing core around which the workspace radiates. The studio also serves as a gallery, displaying the client’s finished products alongside work in progress. The interiors have independent strength but do not overwhelm the clients or compete with their own work.

WORK SMALL Merit Award 555 Mission, San Francisco, CA Firm: Gensler, San Francisco, CA Client: Confidential Project:

Design Team: Brieanne Marshall, Tomas Rizo

Project Team: General Contractor: Denis Casey/Stein-Casey Inc. Lighting Designer: Alice Prussin Lighting Design Wood Paneling: Pacific Millworkers/Woodcraft Glazing: United California Glass Reception Desk, Counters: West Bay Plastics Furniture Manufacturer: Council

“The final design really captures our sensibility – clean, elemental but with an underlying energy.” client statement

Tile: Heath Ceramics Photographer: César Rubio

“A very elegant and restrained design with excellent attention to purposeful simplicity, clarity of detail and craft execution.”

juror comment

Design Team: Terry Walker, Chris Brown, Lisa Bottom, Steve Suzuki, Batya Aloush, Brenden Mendoza

Project Team: General Contractor: Skyline Construction MEP: WSP Flack + Kurtz

Lighting Consultant: Alfred Scholze Associates

Furniture Dealer: SideMark, Inc.

Custom Millwork: Design Workshops

Broker: Bradley Van Linge & Shannon Dolan, Cornish & Carey Commercial

Custom Glass: Skyline Design European Rustic Oak Floor: Hakwood Casegoods: HBF

Project Manager: Gina Caruso, Relocations Connections Inc. Photographer: Bruce Damonte

SPECIAL SECTION

ABOVE THE CLOUDS: Creating a predominant feeling of openness throughout the space and taking advantage of its top floor’s unobstructed views, the design of this financial startup’s workspace features transparency at every opportunity, be it glass conference rooms and offices or strategically located architectural slots that allow unexpected glimpses to the views beyond. The use of neutral palette and materials as well as the clean spare lines of the furnishings add to the overall sense of calm.

work WORK BIG Honor Award Razorfish, San Francisco, CA Firm: Gensler, San Francisco, CA Client: Razorfish Project:

FAST TRACK: This online advertising agency’s quickly-evolving, fast-paced industry

meant that a rich variety of collaboration spaces, keen attention to functionality and the ability to constantly adapt were all critical elements of design success.

Challenged with delivering big client impact with minimal investment, the design team capitalized on the arrow-shaped floor plan, carving out varied, often triangular-shaped spaces to emphasize speed, flow and movement. Materials were selected for their functionality, low cost, environmental sensitivity and response to the idea of constant change. A neutral grey and white color palette serves as a backdrop to pure, energetic accent colors that serve as color-coding for meeting rooms and way-finding on the large floor plate. The furniture cues the accent colors and is a blend of contemporary industrial design and modern classics.

Design Team: Collin Burry, John Tillotson, Rhonda Petrov, Pedro Ayala, Ian Orlins

Project Team: General Contractor: BCCI Construction Company Lighting: Rudy Rodriguez Lighting Design Furniture Systems: MBI Group

“Ultimately, the space does a wonderful job of being functional and practical while at the same time takes the user on a journey of unexpected moments and areas of exploration.”

client statement

Project Manager: Colleen Groff, Jones Lang LaSalle Photographer: David Joseph

WORK BIG Merit Award O’Melveny & Myers, San Francisco, CA Firm: Gensler, San Francisco, CA Client: O’Melveny & Myers Project:

NO OBJECTION: With a goal to “change the way lawyers work, create a destination place and set the bar for sustainability,” the design incorporates a vertical campus strategy that includes an engaging central lounge/library with adjacent conference rooms on each floor. Living room style break out areas take advantage of the stunning bay view, and the materials used provide both longevity and a warm tactile feel. The office demonstrates the firm’s sustainable dedication by becoming the country’s first LEED Gold law firm.

“Elegant, strong, stable.”

juror comment

Design Team:

Furniture Systems: MG West

Ronette King, Doug Zucker, Julia Campbell, Diane Rogers, K. Chung, Lucas Martin, Laurie Petipas, Brenden Mendoza, Lynne Miyamoto

Lighting: Noland & Associates

Project Team:

Furniture: Knoll Millwork: Design Workshops Terrazzo: American Terrazzo

General Contractor: GCI General Contractors

Glass: Skyline, Bendheim

Engineer: Glumac

Project Manager: Cole Project Management

Audiovisual: Anderson Audiovisual

Photographer: David Joseph

Stone Tile: Tileworks

work WORK BIG Honor Award Facebook, Palo Alto, CA Firm: Studio O+A, San Francisco, CA Client: Facebook

Design Team:

WINNING PROFILE: Renovating an abandoned tech lab, the new workspace

General Contractor: SC Builders Inc.

Project:

recreates the feel of a Facebook page. Existing walls are left off-white to replicate the neutral backdrop of the website, while new ones reference page add-ons with splashes of color. Employees are encouraged to add artwork, write on walls and move furniture, much as they would customize their online pages. While the design promotes individual expression, it also achieves unity. Paths of travel are broad, continuous and easily navigated. Distinct neighborhoods are defined by changes in color and interior spacing, but linked by overarching common finishes and graphics. The team encouraged the client to co-author the design, conferring regularly with advisory committees and using the Facebook platform to allow staff to vote on decisions that would directly affect it.

Primo Orpilla, Verda Alexander, Perry Stephney, Denise Cherry, Clem Soga, Virginie Manichon, Kroeun Dav, Sandra Bonderud, Birgit Schweimanns

Project Team: Structural Engineer: KPFF Mechanical Engineer: Air Systems, Inc. LEED Consultant: Bright Works Electrical Engineer: Elcor Electric Carpet Manufacturer: Milliken, Nood Fashion Wall Covering & Graphics: One Tree Design Cabinet Refinisher: West Coast Powdercoat Custom Furniture: Oliver diCicco Design Photographers: César Rubio, Jasper Sanidad

“Our designers understood the importance of making the workspace double as living space.”

client statement

WORK BIG Notable Award APX Alarm Headquarters, Provo, UT Firm: POLLACK architecture, San Francisco, CA Client: APX Alarm Project:

COMMUNITY BASED: Designed around the concept of a Main Street flanked by

amenities and support spaces, the intent is to pull disparate groups of employees into shared areas that offer collaboration and meeting spaces.

Amenities are furnished in a unique manner increasing the sense of comfort and reflecting the company’s hip, energetic and youthful personality.

Design Team:

Project Team:

David Galullo, Nathaniel Haynes, Joelle Rosander, Tuan Louv

General Contractor: L&T Construction Furniture Manufacturer: TEKNION Furniture Dealer: SideMark, Inc. Photographer: Eric Laignel

SPECIAL SECTION

MEP: PVE, Inc.

serve SERVE Merit Award University of the Pacific, University Center, Stockton, CA Firm: Gensler, San Francisco, CA Client: University of the Pacific Project:

CULTURE CLUB: Unique in its physical environment, history and dedication to

creating first name relationships between the students, faculty and administration, the LEED Silver Student Center sought to express the university’s values and create a new heart for campus life – a hub for expression of its diverse students and programs. The variety of physical environments along with the artwork, murals, interactive displays and digital media all work together to tell that story.

Design Team:

Mech/Electrical: Flack + Kurtz Consulting Eng.

Custom Furniture: Kroll Furniture, HPL

Lighting Consultant: JS Nolan + Associates

Furniture Manufacturer: Nienkamper

Food Service: Marshall Associates Inc.

Millwork: Union Planning Mill

Project Team:

LEED Consultant: Paladino & Company

General Contractor: Devcon Construction, Inc.

Furniture Dealer: SideMark, Inc.

Photographers: Sherman Takata, Tim Griffith

Gary Brandau, Melissa Mizell, John Duvivier, Dennis Schmidt, Mark McMinn, Frederick Liu, Hulett Jones, Jay Wilson, Lucas Martin

SERVE Merit Award Park City Museum, Park City, UT Firm: Mark Cavagnero Associates, San Francisco, CA Client: Park City Museum Project:

“...celebrates the existing structure and used it to their advantage.”

juror comment

FULLY INTEGRATED: Located in the heart of Park City’s historic Main Street,

the museum is housed in three early 20th century buildings; the City Hall and Territorial Jail, the Library and the Fire Department Whistle Tower plus a new modern addition sympathetically connecting the historic buildings. The renovated interiors use exposed structural elements and local building materials to frame dramatic gallery spaces for mining and ski exhibits but also allow each of the original buildings’ features to shine through.

Design Team: Mark Cavagnero, Laura Blake, Brandon Joo

Project Team: Civil Engineering: Great Basin Engineering Structural Engineering: Reaveley Engineers & Associates

Lighting Design: Auerbach Glasow French

Red Oak Wood Floors: Mullican Hardwood Flooring

Landscape Architecture: Land Solutions Planning & Design

Steel Curtain Wall System: Hope’s Steel Windows & Doors

Exhibition Design: West Office Exhibition Design

Stone Masonry: Delta-Stone Products, Inc.

Acoustical Ceilings: Hunter-Douglas Contract

MEP Engineering: Spectrum Engineers

SERVE Notable Award Stanford Medicine Outpatient Center, Redwood City, CA Firm: Anshen+Allen, San Francisco, CA Client: Stanford Hospital & Clinics Project:

DOCTORS ORDERS: This adaptive reuse of a former office complex into a

medical outpatient facility is a story of transformation. Planning prioritized daylight, views and a hospitality atmosphere in patient care spaces to assist orientation and improve patient experience. Patient waiting areas have views to a central garden while adjacent staff work areas are screened from public view.

Project Manager: Ken Ament, Construction Control Corp.

Photographer: Tim Griffith

Design Team: Gary Marshall, Lynn Befu, Sharon Woodworth, Darren Kelly, Robert Seelenbacher, Pamela Aurora, Dennis Lappe, Stanford Hughes (Brayton Hughes Design Studios), Suzanne Greischel (Studios)

Project Team: Design Consultant, Public Spaces: Brayton Hughes Design Studios General Contractor: DPR Construction, Inc. Structural Engineer: ESE Consulting Engineers Façade Analysis Engineer: ARUP/Maurya McClintock Mechanical Engineer: Guttmann & Blaevoet Photographer: Joe Fletcher

shop SHOP Merit Award Allsteel New York Showroom, New York, NY Firm: Gensler, San Francisco, CA Client: Allsteel Project:

FRESH START: With only three years remaining on their lease, Allsteel wanted to reenergize their New York showroom with minimal investment. To unify and dramatically change the character of the space, the design went bold, using highcontrast tones of white, mink gray and black. Super-sized graphics channeled “Old Gotham,” a reference to the showroom’s historic Union Square location.

