The Registry September 2010 Issue

In Every Direction East West Bank Navigates Foundering Bay Area Loans, pg. 6

THE

Ups and Downs

Exhale Slowly

Interest Rates Will Rise.

But When?, pg. 22

Residential Landlords Brace For November Ballot, pg. 25

Final Offer with Jim Fowler A Decade to Test His Mettle, pg. 36

Registry

BAY AREA real estate JOURNAL

4th Annual

Green ISSUE Naked City

Global Initiative Pushes Property Industry to Show More pg. 9

Let There Be Less Light(ing) Startups Rally to Reduce Energy Output pg. 10

September 2010

CalGreen

State to Developers: You Will Be Green pg. 12

Leading from the Rear

California Leads, Follows the World pg. 14

Walking the Talk

Certified Buildings Must Prove They Are Green pg. 21

Moffett Field Future Sustainability Base at NASA Ames Research Center



Contents SEPTEMBER 2010

LEED NC SILVER Certification

NETAPP BUILDING, SUNNYVALE

4TH ANNUAL

GREEN ISSUE

FEATURE PACKAGE

4 News Desk A summary of recent planning decisions

from select cities, news about the industry and people on the move.

6 Commercial Market Report

Beyond Green, pg. 9 Waste Not, pg. 10 The Power of the State, pg. 12 Something from Nothing, pg. 14 Saving Luxuriously, pg. 16 Trust and Verify, pg. 21

UCB: Uncontrolled Commercial Banking

8 Feature Package: Green 22 Finance Very Interesting 24 Rob’s REality Certainly Uncertain

25 Legal & Government Take a Deep Breath 26 REal People IFMA Green Block Partyty

28 REal People DPR Celebrates 20 years 30 Commercial Lease Report 31 Commercial Sales Report 34 Calendar of Events 36 Final Offer | Jim Fowler

Front Cover: Rendering courtesy of AECOM and William McDonough + Partners. This Page: Photo Courtesy of Jesus Nava

THE

Registry

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

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.

Letter from

Publisher Vladimir Bosanac vb@theregistrysf.com

the Publisher

President Heather Bosanac 415.738.6434 heather@theregistrysf.com

Editor-in-Chief Sharon Simonson 408.334.2512 ssimonson@theregistrysf.com

Creative Director Jelena Krzanicki

Photographer Jesus Nava

Writers Robert Celaschi, Michael Fitzhugh, Sharon Simonson, Sasha Vasilyuk

Contributors Jonathan M. Blute, Dan Geiger, Timothy J. Halloran, Peter Ingersoll, Rob La Eace

Advertising 415.738.6434

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.

Media Partners BICB, BOMA San Francisco, BOMA Silicon Valley, City of Hope, CoreNet Northern California Chapter, CREW San Francisco, CREW Silicon Valley, East Bay CREW, IFMA Silicon Valley Chapter, IIDA Northern California Chapter, NAIOP San Francisco Bay Area Chapter, Northern California Chapter of the Appraisal Institute, Northern California Chapter of SIOR, USGBC Northern California Chapter.

The Registry is a registered trademark of Mighty Dot Media, Inc. ©2010 Mighty Dot Media, Inc. All rights reserved.

This publication and/or its contents may not be copied, reproduced or republished in whole or in part without the written consent of Mighty Dot Media, Inc.

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S E P T E M B E R 201 0

Dear Reader, The 4th Annual Green Issue you hold in your hands marks a significant milestone for The Registry for a few reasons. We launched our publication at the end of 2007 with a Green Issue and with this magazine we are close to entering our fourth year of operation. We are very proud of this accomplishment and thank you and others in this industry for the continued support. The world has evolved since then, to say the least, and the fact that this is our 4th Green Issue also marks the continued importance the Green Movement has been playing in the industry.

Today, it is part of the mainstream in a way that has propelled sustainability from a marginalized objective to a primary goal for companies. As such, green has even entered the political arena, another milestone, and found a fertile ground in California where it will likely germinate eastward. CalGreen, the first national state-level green ordinance, is ushering in a climate of government directives that will affect the industry significantly. This is why on page 12, in “The Power of the State,” we examine its immediate impact on the industry and try to understand the consequences of the bill’s passage on our lives in general.