Large windows running the length and width of the space complete the effect, drawing in the vibrancy of the surrounding city.

Design Team:

Project Team:

Collin Burry, Julia Campbell, Robert Cataldo, T. Kent Hikida, Stephanie Shunk, Rhonda Petrov, Cathy Terashita, Bill DuBois

General Contractor: ICON Interiors Inc.

“A great response for a tight budget and timeline.”

Furniture Manufacturer: Allsteel

“Not only is the outcome successful, but the team was terrifically talented and managed the process well.”

Photographer: David Joseph

Mechanical/Electrical: WB Engineering & Consulting Lighting: Rudy Rodriguez Lighting Design

juror comment

client statement

SHOP Merit Award Teknion IIDEX Exhibit, Toronto, Canada Firm: Vanderbyl Design, San Francisco, CA Client: Teknion Project:

CAPTIVATING: A 16-foot floating wall suspended 18 inches from the floor

creates an enclosure which directs the visitor’s attention to the product, while also providing an illusion of spaciousness as the floor extends visually well past the defined space. The nature-inspired graphics offer vivid symbols of Teknion’s commitment to the natural environment as does the reused carpeting from last year’s booth and the fully recyclable aluminum and spandex panels.

Design Team: Michael Vanderbyl, Peter Fishel, Dave Hard

Project Team: Fabricator & Installer: The Taylor Group Photographer: Interior Images

SHOP Notable Award

Design Team:

McEvoy Ranch, San Francisco, CA Firm: Gensler, San Francisco, CA Client: McEvoy Ranch

Project Team:

FARM GROWN: To create an emotional connection to the 550-acre-ranch

Signage: Digital Fusion Media

experience in a 258-square-foot space, the designers, inspired by the ranch’s open kitchen, lined the walls with limed white oak cabinetry and grounded the space with an olive wood center island. Acrylic panels with images of olive branches give an illusion of viewing the orchard through the kitchen windows.

General Contractor: Mayta & Jensen Millworker: Berkeley Mills Custom Sink: Standard Sheet Metal Countertop: Dupont Zodiaq Fixture Countertop: Fuez Spec It Project Manager: Tom Owens, Gensler Photographer: Sherman Takata

SPECIAL SECTION

Project:

Michael Bodziner, Tom Owens, Janice Natchek, Millie Kwong, Juan Rodriguez-Beltran

live/give LIVE Merit Award Sonoma Retreat, Sonoma, CA Firm: Aidlin Darling Design, San Francisco, CA Client: Confidential Project:

OM: This private exercise, meditation and relaxation space, sited adjacent to the main house, consists of a meditation/workout/yoga studio with an adjacent steam room, changing rooms, bathroom, refreshment bar, private sundeck and an outdoor shower. The design seeks to foster self discovery not only by creating a sense of privacy through its many protective layers, but once inhabited, aspires to dissolve away ... leaving the inhabitant and nature to become reacquainted.

Design Team:

Structural Engineer: Berkeley Structural Design

David Darling, Joshua Aidlin, Paul Baird, Kent Chiang

Civil Engineer: Lescure Engineers Inc. Landscape Design/Build: June King

Project Team: Contractor: Burlington Construction Inc.

Photographers: Bruce Damonte, Chris Gramly

LIVE Notable Award Stone Court Residence, Los Altos, CA Bohlin Cywinski Jackson, San Francisco, CA Client: Jawed Umerani Project: Firm:

INWARD FOCUS: Organized around a reflecting pool and central courtyard bound by tall glass walls, the home’s expressed brace frames and steel columns simultaneously reinforce the perimeter glazing and define the interior circulation.

The extensive use of wood and stone complements the modern design, while brightly colored niches provide a vibrant backdrop for the classic furnishings.

Design Team:

Project Team:

Peter Q. Bohlin, Gregory R. Mottola, George A. Bradley, Brian Padgett, Priyanka Mara

General Contractor: Louis Ptak Construction, Inc. Structural Engineer: Umerani Associates Landscape: Anke Jurleit

MEP: C & B Consulting Engineers Project Manager: George Bradley, Bohlin Cywinski Jackson Photographer: Nic Lehoux

GIVE Merit Award ClimateWorks Foundation, San Francisco, CA Firm: Leddy Maytum Stacy Architects, San Francisco, CA Client: ClimateWorks Foundation Project:

“Loved the liquid quality of the ceiling elements and white-on-white solution. Feels like a fun space.” juror comment

FRESH BREEZE: This international philanthropic foundation works with nations and economic sectors worldwide to enact policies that aggressively reduce greenhouse gas emissions through enhanced energy standards, low-carbon energy supplies and forest conservation. Their anticipated LEED-CI Platinum certification offices provide an integrated work environment that weaves together advanced energy-efficiency, carbon reduction, resource conservation and communications technologies within a series of healthy, inviting spaces that profoundly connect staff and visitors to each other and the natural world that sustains us.

Design Team: William Leddy, Beth Morris, Adam Franch

Project Team: General Contractor: GCI General Contractors MEP: Rumsey Engineers

Lighting Design: Architectural Lighting Design Acoustics/AV: Charles M. Salter Associates

Task Chairs: Knoll Broker: Tony Zucker, Jones Lang LaSalle Americas

Ceiling “Clouds”: Eventscape

Project Manager: Nolen Boyer, Jones Lang LaSalle Americas

Workstations: Teknion

Photographer: Bruce Damonte

student 2010 Student Design Awards The IIDA-NC Chapter toasts the winners of this year’s Honor Awards program.

Sponsorship of this celebration not only provides the organization with the financial support to honor the regional firms and designers but also funds awards for interior design students, the visionaries who will be leading the future of design. Open to student IIDA members in the Northern California Chapter, this year’s program presents $9,000 in design awards. There were 21 entries in all.

Theme:

1st Place | Housing Vahe Markosian School: San Jose State University Level: Senior Name:

Description: This project is my response to an impending global

housing shortage that will mostly affect the developing world.

award: $3,500

User-Centered, Problem-Solving Design: addressing how design can solve the problem of the individual(s) who will use and inhabit the designed environment.

2010 Jury: Anna Hernandez, Industry IIDA; president and founder of Luna Textiles; past -VP of industry members for IIDA; Ronette King, IIDA; Gensler Design Principal; Interior Design Hall of Fame Inductee; Hank Dunlap, IIDA; CCA Professor Emeritus, a founding board member for the Northern California Chapter of IBD [now IIDA]; recipient of 2008 IIDA-NC Leadership Award of Excellence; Stanley Ambercrombie, FAAR, FAIA; Hon. FASID, Hon. IIDA; IIDA Star Award recipient; Former editor-in-chief, Interior Design committee: F ae Urban, ASID, IIDA, IIDA Northern California Chapter Honoree 2009-2011; Cheryl Gordon, LEED AP, Associate IIDA, co-vice president of Student Affairs; Tamara Roth, LEED AP ID+C, Associate IIDA, co-vice president of Student Affairs

Name:

3rd Place | Homeless Shelter

Jinney Kho

Name:

School: California College of the Arts Level:

Senior

Description: Unfolding luxury in unexpected places and situations.

Sangheeta Singh

School: San Jose State University Level:

Senior

Description: The design, derived from a fetus in a womb, is a sustainable

award: $2,000

shelter for homeless people to enhance their lives. award: $1,500

Merit Award

Merit Award

Name:

Borum Song School: California College of the Arts Level: Junior award: $1,000

Name:

Description: A new way of working

Description: The Alqwu’ Restaurant

in a living office. Calculative design encourages users to be active and creative.

Krystyna Nitschke School: U .C. Berkeley Extension Level: Senior award: $1,000 provides a unique dining experience through integrating the interior with the site.

SPECIAL SECTION

2nd Place | Beauty School

10 Reasons You Should Join BOMA

TOP 10

Reasons

1) Provides relevant education and training programs for an everchanging world 2) Helps create satisfying and rewarding careers with our recruitment, job-finding and other professional development support 3) Creates valuable networking opportunities for business development 4) Connects you with a prestigious global network of commercial property professionals 5) Shares the operating expertise and knowledge of other BOMA members 6) Helps you connect with vendors and suppliers who understand your business 7) Advocates the Bay Area as an ideal environment for business 8) Protects private property rights at the local, state and federal level 9) Provides you the tools and timely information to operate efficiently and profitably 10) Produces many fun events

Building Owners and Managers Association (BOMA): The go-to group for commercial building owners, operators and those who serve them. Visit us at www.bomasf.org or call 415-362-2662, ext. 115.

commercial

I

Port in a Storm The port and city of Oakland are pursuing nearly $1 billion in public and private investment.

photo b y C had Z iemendorf

By Jessica Saunders

f all goes as planned, two decades from now the Oakland port, already a major East Bay economic driver, could be the single most important employer and economic stimulus in the entire Bay Area.

In a competition that originally included four bidding teams, the city of Oakland in 2009 selected a development proposal from global logistics real estate company AMB Property Corp. of San Francisco and Oakland’s own California Capital Group.

The two planned to develop a mix of offices, industrial, R&D, loading and logistics space on 165 acres adjacent to the port. Together with the port’s marine terminal redevelopment and an intermodal rail facility on its 168 acres, the $882 million public-private project known as “Oakland Global” would help re-create the waterfront industrial district.

Oakland entered a 360-day exclusive negotiating period with a joint venture of AMB and California Capital on Jan. 19, working toward a disposition and development agreement for its share of the base. The port, which began a six-month exclusive negotiating agreement with AMB and California Capital in August 2009, recently extended the agreement for six months through Aug. 1, in part to align its negotiations with those of the city.

By coordinating plans, the port and city hope to build upon what has been a key regional economic engine.

30 theregistrysf.com

april 2 0 1 0

By coordinating plans, the port and city hope to build upon what has been a key regional economic engine. The Port of Oakland generates on the order of $2 billion in personal income annually, according to a 2006 economic impact study done for the port. It also throws off more than $200 million in state and local taxes and $1.8 billion in direct operating revenue for businesses that provide maritime services for cargo vessels, found Martin Associates, an economic consulting firm that specializes in transportation systems.

Exclusive negotiating agreements can result in either purchase or lease land deals. In the case of the former army base, the city and port will retain ownership of their land and lease it to the developers. ENAs require the property owner and elected master developer to negotiate in good faith toward a disposition and development agreement for the land.

Neither party is obligated to complete the process; both parties can walk away at any time, said Joanne Dunec, a real estate and land use transactional shareholder at law firm Miller Starr Regalia in Walnut Creek.

One key piece of every exclusive negotiating agreement is financing, Dunec said. The city, port and developer are working together to secure public funding for the project. The proposed funding plan includes an estimated $190.7 million from the federal government, about 22 percent of the overall estimated project cost. That money could come from the 2009 American Reinvestment and Recovery Act, said Walter Cohen, director of Oakland’s Community and Economic Development Agency. An upcoming transportation bill is expected to include money for logistics and ports, and project money could also come from the federal departments of Energy and Commerce, Cohen said. “To call it stimulus is to be narrow.

There are other pots of money out there,” he said.

The state has allocated $242 million for the project, about 27 percent of the total, from the California Trade Corridors Improvement Fund, according to the developer and the city. That total includes $110 million for the 7th Street grade-separation project and $132 million for the Outer Harbor Intermodal Terminal, a container terminal, on-dock rail yard and related roadway improvements.

But, the state funds must be matched, and the army base team is looking at how to do that, Cohen said.

The Oakland Redevelopment Agency will contribute $32 million to the army base project and another $30 million will come from the army base environmental remediation fund.

Another $387 million, or nearly 44 percent, in private equity and investment has been committed to the project by the port’s partners, including AMB, California Capital and others, including 100 percent of the trade and logistics facilities and the marine terminal improvements at Berths 20-24, according to documents.

Just getting the land ready for development, including seismic stabilization of the infill, grading, sewers and roads is expected to cost an estimated $302 million, Cohen said.

Securing public funding for the project is “central,” Cohen said.

“That we bring together a public-private partnership on this is pivotal.

It is essential, it is critical and it is happening.”

For businesses dependent upon the Port of Oakland, the army base redevelopment represents the potential for growth and expansion. But some leaders were more optimistic than others. Redeveloping the base as a trade and logistics center will benefit the port, the city and its residents with job creation, said Bill Amoudi, owner of AB Trucking in Oakland and Oakland Maritime Support Services, a 15-acre service center for independent truck drivers located on the base. Oakland Maritime is currently in negotiations itself with the city regarding a move across the street to a new 15-acre site.

ndustrial property in key port markets nationwide, including Oakland, is faring worse than non-port competitors. Oakland, boosted by exports, infrastructure improvements and a good West Coast location, is struggling as well, though less than some others.

At the same time, Oakland is one of 10 major U.S. container ports where U.S. maritime trade concentrated from 2001 through 2008, according to a March Colliers International research report. From 2001 through 2007, even as port traffic grew 65 percent, those ports captured more than 90 percent of all U.S. trade. In the last two years, port volumes nationwide, as measured by containers passing in and out, have dropped 15 percent. Oakland’s have declined much less.

The Oakland port is a centerpiece of the regional economy. The port and related activities like warehousing and distribution are part of Oakland’s 5,000-acre manufacturing belt. The area stretching from the Oakland International Airport to the port contains more than 24 million square feet of industrial space, according to the city Community and Economic Development Agency.

Colliers found that for every 1 percent change in port traffic (up or down), there is a 0.33 percent movement in demand for industrial real estate occupancy in port markets. Thus the 60 percent rise in port activity from 2001 to 2007 generated a 20 percent demand upswing in industrial space.

Stretching along 20 miles of the Oakland waterfront, the port operates maritime, aviation and real estate businesses over 16,000 acres, including ownership and management of seaport facilities on San Francisco Bay and the Oakland Estuary and leasing and renting facilities for railroad and trucking operations. The port’s maritime activity supports more than 450,000 California jobs, including 9,880 direct employees, according to a 2006 economic impact study for the city of Oakland by Martin Associates, an economic consultant.

Oakland is the preferred shipping point for products grown in the Central Valley and wine produced throughout Northern California. It is geographically two to three days closer to key Asian import centers than other California ports, giving it an advantage when timely delivery matters. Agricultural exports such as wine, rice, barley and meat continue to be the highest-value goods coming through the port.

In contrast, said Jerry Nickelsburg, senior economist with the UCLA Anderson Forecast, the much larger ports of Los Angeles and Long Beach are major conduits for imports such as electronics, toys and other manufactured goods from Asia. Import-driven ports have suffered much more in this downturn than export-driven ports such as Oakland, Colliers found. “With the recession and the really sharp pull back from U.S. consumers, the decline of activity for Southern California was much greater than the Port of Oakland,” Nickelsburg said.

The Oakland port is the fifth-busiest container port in the country.

Since the early ’90s, the port’s traffic has risen fairly steadily from 1.29 million containers (measured in twenty-foot equivalent units) in 1992, to a peak of 2.39 million containers in 2006. Nearly $30.5 billion worth

continued on page 37

continued on page 37

Oakland’s port, buoyed by exports, is recovering.

By Diana Samuels

I

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theregistrysf.com 31

DESIGN

Hands Up A massive mural at the newly renovated and expanded San Jose airport gives new meaning to the phrase ‘community outreach.’

A

“I am just passing the hands.”

David Vossbrink, communications director, Mineta San Jose International Airport

32 theregistrysf.com

n enormous mural has transformed the otherwise plain east face of a new San Jose international airport parking garage into a message of welcome and farewell befitting Silicon Valley. Pixelated and bigger than life, the hands featured in artist Christian Moeller’s new work speak to the diversity and technological prowess of San Jose in literal and allusive terms, says curator Mary Rubin, a senior project manager for San Jose’s public art program.

“Hands, besides faces, are the most expressive parts of the human body,” Rubin said. “We work with our hands. They are the things that translate between our minds and physical reality.”

The new 3,500-spot garage is part of a $1.3 billion airport overhaul. It presented a huge opportunity to do something innovative and exciting, Rubin said.

The $1 million mural’s ambitious scope spans more than three football fields in length and five of the garage’s seven decks. The range of hand models used in its conception is expansive as well: a tamale maker, a surgeon, technologists and construction workers account for but a few of the 54 open hands depicted, Rubin said. Former Yahoo Chief Executive Tim Koogle and even Joey Chestnut, the world’s top eater, as ranked by the International Foundation for Competitive Eating, lent their hands to the effort.

Making the mural a reality fell to an innovative collaboration between Moeller, general contractor Hensel Phelps Construction Co., Denver-based Fentress Architects and pre-cast concrete company Clark Pacific, which fabricated and assembled the garage. The companies handled plans and material in a way nearly unheard of in large-scale construction projects, Rubin said.

Though chain-link fencing and plastic—the mural’s raw materials—barely seem the stuff of great art, they fit the bill perfectly for a project defined not only by scale but by dedicated purpose and strictures of cost.

The process of creating the mural is unique to Moeller, who employed a technique developed over time in previous smaller artworks such as his 2006 “News Reader” in Seattle. That piece depicts four Seattle citizens reading magazines during a bus ride. It is a permanent installation along the perimeter fence of the Atlantic Central Base bus operations near downtown.

Like that piece, “Hands” is built using chain-link fencing as a

april 2 0 1 0

matrix for two-inch, white plastic discs. Workers at San Fernando, Calif.,-based Carlson & Co. hand-placed each tile with the guidance of a purpose-built machine.

In “Hands,” Moeller extended the technique by using a secondary layer of smaller-gauge fencing behind the one holding the discs. The visual effect is of a pixelated, half-tone image that is dynamic and has depth. That secondary layer also helps protect the artwork by establishing a barrier that should help keep vandals from accessing it from behind via the garage.

“It really is a blending of high tech and high touch, using sophisticated technology and manual labor to create the image,” said David Vossbrink, the airport communications director.

Although it didn’t come cheap, the mural also didn’t add a dime to the $270 million budget for the garage, and it is expected to last at least 20 years. Were it not for the mural, a metal façade would have been constructed in its place at a similar cost, Vossbrink said.

“We know that parking structures can be very severelooking, so we wanted to give it some visual impact so that the building wasn’t just a parking structure but really added visual impact and visual value to the surrounding area,” he said.

Parking structures afford a great opportunity for public art, said award-winning architect Geoff Adams, the public-sector leader for Stantec Architecture in San Francisco. Because they are so large, parking garages provide a unique opportunity with few constraints beyond maintaining proper airflow through the garage itself, he said.

Airport parking structures demand a different approach than those in a dense downtown context where people expect to interact with the structure on a much more human scale, such as through first-floor retail. “You’re often seeing an airport garage from a distance. They relate to their surroundings but on a much different scale,” he said.

Whether travelers glimpsing “Hands” as they pass the airport will find a way to relate to the 63-foot-tall hands waving them along on their journeys will undoubtedly remain a subjective experience. But so far, the reaction has been positive, Vossbrink said.

It won’t be long, he jokes, before cell-phone callers are reporting their process along state Highway 87 using the mural as a landmark: “I am just passing the hands.” n

photos b y C had Z iemendorf

By Michael Fitzhugh

GREEN

O

n Jan.12, the California Building Standards Commission adopted a first-in-the-nation green-building code. CALGreen, as it is known, applies to all building permits pulled on or after Jan. 1, 2011. As a condition to granting a building permit, CALGreen requires residential and commercial developers to implement a wide range of sustainability measures.

The purpose of CALGreen is to “improve public health, safety and general welfare by enhancing the design and construction of buildings.” According to the governor’s office, CALGreen will help California meet its goals of “curbing global warming and achieving 33 percent renewable energy by 2020,” the standard mandated by the California Global Warming Solutions Act of 2006.

But CALGreen also creates a set of sticky and uncomfortable tensions. It leaves largely undefined how local governments should implement it, and it does not answer how it will affect existing third-party verification systems, specifically the U.S. Green Building Council’s Leadership in Energy and Environmental Design and Berkeley-based Build It Green’s GreenPoint Rated program. Even as the legislation was debated, observers wondered if it would supplant the arguably superior LEED program.

CALGreen includes mandatory and voluntary measures. All new construction, whether residential, commercial or public, including historic buildings, water-recycling systems, prisons and jails, must comply with the mandatory measures. Those buildings that meet the voluntary measures will be qualified as CALGreen Tier 1 or Tier 2, depending on the extent of their compliance. The Building Standards Commission intends to update CALGreen every three years, and voluntary measures may become required.