While the bill’s effect will reverberate throughout the real estate industry, one organization can chalk it up as a milestone in its efforts to bring green and sustainability to the forefront of the industry. The U.S. Green Building Council has been a vocal and important champion of the green movement and has emerged as a de facto standard for measuring green buildings. With the passing of the bill, however, some argue that USGBC may actually stand to lose some of its power. The argument makes the point that with government mandating green practices, thirdparty services may become obsolete. I personally feel this is a short-sighted perspective mainly because it fails to take into consideration the fact that a new environment will force everyone to evolve. And this is precisely why Dan Geiger’s column on page 21 on USGBC’s efforts to transform itself is an important read. Dan is the executive director of the Northern California Chapter of USGBC, and he offers us a perspective on where the organization is heading.

In the Bay Area, the Green movement is multidimensional. Not only has it lodged itself in the psyche of building owners and managers, but it has also made a strong impression on tenants in the last decade who increasingly are demanding green and sustainable settings. Furthermore, the movement,

as I said earlier, is now a political force in California, which is one of the reasons why the NASA Ames Research Center at Moffett Field will get a LEED Platinum (the highest) certification, and become the greenest development in the federal government’s portfolio. As our editor in chief, Sharon Simonson, writes on page 14 titled “Something From Nothing,” the project’s design team is led by none other than William McDonough, considered by many to be the the father of sustainable design in the U.S. The fact that the federal government selected someone like him for this project is not that surprising. What is more interesting, however, is the fact that the United States has an inordinate amount of green architectural and design talent. This is recognized by almost everyone around the globe except in America, perhaps. American-based architects are leading some remarkable sustainable and green projects in countries around the world and are doing nothing of the sort on their home turf. The article explores this phenomenon and recognizes that we have a chance to do even more in the United States.

The final dimension of the green movement in the Bay Area is driven by the very industry that drives the economic engine of our region—technology.

Green startups have sprouted all over the Bay Area, driving innovation in building materials, smart grid technology and alternative energy sources to name a few. Naturally, venture capital is recognizing the global potential of these initiatives as global conglomerates are starting to peek into the activities of these nascent companies. The article on page 10, “Waste Not,” by Robert Celaschi, considers the impact these companies will have on the way buildings are built and managed. My feeling is that their products will become the new norm in construction as building owners will continue to be ever so diligent about where their money is going. I also wish for their speedier adoption because their success will drive employment opportunities in the Bay Area, something that could have a real and lasting impact on the region.

Thank you again for your continued interest. As always, feel free to reach out to us with comments or questions.

Vladimir Bosanac, Publisher vb@theregistrysf.com

Contributors Jonathan M. Blute Take a Deep Breath, pg. 25 Jonathan M. Blute is an associate with Murphy Pearson Bradley & Feeney’s San Francisco office.

He principally handles civil litigation matters, focusing on defending commercial, business, professional liability and real estate clients, including commercial and residential property owners as well as homeowners’ associations. He also assists companies and individuals with strategic planning and risk management and in the preparation of commercial agreements.

Dan Geiger

Editorial Boards Board members of The Registry serve without expectation of recompense or reward. They advise the magazine’s executive team on matters of relevance to the region’s commercial and residential real estate community. The board’s makeup reflects the wide readership of the magazine including attorneys, architects, interior designers, residential and commercial real estate brokers, investors, lenders, general contractors and subcontractors, engineers and other professionals.

Trust and Verify, pg. 21

Dan Geiger is executive director of the Northern California Chapter of the U.S. Green Building Council. He is an experienced social entrepreneur with more than 25 years of start-up, executive and leadership experience and has consulted on business planning, strategy and organizational development in the nonprofit, for-profit and philanthropy sectors.

Timothy J. Halloran Take a Deep Breath, pg. 25 Timothy J. Halloran is a senior shareholder of California-based law firm Murphy Pearson Bradley & Feeney P.C. He has more than 25 years experience trying cases to jury verdict in all manner of civil litigation, including commercial and residential real estate disputes; legal and medical malpractice suits; copyright and trademark infringement cases; personal injury; business litigation; and consumer rights. He is a board certified civil trial advocate by the National Board of Trial Advocacy and has been elected a member of the American Board of Trial Advocates. He speaks regularly before bar associations conferences on legal malpractice.