Some CALGreen mandatory measures include a 20 percent reduction in indoor water use, a 50 percent reduction in the amount of construction waste sent to landfills, a one-time commissioning of non-residential buildings over 10,000 square feet and compliance with energy-efficiency standards promulgated by the California Energy Commission. All will increase the cost to build.

Official state news releases maintain that the transition to CALGreen will be seamless because of the existing inspection system.

However, the entire building documentation and inspection process has changed dramatically with the new code. It also remains to be seen to what extent the re-training of California building inspectors will qualify as green-jobs training for purposes of allocating federal stimulus funds. If not funded by the federal government, the training costs fall to local government.

The California Air Resources Board estimates that the new mandatory provisions will reduce greenhouse gas emissions by the equivalent of three million metric tons in 2020. California’s 2004 emissions were 480 million metric tons, and the California Air Resources Board puts California’s target greenhouse-gas emissions for 2020 at 427 million metric tons, in comparison.

Upon receipt of a certificate of occupancy, a building owner may label a building as CALGreen compliant, without, in the words of the state “using additional costly third-party certification programs.” CALGreen stipulates that “it is not the intent that this code substitute or be identified as meeting the certification requirements of any green building program.” However, that may be the result, in particular for new construction, even though existing third-party green-building measurement systems have more detailed mechanisms to quantify green buildings.

Shades of Green California’s new building code may challenge the thriving U.S. Green Building Council’s established position.

By Aleka Skouras Eisentraut

For instance, LEED for new construction requires ongoing performance-data collection and reporting for re-certification. This ensures that buildings continue to perform in the manner intended. CALGreen has no such structure, a weakness in LEED’s earlier iterations that brought criticism and ultimately change.

State literature on CALGreen says the purpose of the voluntary provisions is to encourage “local communities to take further action to adapt their buildings to reduce greenhouse gas emissions, improve energy efficiency and conserve natural resources,” presumably by providing municipalities and counties with ready-made ordinances that will supplant the incorporation of the LEED and GreenPoint Rated standards. CALGreen includes appendices for municipalities as templates for adopting Tier 1 or Tier 2 requirements as mandatory.

The state is late to the game. Many California cities and a handful of counties already have moved. According to the state, 34 California cities including San Francisco, San Jose, Palo Alto, Hayward and Los Angeles, as well as three counties, including Marin and San Mateo had adopted green-building ordinances as of September 2009. Of those, 24 cities and two counties have requirements in their ordinances linking new construction and/or retrofits to standards outlined in LEED and GreenPoint Rated.

But CALGreen does not address conflicts with existing greenbuilding requirements. It is not clear if a green-building ordinance more stringent than CALGreen will be grandfathered, for instance.

CALGreen allows for local idiosyncrasies but requires a city or county wishing to adopt more stringent building codes to “make express findings for each amendment ... based upon climatic, topographical or geological conditions.” The findings must be submitted to the Building Standards Commission, or, in the case of energy-related amendments, to the California Energy Commission. How the Building Standards Commission will interpret the CALGreen language requiring findings based on local conditions is unclear.

Lastly, it is worth noting that CALGreen does not address existing building retrofits. It will need to do so in the future to comply with some funding requirements under the American Recovery and Reinvestment Act. Under LEED for existing buildings, retrofits are evaluated in the same areas as new construction, but they invoke additional measures such as building benchmarking and continued commissioning as pre-conditions to recertification. LEED, in this instance, is clearly superior to state law, especially given that existing buildings far outnumber those built annually and curtailing emissions related to existing stock will do more to reduce greenhouse gases than regulating new construction.

As noted by Build It Green, “there is still much work needed to refine and implement [CALGreen] … .” n Aleka Skouras Eisentraut can be reached at 510.834.6600 or AEisentraut@wendel.com.

COMMERCIAL

Bigger is Badder The recession is shuffling the commercial brokerage deck.

By Jennifer Caterino

“Big institutional clients want one contract, one service provider across an entire portfolio.”

Michael Kamm, chief executive of Cassidy Turley BT

W

ith transaction volumes near cyclical lows and revenue under duress, commercial real estate brokers are positioning themselves to survive the downtime and to reap the rewards of an eventual upturn. In what one industry expert dubs a “shuffling of the deck,” firms are pursuing mergers and acquisitions, abandoning long-standing network affiliations and, in some cases, gearing themselves to a global environment by expanding their service offerings and creating recurring revenue streams to buffer the cyclical transaction work. The experiences of full-service real estate companies over the last several years including CB Richard Ellis Inc. and Jones Lang LaSalle suggest bigger can be better, though not always.

On Jan. 4, Colliers International and FirstService Real Estate Advisors, a subsidiary of publicly traded FirstService Corp., put an end to speculation, confirming a deal to increase FirstService REA’s control of Colliers to about 70 percent of global business. The San Francisco Colliers office became FirstService owned; San Jose stayed independent but the senior managing director there says his company is still better off. The firm’s Bay Area operation now consists of 365 real estate professionals working in 12 offices, according to FirstService REA. In January, eight firms—two with deep Bay Area ties— from four different networks teamed to form a new privately held real estate company. Cassidy Turley consolidates San Francisco’s BT Commercial, previously the largest affiliate member of the NAI Global network; CPS CORFAC International in Santa Clara, whose CORFAC membership expired at the end of the first quarter; BRE Commercial San Diego and BRE Commercial Phoenix, both formerly Grubb & Ellis affiliate members; Colliers Houston & Co. of New Jersey; and four former Colliers affiliates that merged in August 2008.

The Cassidy Turley merger unites 2,750 professionals in 58 offices nationwide. An anticipated international partnership with London-based GVA Grimley is expected to extend the firm’s reach throughout Europe and Asia. In Northern California, the combined operations of CPS and BT Commercial give the firm 16 offices, including two Santa Clara locations in the short term, and 280 agents.

Bay Area brokers believe that a widening pool of corporate and institutional customers prefer a full-service platform. This allows the brokers business stability, offering less

cyclical, repeat revenue through property management and other corporate services. While the meaning of full service is inconsistent it generally includes leasing and investment sales, property and facilities management, corporate services, capital markets, development and project management, valuation and mortgage brokerage.

Michael Kamm, chief executive of Cassidy Turley BT, said the decision for BT Commercial to leave the NAI Global network was motivated by a desire to compete for Fortune 500 clients. “Big institutional clients want one contract, one service provider across an entire portfolio,” Kamm said. Strategic alliances will continue at Cassidy, he added, as the firm works to fill voids in its coverage in the next couple of years.

The FirstService REA deal is the latest step towards Colliers’ long aim to transition from a network to a majorityowned, centrally managed global organization. Since 2004, FirstService REA has acquired controlling stakes in multiple North American real-estate service companies, including PKF Hotel and Hospitality Consulting and FirstService PGP Valuation. With the latest deal, FirstService REA now controls the U.S. license. In the last six years, it also expanded globally, acquiring significant Colliers International operations throughout Europe and Asia Pacific. The company now has 15,000 professionals in 61 countries.

Jeff Fredericks, senior managing partner of Colliers International’s Silicon Valley operations, said his firm remains independent but will benefit from FirstService REA’s stronger platform and “soup-to-nuts” services. “We already do a lot of work with Fortune 500 companies. For Colliers, this will have a bigger impact on our ability to work with the Fortune 50 to 100,” he said. His clients won’t be required to use FirstService REA partners. “We could still offer [an outside] facility management service. We wouldn’t pressure [clients] to use ours.”

The Colliers story continues to unfold. Alan Collenette, managing director of Colliers International’s San Francisco office, and Fredericks said there likely would be more announcements from FirstService REA when the deal is finalized April 21 and more additions are announced.

While the state of the global economy has made consolidation more affordable, its chief driver is diversification of revenue streams. While that mission has a strong theoretical foundation, experience shows that the devil, as usual, is in the details. In June 2008, global service provider Jones continued on page 42

34 theregistrysf.com

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The Three Dwarfs

By Rob La Eace

e R s ob’

r

A

y t i al

id Res

36 theregistrysf.com

ent

ial

um Col

april 2 0 1 0

n

I

was talking with a friend the other day regarding the housing market. “Anyone who is not buying right now is either broke or stupid,” he said. I’m a sucker for brevity, so I had a keen appreciation for his thought. I also agreed with him. Well, what I should say is that I found his statement to be true, but not inclusive of one key concept. It seems that there are three key factors inhibiting (dare I say dwarfing?) market growth. My friend touched on two. Folks simply aren’t buying because they don’t have the money. They may not be broke, but many don’t have the hefty down payment now generally required. As for the “stupid” part, well, it is hard to find a compelling reason not to buy in the Bay Area. Even if we do have a market double dip, we will not see another huge downward adjustment. Baring extreme circumstance, it would be minor, if at all. And any benefit to waiting may be negated by higher interest rates.

So, if Broke and Stupid are the names of the first two dwarfs, who is the third? His name is Doubtful.

Buyers may be ready, buyers may be able, but nothing happens if buyers are not willing. Confidence is king. What is confidence? It means something different to everyone. One woman may define confidence as being comfortable enough with her career status to take a hiatus from work and a trip around the world. Another man may define confidence as being fairly sure he’ll have his job next week. It’s a tough thing to quantify because it’s not really a thing. It’s more a happy place where your mind can be. Put simply, confidence is freedom from doubt.

World economists have spent billions of dollars and countless hours trying to devise ways to measure confidence. The most accepted system for gauging the American consumer mind is the Consumer Confidence Index. Created in 1967 by The Conference Board, a non-profit with its main U.S. office in New York, this monthly report is based on a survey of 5,000 American homes with varying household incomes across the nine U.S. census regions. The survey examines three areas: present employment and business situation; six-month expectations for business, employment and income; and a consumer’s plan to buy major appliances, autos and homes within six months. The survey also asks about upcoming intended vacations and a consumer’s expectation for the 12-month outlook on inflation, interest rates and stock prices. It

is important to know that 60 percent of the index is weighted on expectations for the future and 40 percent on present conditions.

Does the CCI work? I guess the simple answer is yes. It serves a purpose. Small changes are quite meaningless, but a change of 5 percent or greater is regarded as significant. Also, one needs to see more than one month’s data to determine a developing trend. The information produced by such an index is really most useful to large corporations, financial institutions, retailers and others who must make business plans, liquidate their holdings or order merchandise months before it will be delivered.

To slow-moving animals like these, forewarning on economic direction is critical. Once again, it’s about the big picture, not one month’s report. As an example, the CCI Report for September 2008, just prior to our global meltdown, stated: “Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year.” Who knew what was around the corner in October. So what about us—the little guys? As all markets are local, I think the most accurate place for us to gain a sense of consumer confidence is where the rubber hits the road: open homes, broker tours, new loanapplication filings, first-time homebuyer seminars and the like. We know a confident market when we see it. Indices…? We don’t need no stinkin’ indices!

For the most part, by the time the data has proven that a trend exists, we are already seeing that same spirit, negative or positive, in our market.

So, just when will Doubtful leave us alone? The February 2010 CCI indicated the lowest confidence level in 27 years. We’ll see where we are March 30th when the next report is released. In the meantime, keep in mind that the CCI focuses heavily on what the average Joe or Jane on the street THINKS is going to happen. You can gather that same type of data yourself daily. All you have to do is ask folks around you. From cab drivers to baristas, university deans to fashionistas, one thing is for sure, opinions are like California real estate licenses: Everybody has got one. Until next time, “Hi ho, hi ho, it’s off to work we go.” n

Rob La Eace can be reached at 415-290-7228 or rob@roblaeace.com.

Port In A Storm continued from page 31

There is not enough port-related business to support the additional development yet, but it will be there, Aboudi said. “There’s no doubt about it.”

The proposed project will give the port more capacity for future growth, but whether or not the capacity will be absorbed depends on how well Oakland competes with ports on the East and Gulf coasts, said Mike Jacob, vice president for the Pacific Merchants Shipping Association.

“We are all looking at trying to capture a percentage of cargo that is not local and to the extent that you have more capacity to do that, you are telling the trade community you are dedicated to having that cargo be part of a critical mix at your port,” Jacob said. n

Port Side continued from page 31

of imports and exports moved through the port last year, according to the port. Growth was also reflected in port payrolls. From 2001 to 2006, direct port employment rose by nearly 2,000, with the average annual employee salary rising from $43,200 in 2001 to nearly $51,000 in 2005 (an 18 percent increase), according to the Martin Associates study.

From 2007 to 2009, container traffic through the port of Los Angeles suffered a 20 percent drop, from 8.4 million containers in 2007 to 6.7 million in 2009. The port of Long Beach saw a 32 percent drop. In Oakland, the decline between 2007 and 2009 was only 9 percent, to two million containers last year. Oakland’s exports were the reason behind the smaller drop: At the beginning of 2009, exports of full containers were down 15 to 20 percent. By December, exports had increased 41 percent over the year before.

Bay Area businesses that surround the port will likely have to wait until the import side of the picture improves more, said Jon Haveman, a founding principal with San Rafael-based Beacon Economics. Local economic activity has a strong impact on sectors like warehouse space. “It’s that the local economy doesn’t have the demand for the goods that go through the port,” Haveman said.

Jobs associated with exports are back at pre-recession levels, Nickelsburg said. But the consumer economy is still weak, so it hasn’t generated new distribution jobs or significantly helped the local industrial real estate market. “Even the recovery in exports at the port of Oakland is not enough to yet make an impact on the value of those properties,” Nickelsburg said.

Greig Lagomarsino, a senior vice president with Colliers International in Oakland, who works with industrial and warehouse properties, said he’s optimistic. While the first half of last year was “pretty rough,” he said, “it seems like leasing momentum and activity is picking up.” Lease rates for local warehouse space had dropped from a peak of about 50 to 55 cents per square foot, triple net, to 40 cents, Lagomarsino said, but have stabilized. “It’s still a tenant’s market, but I think the tide will probably turn again at the second half of this year,” Lagomarsino said.

For now, major new infrastructure projects at the port and elsewhere in the nation are intended to increase traffic, port officials say. Last year, Union Pacific rail lines through the Donner Pass were expanded and improved. Now the route can allow freight trains that are twice as long as before and double-stacked. More products can be moved faster from Oakland into the interior of the country and vice versa. n

Earth Day 2010

BOMA Silicon Valley salutes our building owners & managers who have reduced their carbon footprint.

Together we CAN have a positive effect on climate change!

Don’t miss these exciting BOMA SV Events!  April 22 – Associates Night Trade

Show and Wine Tasting. We know how to throw a great party! This event draws over 500 people!  April 29 – Annual Roof Walk Seminar. We not only promise stunning views, but you will learn some pretty kool things about roofs!  May 6 –Luncheon – Michael Burns, VTA Gen. Manager will give us the latest on BART to San Jose  June 7 – Sherie Dunn Memorial Golf Tournament - Cinnabar Hills Golf Course – get your spot – this event sells out quickly! www.boma-sv.org BOMA SV Media Sponsor

Real S C E N E

O F T H E

Left: Monica Sloboda, Morgan Miller Blair, works with her group of high school girls to develop their redevelopment proposal.

S E E N

Below: Holly Neber, AEI Consultants, discusses the possible adjacent environmental issues.

2nd Annual CREW Careers Event Above: Girls from over 13 East Bay high schools participated in CREW Careers 2010.

Right: Leilani Ruiz, Systems and Space, listens as the girls share their redevelopment ideas.

Left: Tillie Ross, Old Republic Title and President of East Bay CREW, shares with the girls the network available within CREW locally and nationally.
 Above left: Elizabeth Swift, Mechanics Bank, encourages her group to think financially.

Above middle (l-r): Deborah Han, City of Walnut Creek, and Cheryl Hayes, GE Capital, share facts about Walnut Creek while on a walking tour.

Right (l-r): Judges Cheryl Hayes, GE Capital, Tillie Ross, Old Republic Title and Sandra Weck, Colliers International, hand out certificates.

38 theregistrysf.com

april 2 0 1 0

P hotos b y T eresa G ood w in and M onica S loboda

East Bay Commercial Real Estate Women hosted 20 female high school students on Saturday, February 20th, at Walnut Creek’s City Hall for a hands-on introduction to career opportunities in the commercial real estate industry. The one-day program featured expert presenters including a City Planner, Architect, Banker, Appraiser, Attorney, Environmental Consultant and Property Manager.

2010 Calendar of Events April 6 Lunch Program at Capital Club May 3 Mulligan’s and Margaritas April 14 Golf clinic at Santa Teresa Golf Course June 8 Broker Panel Luncheon July 13 Lunch Program at Capital Club August 19 Annual Wine Event September 14 Developer Panel Lunch October 20-23 CREW Nat’l Convention & Marketplace San Francisco Marriott November 2 Lunch Program at Capital Club December 7 Holiday Party and Silent Auction

Coming Monday, May 3 Mulligans & Margaritas Scramble Golf Tournament Register online only at www.crewsv.org - limited to first 144 golfers only!

Lunch Sponsor

Reception Sponsor

CREW Silicon Valley 2010 Sponsors

activity

Reports commercial leases

Address

City

Lease Sq. Ft.

Tenant/Rep/Brokerage

Landlord/Rep/Brokerage

Notes

Exel Logistics, Inc/Greig Lagomarsino, SIOR (Colliers International-Oakland)

AMB Property Corporation/Greig Lagomarsino, SIOR (Colliers International-Oakland)

Renewal, 36M

Alameda County 7200 Edgewater Dr

Oakland

100,800

33200 Lewis Ave

Union City

67,000

MacFarlane Western Foam Products Inc/ Kate Webster & Michael Lloyd, SIOR (Colliers International-Pleasanton)

CBW Properties LLC/Townsend Commercial Real Estate

Renewal, Industrial

751 143rd Ave

San Leandro

49,942

United Textiles/Dan Bergen (Colliers International-Pleasanton)

St. Paul Properties/The Sutherland Co

Renewal, 38M

7650 Marathon Dr

Livermore

44,544

SMC Corporation of America/ Cassidy Turley BT Commercial-Pleasanton

Marathon Drive Buildings SUB LLC/Michael Lloyd, SIOR (Colliers International-Pleasanton)

Renewal & Expansion, Industrial

3201 Laurelview Ct

Fremont

40,800

Quanta Computer/Thomas Taylor (CB Richard Ellis)

ProLogis/Mary Blasre (ProLogis)

Class B R&D/Flex, Renewal

19202 Cabot Blvd

Hayward

38,650

FDL Logistics/Mark Maguire (Colliers International-Oakland), Rick Knauf (Colliers International-Redwood City)

Prologis/Prologis

Renewal, 36M

3353 Gateway Blvd

Fremont

36,353

Quanta Computer/Thomas Taylor (CB Richard Ellis)

ProLogis/Andrew Stoddard (ProLogis)

Class B R&D/Flex, Renewal

30451 Whipple Rd

Union City

26,130

Eden Foods Inc./Paul Mueller (Cornish & Carey Commercial ONCOR International)

RREEF

Warehouse

1500 Whipple Rd

Union City

22,339

ETS Direct/Mark Maguire & Kevin Hatcher (Colliers International-Oakland)

Tulloch Construction/Tulloch Construction

New Lease, 38M

66 Franklin St

Oakland

19,326

Sungevity/Todd Graves, Brenton Wickman & Shannon Dolan (Cornish & Carey Commercial International)

Port of Oakland

Office

47770 - 47790 Westinghouse Dr

Fremont

18,271

Microfluidic Systems/Cresa

Columbia California Warm Springs/Bob Steinbock (CB Richard Ellis)

Class C R&D/Flex, Renewal

47428 - 47436 Fremont Blvd

Fremont

18,000

Uniform Industrial Corporation/Sherman Chan (CB Richard Ellis)

ProLogis/Brian Erlanson (ProLogis)

Class B R&D/Flex, New Lease

2276 Commerce Pl

Hayward

18,000

General Insulation/Sean Sabarese (Colliers International-Oakland)

Prologis/Prologis

Renewal, 63M

1850-1870 Fairway Dr

San Leandro

15,682

California Transplant Donor Network/ Kevin Hatcher, Greig Lagomarsino, SIOR & Mark Maguire (Colliers International-Oakland)

FJM Merced Assoc/Kevin Hatcher, Greig Lagomarsino, SIOR & Mark Maguire (Colliers International-Oakland)

New Lease, 64M

26599 Corporate Ave

Hayward

12,500

New Asia Food/Kevin Hatcher & Mark Maguire (Colliers International-Oakland)

Marfred Industries/Kevin Hatcher & Mark Maguire (Colliers International-Oakland)

New Lease, 6M

3151 Diablo Ave

Hayward

12,000

I Touchless/Lee & Associates

RREEF/Mark Maguire (Colliers International-Oakland) & Sam Higgins (Cassidy Turley BT Commercial)