NORTH

Stephen Austin, RPA

Regional Property Manager Boston Properties

Daniel Myers

Marc Cunningham President AllWest

Jeanne Myerson

Partner, Real Estate Practice President & Group Leader Chief Executive Officer Wendel, Rosen, The Swig Company Black & Dean LLP

Bruce Dorfman

Jesshill E. Love III

Daniel Huntsman,

Principal LEED AP Thompson | Dorfman President & Founding Principal Partners, LLC Huntsman Architectural Group

Anton Qiu

Principal TRI Commercial

Phil Williams, P.E., LEED AP Vice President Webcor Builders

Partner Ropers, Majeski, Kohn & Bentley

Paul Zeger

Principal, President & CEO Pacific Marketing Associates

Peter Ingersoll Very Interesting, pg. 22

Peter Ingersoll is chief executive of East Bay investment advisory Safe Harbour Equity Inc. and a serial entrepreneur. He has an economics degree from the University of Pennsylvania Wharton School and several advanced degrees from the School of Hard Knocks earned while working in the construction, development, site acquisition, private banking & trust, investment banking, securities and, most recently, the Northern California commercial real estate industries. This article is based on research for his forthcoming book, “The Real Estate Tsunami Survivor’s Guide,” to be published in November. The book features interviews and remarks from industry leaders such as Dr. Sam Chandan, the global economist for Real Capital Analytics; Ethan Penner, president of CBRE Capital Partners; and Michael J. Panzner, author of “Financial Armageddon: Protecting Your Future from Four Impending Catastrophes” and “When Giants Fall: An Economic Roadmap for the End of the American Era.”

SOUTH

Terry de la Cuesta, IIDA, LEED AP

Jennifer Dizon, CPA

Norman C. Hulberg, MAI

Robert Kraiss, CFM

Director of Healthcare Synergy 4 Health, a One Workplace Company

Audit & Advisory Partner Hood & Strong, LLP

Erik W. Doyle

President Cornish & Carey Commercial

Geoffrey C. Etnire

Co-Chair, Real Estate Group Hoge, Fenton, Jones & Appel, Inc.

Michael W. Field

Director, Commercial Real Estate The Sobrato Organization

Rob La Eace Certainly Uncertain, pg. 24 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.

Director of Corporate Facilities & Real Estate President Adaptec, Inc. Hulberg & Associates, Inc.

Jody Quinton

Regional Manager DPR Construction, Inc.

Patricia Sausedo

Vice President of Public Policy & Communications San Jose Silicon Valley Chamber of Commerce

S E P T E M B E R 201 0

Jeffrey A. Weidell

Executive Vice President NorthMarq Capital

theregistrysf.com 3

News

Desk

PLANNING NEWS from around the Bay San Francisco 900 Folsom The San Francisco Board of Supervisors has approved a $200 million, 448-unit mixed-use housing and retail development for two acres on adjacent sites at Folsom and 5th streets South of Market. The project sponsor is Avant Housing, a partnership between San Francisco’s AGI Capital and TMG Partners. Avant was formed as a result of a partnership with the California Public Employees’ Retirement System. Construction is expected to start within a year on the first, smaller phase, which consists of 179 housing units. AGI Principal Eric Tao said stonefaced lenders are beginning to warm: “We have been talking to them for three years, and they never talked back. Now they are.” Avant is looking at financing its project as apartments with the understanding that the units could ultimately be sold as condominiums, a tactic that banks are encouraging, Tao said. The site entitlements allow both. Tao concedes that some San Francisco condo developers in the last cycle “did not hit their pro formas,” though the carnage is far less than in other regions. AGI is banking on demographics to fuel demand: Young professionals in the 75 million-strong Generation Y and the like-sized Baby Boomer generation are both expected to buy. “I am in Generation X. We still went to jobs. With Gen Y, the jobs come to them. Google sends buses to pick them up. They want to live in San Francisco, and they are not going to be stuck on freeways,” Tao says.

San Mateo 1080 S. Amphlett Blvd.

The San Mateo City Council has approved development of 60, three-story town homes and 14 small, single-family detached homes plus a 30,000 square foot commercial building on 3.5 acres. An existing building is to be demolished. The project is being pursued by Intracorp San Francisco. Intracorp executive Phil Kerr said the approvals cap a two-year entitlement process.

Next on the list is construction financing, he says. “If you look at the history of what has been selling, there is a very limited supply in San Mateo of new homes and especially new town homes priced in the range from $500,000 to $600,000,” he said. The company expects to be under construction a year from now.

Daly City General Plan The 7.5 square-mile community of Daly City is thick in the throes of updating its general plan to guide development for the next 20 years. An update to the city’s zoning ordinance will follow.