Renewal, 12M

1414 Stealth St

Livermore

10,644

American Pacific Promotions/Michael Lloyd, SIOR Advanced Monolithic Systems/Michael Lloyd, SIOR (Colliers International-Pleasanton) (Colliers International-Pleasanton)

Industrial

7610 Kato Rd

Fremont

9,504

Exide Technologies/Bo Richardson (Mohr Partners, TX)

MIREF Fremont Distribution Center/ Reed Payne & Brian Matteoni (CB Richard Ellis)

Warehouse/ Distribution, New Lease

4555 Las Positas Rd

Livermore

9,000

Cyclone Martial Arts & Fitness/Michael Lloyd, SIOR (Colliers International-Pleasanton)

Arroyo Livermore Business Park/Michael Lloyd, SIOR (Colliers International-Pleasanton)

Industrial

26260 Eden Landing Rd

Hayward

8,800

Platron/Townsend Commercial Real Estate

RREEF/Greig Lagomarsino, SIOR & Joe Yamin (Colliers International-Oakland)

Renewal, 39M

400 Market St

Oakland

8,800

Intrepid Electronic Systems (Lee & Associates)

Safety Kleen Systems/Joe Yamin & Sean Sabarese (Colliers International-Oakland)

New Lease, 60M

2108 - 2150 Edison Ave

San Leandro

8,000

AC Square Inc

Jensen & Manta/Ken Morris (CB Richard Ellis)

R&D/Flex, New Lease

2343 Lincoln Ave

Hayward

7,400

Denco Sports/Joe Yamin (Colliers International-Oakland)

Prologis/Prologis

New Lease, 26M

20919 - 20923 Cabot Blvd Hayward

7,348

Kitchen Connection/Bob Ferraro (CB Richard Ellis)

Invesco/Bob Ferraro (CB Richard Ellis)

R&D/Flex, New Lease

37950 Central Ct

Newark

6,581

Contractors Supply DBA Greenworks/ Cashin Company

Central Court Investors/Chip Sutherland (CB Richard Ellis)

Class B R&D/Flex, New Lease

2200 Wilbur Ave

Antioch

144,540

Silgan Containers/Curt D Scheve (Colliers International-Walnut Creek) & John Steinbuch (Colliers International-Pleasanton)

Inland America/Stephens Ventures LLC/Curt D Scheve (Colliers International-Walnut Creek) & John Steinbuch (Colliers International-Pleasanton)

Renewal, Industrial

1150 Concord Ave

Concord

Direct Buy East Bay

Delta Bingham Joint Venture/Keith Marr & Jim Shepherd (Cornish & Carey Commercial International)

Retail

14,818

NG MOCO INC/Peter Hamann (CRESA Partners)

PRU and SKS Brannan Associates/SOMA Team (Colliers International-San Francisco)

N/A Class A Office, sublease

Contra Costa County

17,111

San Francisco County 475 Brannan

San Francisco

575 Market St

San Francisco

12,108

Systems International/Scott Harper Loyalty Lab, Inc/Scott Nykodym (CB Richard Ellis) Northstar (Colliers International-San Francisco)

660 Market

San Francisco

7,907

Vendini/Jack Doherty (CM Commercial Real Estate Inc.)

Union Property Capital/SOMA Team (Colliers International-San Francisco)

N/A

Redwood City

31,166

Perseid Therapeutics LLC/Kristoph Lodge & Howie Dallmar (Cornish & Carey Commercial International)

Metropolitan Life Insurance CO-425 MARKET

R&D

San Mateo County 501 Galveston Dr

40 theregistrysf.com

april 2 0 1 0

commercial Leases City

Lease Sq. Ft.

Tenant/Rep/Brokerage

Landlord/Rep/Brokerage

1400 Fashion Island Blvd

San Mateo

21,504

Guardian Edge/David Gray (Colliers International-Redwood City)

1400 Fashion Island LLC/John Held (CB Richard Ellis)

Class A Office, New Lease

999 Skyway Rd

San Carlos

20,432

Aster Data Systems

CA-Skyway Landing LP/Graham Woodall, Kristoph Lodge & Jack Troedson (Cornish & Carey Commercial International)

Office

Cupertino

50,332

Panasonic R&D Company of America/ Tantau Investors LLC/Todd Shaffer & Patty McGuigan Nancy Morse SIOR, CCIM (Grubb & Ellis Company) (Cornish & Carey)

Lease, 72M

C&J Office Buildings, LLC/Lei-Lani Keelan & Patty McGuigan (Cornish & Carey Commercial International)

Office

Address

Notes

Santa Clara County 10900 North Tantau Ave 1029 Corporation Way

Palo Alto

19,782

Vendavo/Lei-Lani Keelan & Patty McGuigan (Cornish & Carey Commercial International)

188 Martinvale Ln

San Jose

14,140

Bittel Technology, Inc/David Mein (Colliers International)

Timothy R & Lori W Ramsay/Scott Prosser (CB Richard Ellis)

R&D/Flex space, New Lease

2100 - 2190 Gold St

San Jose

11,985

TiVo/John Brackett (Cassidy Turley BT Commercial)

Bixby Land Company/Christian Marent (CB Richard Ellis)

Class B R&D/Flex, New Lease

2153 O'Toole Ave

San Jose

10,360

Ventex

LBA Realty Fund/Scott Prosser (CB Richard Ellis)

Class B R&D/Flex space, Renewal

Sonoma County

R&D Lease Transaction, 6M

199 Petaluma Blvd, North

Petaluma

10,400

Baker Creek Seed Co/James Manley (Keegan & Coppin Co, Inc)

199 Petaluma Blvd, LP/James Manley (Keegan & Coppin Co, Inc)

Retail, NNN Lease

40 Maxwell Ct, Suite 1

Santa Rosa

10,000

Neomicro/Rhonda Deringer (Keegan & Coppin Co, Inc)

Dan Bauman/Gil Saydah (Keegan & Coppin Co, Inc)

Industrial, Gross Lease

3100 Gravenstein Hwy North

Sebastopol

8,400

Dutton-Goldfield, LLC

Gail A. Dutton Trust/Michael Flitner (Keegan & Coppin Co, Inc)

Industrial, Gross Lease

commercial sales City

Property Size

Buyer

Seller

25101 Clawiter Rd

Hayward

100,000

Paul Forkash/Lalsel LLC

5990 Stoneridge Mall Rd

Pleasanton

86,756

20275 Mack St

Hayward

50,784

2800 Collier Canyon Rd

Livermore

18,299

Address

Price

Product Type

Brokers

Keith Derman/ Eastshore Energy LLC

$4,500,000

Industrial

Brian Collins & Adam Martinez (Cassidy Turley BT Commercial)

JP Sethi Pleasanton Lodging LP

Mesa West RE Income Fund LP

$12,300,000 (Reported by LoopNet)

Hospitality

N/A

Kenneth Holt/Huron Investments LLC

Timothy Ritter/Bay Foam Hayward

$3,850,000

Industrial

Kevin Hatcher & Mark Maguire (Colliers International); Paul Beckwith (Cornish &Carey Commercial)

Eric Velt/Admedes Inc

Fest Corp

$3,600,000

Industrial

Mike Carigg & Jason Chandler (Colliers International)

Alameda County

Contra Costa County 4440 Tassajara Rd

Dublin

127,069

Tom Engberg/Loja Waterford LLC

Shea Homes/ Shops at Waterford LLC

$44,000,000

Retail

Kevin Van Voorhis & Scott Kinsey (Colliers International)

2455 San Ramon Valley Blvd

San Ramon

35,000

Landes Group

Longs Drugs (CVS sold 313 properties for 1,375,000,000) (all were sale leasebacks)

$6,618,000

Retail

N/A

115 Ryan Industrial Ct

San Ramon

16,320

San Ramon Valley Bible Church

Gabe Arechaederra/ Rasap Franklin II LLC

$3,650,000

Office

N/A

Prime Roseville LP

Sobrato Development SI VII LLC

$54,500,000

Multi-Family

N/A

Jill Dodd/Mwc Real Estate LLC

James Meenaghan

$3,430,000

Office

N/A

Placer County 1751 East Roseville Pkwy

Roseville

548 units

San Francisco County 995-999 Sutter St

San Francisco

10,817

2290-2292 Green St

San Francisco

15 units

Weissman Beth Trust

Ebrahim Abbasi

$4,255,000

Multi-Family

N/A

2 Adrian Ct

Burlingame

29,369

Black Mountain Properties

Donald Spolar

$4,050,000

Industrial

Brett Weber & Tom Schmidt

901 El Camino Real

Redwood City

Autozone Development Co.

Kissick Family Trust

$2,300,000

Industrial

N/A

24 Crystal Springs Rd

San Mateo

8 units

David Hung

Paris Tognoli

$2,550,000

Multi-Family

N/A

3240 Scott Blvd

Santa Clara

44,600

Perviz Guard/Axin LLC

Mike Sanford/ Locon Snta Clara LLC

$4,470,000

Industrial

Kalil Jenab (Cassidy Turley BT Commercial)

1600 Technology Dr

San Jose

Equity Office

Brocade Communications

$30,350,000

Office

N/A

Peggy Matsuda/ 999 Sonoma LLC

Sonoma Avenue LP

$2,450,000

Multi-Family

N/A

San Mateo County

8,850

Santa Clara County

.96 acres

Sonoma County 999 Sonoma Ave

Santa Rosa

28 units

For-Sale Transaction Data provided by:

by the

Numbers

Getting Granny Back Published reports on the mishandling of sovereign debt and over-spending by the Greek government might leave some Americans feeling smug: Our federal and state governments may lurch sickeningly forward and back, but at least we are in better shape than that. Not so fast, argues Ethan Penner, a pioneer in the creation of commercial mortgage-backed securities and the founder and president of CB Richard Ellis Capital Partners, a global real-estate finance business. “We are walking on the precipice of where Greece is,” Penner told an intimate gathering of San Francisco property developers, owners and bankers March 5. “Our national debt and projected deficits govern the limit as to how bullish one can be today.” Penner traces the roots of the current financial crisis in part to poor regulatory decisions in Washington and in part to the success of securitization and the competition it created for traditional lenders.

In response, Congress relaxed lending rules first for the savings and loans in the early 1980s to expand their reason for being, then in 1999 for commercial bankers, repealing the Depression-era Glass-Steagall Act dividing commercial and investment banking. That borrowers like the results of securitization is self-evident: From 1996 through 2007, outstanding U.S. securitized debt grew from $1 trillion to $11 trillion, Penner said. At the same time, conditioned by the outsized returns on properties acquired from the Resolution Trust Corp., real estate investors came to expect rewards as high as 30 percent. “Most commercial real estate is not capable of returning that without huge risk,” Penner said. Echoing comments made in San Francisco last year by Jeremy Newsum, the global head of the Urban Land Institute, Penner said that real estate investors need to recalibrate their expectations. “Core [real estate] should have a yield of something like 5 percent,” he said. Securitization was so successful because it linked real estate to “granny capital,” the most riskaverse but cheapest and most powerful money there is. With whole loans, real-estate borrowers couldn’t access granny capital. With securitized debt, risk and return are divided into pools or layers, so granny capital can play a role. One way to bring it back to securitization is to restructure incentives and create lending structures akin to the one at right. Under Penner’s formula, “Those who invest taxpayer-insured deposits should be prohibited from taking undue risk. If the taxpayer-insured deposits aren’t lost, we don’t have to bail out the banks and replace bank losses every cycle.” Through inter-

Bigger is Badder

a P R I L 201 0

Using Bank Deposits Properly 100%

Mortgage Loan (LTV) Owner Equity (20%) COST OF CAPITAL

80% 72% 64%

Lender Equity (8%)

20%

Private Sector Mezzanine (8%)

12%

Bank Deposits (64%)

4%

Source: CBRE Capital Partners

continued from page 34

Lang LaSalle Inc. acquired The Staubach Co., a Dallas-based tenant representation firm, in a deal valued as much as $727 million. Jones Lang Chief Executive Colin Dyer said at the time his firm intended to be a “consolidator” in a “consolidating” industry worldwide. Jones Lang added 14 offices and more than 1,000 employees.

In a Feb. 2 statement, Jones Lang reported a 34 percent year-over-year gain in Americas leasing business, which they attributed to the gains from a complete year with Staubach. Jones Lang also reported improvement in its property and facilities management revenue, up 25 percent for the quarter and 15 percent for the year, providing what it called a “solid and predictable annuityrevenue base” going forward. At the same time, the firm’s capital-markets business suffered from record low market activity.

CB Richard Ellis Inc., which operates more than 300 offices worldwide, saw a fourth-quarter rebound in investment sales activity in the European and Asia Pacific markets, compared with year-ago levels. The firm also said leasing results jumped 88 percent in Asia Pacific during the fourth quarter versus the same period a year ago. Meanwhile, in its fourth-quarter financial statements, CBRE reported the U.S. property and facilities-management business is holding up reasonably well in the downturn. The business suffered only a 5 percent decline in the fourth quarter and full year.

But that doesn’t mean CBRE has escaped the biggest impact to the industry: The cost-cutting that tenants have embraced with vigor. Brett White, CBRE president and chief executive, warned on a recent conference call against 42 theregistrysf.com

bank competition, interest rates could be pushed even below 4 percent on this most-conservative tranche, which could not represent more than about 65 percent of the underlying property value. Borrowers would have to put up substantial equity, 20 percent in Penner’s example. At the same time, the lender underwriting and originating a loan, whether it is securitized or sold for another purpose, must keep a 5 percent to 10 percent interest, or lender equity, until the loan matures. The lender would be in the first-loss position after the borrower. Penner advised the San Francisco group to think carefully about its plans. “When you look at a deal today, ask yourself, ‘Will I be proud I did this deal two years from now if there is an avalanche of deals that hit the market?’” he said. “I think a lot of people two or three years from now will wish they hadn’t done deals.” n

viewing corporate clients as cash cows. Many companies have cut internal real estate departments and are outsourcing business previously handled inhouse. As customers continued to spend less on their real estate needs in 2009 compared with 2008, year-over-year comparisons show modest outsourcing revenue declines. Project management work is at, or near, historical lows and looking into 2010, White predicted outsourcing performance likely will remain impacted by the new corporate attitudes.

The question also remains: Will the full-service model still seem appealing when leasing and selling again are plentiful? Kamm said in Northern California, where the commission structure is generally very aggressive, in good times firms can expect net profit margins in the 10 percent to 12 percent range, with the rest going to the broker and expenses. Property management margins depend on scale, but a large base of office and shopping-center properties can yield 15 percent, Kamm said. “You need to have the right mix of properties.”

Jon Torgeson, principal of Pasadena-based Torgeson Associates, an executive search and human capital consultant for the real estate and construction industries, said full-service platforms won’t equate magically with success. “It might look as though the business is somewhat commoditized,” he said. “Ultimately, it comes down to the human connection made when pitching the business.” That is not to say a strong relationship guarantees continued business, however. “As soon as the decision is made, metrics are put in to judge the performance. And so a business relationship is always up for grabs.” n

10 Calendar

january february march april may june july august september october november december

1

CREW East Bay will host CREW Cocktails: How to Reinvent Yourself. Visit eastbaycrew.org for more info.

ULI San Francisco will host the YLG Fireside Chat with Rick Holliday from 5:30 p.m. – 7 p.m. at Pacific Cannery Lofts Sales Office, 1201 Pine St., Oakland. The cost is $25 and the event is for ULI YLG members only. Visit ulisf.org or call 1.800.321.5011 to register.

BOMA Silicon Valley will host a membership luncheon.

Visit boma-sv.org for more info.

2

USGBC Northern California Chapter and ULI San Francisco will host a site tour of Laguna Honda Hospital and Rehabilitation Center from 8 a.m. - 9:30 a.m. at Turner Jobsite Trailer Complex, 375 Laguna Honda Blvd., San Francisco. Register online at usgbc-ncc.org or ulisf.org.

5

13

CREW San Francisco will host a UCREW event at 2 p.m. This event will be a networking and educational opportunity for college women to explore the fields of commercial real estate. Contact Samantha Low at lows@hdcco.com with questions.

USGBC Northern California Chapter will host a program called “Green Schools – LEEDing the Way” from 5:30 p.m.

– 8 p.m. at The Harker School, 500 Saratoga Ave., The Rotunda Rm, Nichols Hall Science & Technology Center, San Jose. Members $15 and non-members $30. Contact Judith Sayler at jasayler@sbcglobal.net with questions.

SPUR will host an evening forum called “Critical Planning: A book talk and signing with John Kriken” starting at 6 p.m. at 654 Mission St., San Francisco. Admission is free for members and $5 for non-members. Visit spur. org for more info.

AIA San Francisco will host a Career Strategy Roundtable: Insider Tips to a Successful Interview from 12 p.m. – 1 p.m. at AIA San Francisco, 130 Sutter St., Ste. 600, San Francisco. This is a free event. Please RSVP to rsvp@aiasf.org.

BOMA San Francisco will host PAC at The Park from 4 p.m. - 7 p.m. at China Basin Landing Wharf, 185 Berry St., San Francisco. For more info, contact Wendy de Lara at 415.362.2662 ext. 110 or wendy@boma.com.

6

BICB will host a luncheon featuring the topic “Performance-Based Design of High Rise Buildings” from 12 p.m. – 1:30 p.m. at The City Club of San Francisco, 155 Sansome St., San Francisco. Contact dolores_glass@ajg. com for more details.

CREW Silicon Valley will host a luncheon called “Are You Linked In? How to Advance Your Professional Interests through Social Networking” starting at 11:30 a.m. at The Silicon Valley Capital Club, Knight Ridder Building, 50 W. San Fernando, Ste. 1700, San Jose. Strict dress code required; no jeans please. Members $50 and nonmembers $80. Register online at crewsv.org or contact Chris Blair at 785.832.1808 ext. 205 with questions.

SPUR will host an evening symposium featuring the topic “Rebuilding in Haiti: An evening with Kate Stohr and Cameron Sinclair co-founders of Architecture for Humanity” starting at 6 p.m. at 654 Mission St., San Francisco. There is a $10-$20 sliding scale admission for SPUR members and the general public. Register online at spur.org.

7

CREW San Francisco will host a Membership Madness event starting at 5:30 a.m. Contact Amber Brumfiel at amber.rye@sdma.com or 415.781.7900 with questions.

NAIOP San Francisco Bay Area Chapter will host a luncheon with Real Estate Insiders Matt Hargrove and Mark Mengelberg from 11:45 a.m. - 1 p.m. at Duane Morris, One Market Plaza, Spear Tower, Ste. 2200, San Francisco. This is a members-only event. Complimentary boxed lunches will be provided. Visit naiopsfba.org for more info.

USGBC Northern California Chapter will host a Green Finance Series, Part Two: Financial Considerations for Energy Efficiency Retrofits from 9 a.m. – 4:30 p.m. at Hanson Bridgett, LLP, 425 Market St., 26th floor, San Francisco. Members $395 and non-members $445.

Contact info@usgbc-ncc.org with questions.

8

AIA San Francisco will host an event called “Andrea Ponsi Cityscapes” from 5:30 p.m. – 7:30 p.m. at AIA San Francisco, 130 Sutter St., Ste. 600, San Francisco. This is a free event. Please RSVP to rsvp@aiasf.org.

NAIOP San Francisco Bay Area Chapter will host a webinar screening called “Capitalizing on Demographics: Expand Your Development Horizon” from 10 a.m. - 11:30 a.m. at Marcus & Millichap, 750 Battery, Fifth Floor, San Francisco. This is a free members-only event.

Visit naiopsfba.org for more info.

BOMA Oakland/East Bay will host a luncheon called “Not the Office, Not the Home.” Visit bomaoeb.org for more info.

8-9

IFMA Silicon Valley will host a FMP Class – Operations and Maintenance from 8 a.m. - 5 p.m. at SAP, 3475 Deer Creek Rd., Bldg. 7, TNT Room, Palo Alto. Members $300 and non-members $400. Contact Joy Dunn at 408.226.0190 or admin@ifmasv.org with questions.

9

USGBC Northern California Chapter will host a LEED Green Associate Exam Prep workshop from 8 a.m. – 5 p.m. at The Bently Reserve, 301 Battery St., San Francisco. Contact info@usgbc-ncc.org with questions.

14

AIA San Francisco will host a Construction Specifications Institute Product Fair from 4 p.m. – 7 p.m. at UCSF Mission Bay Conference Center, 1675 Owens St., San Francisco. Admission is free and food will be provided.

Contact Larry Fosnight at lfosnight@assaabloydss.com with questions.

IFMA Silicon Valley will host a FM Roundtable luncheon regarding Change Management from 11:30 a.m. - 1 p.m. at NetApp, 1345 Crossman, Bldg. 3 Café, Sunnyvale.

Members $20 and non-members $30. Contact Joy Dunn at 408.226.0190 or admin@ifmasv.org with questions.

IFMA Silicon Valley will host the 2nd Annual Women in IFMA Networking Event from 6 p.m. - 8 p.m. at J. Lohr Vineyards and Tasting Room, 1000 Lenzen Ave., San Jose. The cost is $30 for both members and nonmembers. Contact Joy Dunn at 408.226.0190 or admin@ifmasv.org with questions.

BOMA San Francisco will host a Legal Liability of Preparedness workshop from 12 p.m. - 1 p.m. at The Ferry Building. Visit bomasf.org for more info.

CREW San Francisco will host a luncheon at 11:30 a.m. at City Club, San Francisco. Visit crewsf.org for more info.

CREW Silicon Valley will host an Annual Golf Clinic at Santa Teresa Golf Course. Visit crewsv.org for more info.

15

IIDA Northern California Chapter will host a panel discussion called “A Look Inside” starting at 5:30 p.m. at Teknion Showroom, 88 Kearny St., 15th floor, San Francisco. All students are welcome and free. Non-members cost is $10. Please RSVP to student.rsvp@iida-nc.org.

CoreNet Global’s Northern California Chapter will host a chapter meeting from 3:30 p.m. - 7 p.m.

CREW East Bay will host a Legal Hot Topic luncheon.

Visit eastbaycrew.org for more info.

19

AIA San Francisco will host a Career Strategy Roundtable: Informal peer-to-peer discussion from 12 p.m. – 1 p.m. at AIA San Francisco, 130 Sutter St., Ste. 600, San Francisco. This is a free event. Please RSVP to rsvp@aiasf.org.

20

AIA San Francisco will host a program called “Green to Codes: Integrating Building Analysis into BIM” from 3 p.m. – 5 p.m. at AIA San Francisco, 130 Sutter St., Ste. 600, San Francisco. This is a free event. Contact Frank Gennaccaro at frank@archvista.com with questions.

CREW Silicon Valley will host a New Members breakfast at De Anza Hotel. Visit crewsv.org for more info.

20

USGBC Northern California Chapter will host a tour of Castro Valley Library and a lively discussion of the latest trends in sustainable landscaping design with landscape architect David Gates. The tour goes from 6 p.m. - 8 p.m. at Castro Valley Library, 3600 Norbridge Ave., Castro Valley. Members $15 and non-members $25. Contact Bridgit Koller at bridgit@bridgitkoller.com with questions. Register online at usgbc-ncc.org.

SPUR’s Young Urbanists will host an event called “Doing Good through Economic Activism” starting at 6 p.m. at 654 Mission St., San Francisco. Admission is free for members and $20 for non-members. Register online at spur.org.

21

USGBC Northern California Chapter will host a LEED AP Existing Buildings: Operations & Maintenance Exam Prep from 8:30 a.m. - 5 p.m. at The Ferry Building, One Ferry Building, Port Commission Hearing Room, Second Floor, San Francisco. Register online at usgbc-ncc.org.

22

IIDA Northern California Chapter will host a Designer Challenge Fashion Show from 6 p.m. – 9 p.m. at South Bay Design Center, 6276 San Ignacio Ave., #E, San Jose.

Cost is $20. For reservations and info call 650.323.6791.

BOMA San Francisco will host its 4th Annual EARTH Awards from 11:30 a.m. - 1:30 p.m. at The Palace Hotel, 2 New Montgomery St., San Francisco. Members $60 and non-members $75. Register online at bomasf.org.

BOMA Silicon Valley will host Associates Night: BOMA SV’s Annual Trade Show from 4:30 p.m. – 9 p.m. at Holiday Inn (Mediterranean Room) 1740 N. First St., San Jose. The cost is $10 per ticket. Register online at boma-sv.org.

26

BOMA Oakland/East Bay will host a golf tournament at Round Hill Country Club, 3169 Round Hill Road, Alamo.

Tickets for golf and dinner are $275 and dinner-only tickets are $60. Register online at bomaoeb.org.

27

BOMA San Francisco will host it Young Professional Leadership Luncheon from 11:30 a.m.-1:30 p.m. at The City Club, San Francisco. Cost is $40. Pre-registration required at www.bomasf.org.

CREW San Francisco will host a CREW Sponsorship Chapter and National Network event starting at 8:30 a.m. at CB Richard Ellis, 101 California, 44th floor, San Francisco. Contact Julie Germain at julie.germain@cbre. com or 415.772.0210 with questions.

28

IFMA Silicon Valley will host a monthly meeting featuring the topic “Impact of the Diverse Workforce on the Facility Professional” from 5 p.m. - 8 p.m. at EMC, 2421 Mission College Blvd. Members are free and for non-members the cost is $60. Contact Joy Dunn at 408.226.0190 or admin@ifmasv.org with questions.

ULI East Bay will host a Breakfast tour of Contra Costa Centre from 8 a.m. - 9:30 a.m. at PMI Group, 3003 Oak Rd., Walnut Creek. Visit ulisf.org or call 1.800.321.5011 to register.

29

BOMA Silicon Valley will host an Annual Roof Walk Seminar from 7:30 a.m. - 1:30 p.m. Members $90 and non-members $115. Continental breakfast and lunch are included in the fee. Register online at boma-sv.org.

30

BOMA San Francisco will host a short course called “Ethics is Good Business” from 8 a.m. - 4 p.m. at 44 Montgomery St., Lower Level Conference Center, San Francisco. The cost is $400 for both members and non-members. Register online at bomasf.org.

AIA San Francisco will host a seminar called “Introductions to Specifications and Project Delivery Methods: Effects on Specifications” from 9 a.m. - 5 p.m. at XL Construction, 851 Buckeye Court, Milpitas. The cost is $75-$190. Visit csiscv.org or contact maia@mba-architects.net with questions.

april 2 0 1 0

theregistrysf.com 43

FinalOffeR To Market, to Market Ezra Mersey, founder, Jackson Pacific Ventures The tea leaves may be forecasting unexpectedly better days for Ezra Mersey, founder of Jackson Pacific Ventures, developer of San Francisco’s new One Hawthorne. The 165-unit, 25-story residential high-rise at Hawthorne and Howard comes to market this spring. A year ago, prospects looked daunting. Sales numbers for all San Francisco housing units hit a five-year low in December 2008 when fewer than 300 units sold, according to The Mark Company. The sales pace has improved dramatically since then, though the median price of all housing units sold in the city has fallen to $650,000 today from a peak of more than $800,000 in mid-2007. By the end of last year, the inventory of new condos for sale fell to about 1,200, including about 500 units in contract but not closed. Not much is in the pipeline behind them. One Hawthorne prices will range from the low $400,000s to penthouses expected to sell for more than $2 million, Mersey says.

Mersey began his career in New York as a high-rise building architect for Philip Johnson in the 1980s. He then moved to Kajima Urban Development, where he became an executive vice president and was responsible for the development of major projects including Pacific Bell Park. During his tenure with Tishman Speyer Properties from the late 1990s to 2003, the company developed projects in San Francisco, Silicon Valley and on the Peninsula, including 555 Mission in the city, where Mersey helped acquire the land and entitlements. He started Jackson Pacific Ventures in 2003.

Mersey grew up in New Haven, Conn.

How are you feeling about One Hawthorne coming to market in the current environment?

EM You can come to market early, late and just right.

We think we have an opportunity to come to market between early and just right. The model units are very encouraging. Most of the units have a den or library area, which is great for people who have a small business that they run out of their home. We also made good decisions about materials, fixtures and fittings. We want to create something that when people see it they don’t feel they are compromising. We knew two years ago that we would be in a more competitive environment, so we focused on exterior architecture, interior floor plans and qualities of finish.

The sales center opened in January, but we have not yet brought brokers or potential buyers through the building.

We didn’t want to start selling in an unfinished condition because when you have a finished product that you think is going to be exemplary you want to showcase that. People can really feel what it is going to be like.

44 theregistrysf.com

april 2 0 1 0

Ezra Mersey

By Sharon Simonson

Why did you start Jackson Pacific?

EM Both Tishman and Kajima were big companies. My goal was to have a small, focused entrepreneurial company.

We want to do a couple of things and to do them very well.

It is a value-creation company. We do that by acquiring raw land and getting projects through entitlements and design, then selling or developing them. All of our projects have gotten significant up-zoning. One Hawthorne was a four-story, C-quality office building that was empty with very poor prospects for being leased. The site was zoned for offices and had a 150-foot height limit. One Hawthorne is about 240 feet. When you are trying to figure out what is best at a given site, it’s not an a-ha moment. It’s a long analytic process. At One Hawthorne we looked at renovating the office building, adding stories, building a sliver building next to it. We looked at a blank slate to rethink everything, and when we did that, the right idea seemed high-rise housing.

How did you become interested in architecture?

EM The first exposure I had to architecture was a lecture by [architect] Paul Rudolph in New Haven when I was 9-years-old.

How did you get to the West Coast from the East Coast?

EM I got to the West Coast when I was offered a job

by Jerry Speyer to start a Tishman Speyer office in San Francisco in 1997. I wanted a chance to live in a city other than New York.

Compare New York and San Francisco.

EM What you get in San Francisco is quality of life, quality of environment, cultural diversity, interesting politics and a creative culture. The strengths of New York are its density and the abundance of economic and cultural resources that come with extreme density, more than any other city in the world. Quality of life is not a defining element of New York City.

What’s next for you?

EM A very good completion of One Hawthorne. We have a couple of years to go. Sticking with projects to completion and not getting distracted is something that our investors and lenders appreciate. We have two construction lenders: Bank of America and the Amalgamated Longview Construction Fund. They are supportive of us doing what we need to do to repay our loan. There is a danger in real estate to look beyond what you have and start worrying about the next cycle and next deal. That said, we are always monitoring the market for value-added land investment in San Francisco. I don’t think that the market is at the point yet where potential buyers and sellers see value the same way. But we are patient. We are waiting until the time is right and not feeling like we have to do a deal. n

City of Hope’s Northern California Real Estate and Construction Business Alliance Presents The

®

AWARD DINNER honoring

H A M I D M O G H A DA M AMB P ROPERTY C ORPORATION

T HURSDAY E VENING , M AY 13, 2010 T HE P ALACE H OTEL , S AN F RANCISCO For registration information and event details, visit www.cityofhope.org/rec/spiritoflife or call (800) 732-7140 Presenting Sponsors

Media Sponsor

THE

Registry

®