With 108,000 people, Daly City is the largest community in San Mateo County and the second most dense in the Bay Area, said Michael Van Lonkhuysen, the senior planner overseeing the update. The Association of Bay Area Governments projects its population will grow to just shy of 130,000 in the next two decades. Immediately south of San Francisco and on the cusp of the

San Francisco airport, Daly City expects its housing base to grow enough to accommodate the 4,200 additional households expected to live in the city by 2030. Study shows that household formation is outpacing housing production, Van Lonkhuysen said. The city plans to steer much of the new development to Mission Street, the main north-south corridor east of Interstate 280. Mission, the extension of El Camino Real, runs 2 miles from Daly City’s southern border to San Francisco. A collection of low-slung, older vintage commercial and industrial buildings now, Mission Street—if all goes as planned—will see higher-density housing and commercial redevelopment. “We are low on vacant land, and parcel assembly is something the city is trying to incentivize,” the planner said. “When we update our zoning ordinance, we hope to incorporate incentives to private property owners to merge property because small parcels present the single biggest roadblock to larger-scale development.” Parking requirements for all types of residential development near transit could also fall.” The general plan should be complete in 2011.

San Jose Guadalupe Mines Road, South of Via Campagna City Council is to vote Aug. 31 on entitlements for Danville-based Trumark Cos. to develop 94 detached single-family homes in San Jose’s far southwest reaches. If approved, the project would likely represent one of the few and last new detached housing developments in the city.

The Planning Commission approved the project Aug. 11 on a 4-1-2 vote, with two commissioners absent. The 16-acre site is in a scenic, relatively remote district that abuts the town of Los Gatos not far from multiple open space preserves. The homes are to sell for $1.1 million to $1.2 million, with values driven up by the scarcity of new single-family detached stock in San Jose and the desirable Los Gatos school district, said Trumark Vice President Arden Hearing.

Trumark expects to pursue development in partnership with an equity partner, Hearing said.

He declined to disclose the partner’s name. Trumark is pushing forward with entitlements in expectation of a rebounding sales market, said Chris Davenport, a Trumark senior vice president. It is one of the few developments of any property type seeking city entitlements this year, San Jose planning staff said. San Jose currently has about 20,000 approved housing units on its books, said San Jose Principal Planner Andrew Crabtree. That includes both for-sale and for-rent units. Hearing says that potential source of rival new housing does not scare Trumark.

“For detached lots in San Jose, you can sell them all day long,” he said.

Monterey County Monterey County began the update of its general plan more than a decade ago. On Aug. 11, its planning commission approved the current draft, and the Board of Supervisors is take up the commission’s recommendation Aug. 31. Monterey County, which borders the Pacific Ocean just south of the Silicon Valley, is one of the largest in the state with 3,300 square miles.

Incorporated county cities include Carmel, Monterey, Seaside and Salinas. n

SENT to us Dirt Turns for Transbay Terminal San Francisco broke ground on the much-anticipated, five-story, one million square foot Transbay Transit Center, the anchor of a proposed high-density office and housing community South of Market and the northern terminus of the state’s proposed high-speed rail system.

Transbay Transit Center is to house 11 transit operators including regional rail and bus service providers and to serve more than 45 million passengers a year. It is to be complete in 2017. The city also opened a temporary terminal at Howard and Main streets.

Construction Begins on Doyle Drive Replacement Major construction began on the Doyle Drive Replacement project, a $1 billion highway upgrade to secure the primary access route linking San Francisco, San Mateo, Santa Clara, Marin and Sonoma counties. When completed in 2013, the project will replace the 73-year-old Doyle Drive southwest of the Golden Gate Bridge. The improvements significantly reduce the likelihood of an earthquake severing the roadway cutting a key commercial link for the region.

The project will also result in structural and seismic improvements to the Presidio Trust and the Golden Gate National Recreation Area nearby.

is nearing completion of 500,000 square feet of new construction and 150,000 square feet of remodeling. The program includes acute general medical facilities with 30 acute-care beds and a 750-bed skilled-nursing facility. The hospital is designed to use 30 percent less energy than required by the building code.

Silicon Valley Home Sale Price Up 12.5 percent Year -Over-Year The average sales price for a Santa Clara County home, including single-family, townhouses and condos, rose in July to $710,475, a 2.20 percent increase from June and a 12.42 percent increase from July 2009, according to MLSListings. The average sales prices has climbed every month this year except for a slight dip in May.

Bay Area Home Foreclosure Rates Remain Muted

California has applied for up to $1.6 billion in additional federal funding to help build a portion of the state’s high-speed rail system. The application, filed on behalf of the California High-Speed Rail Authority and Caltrans, seeks part of the $2.3 billion the U.S. Department of Transportation has available for high-speed train and intercity rail projects nationwide. The funds would help complete engineering and other work on the project not covered by earlier federal funds. In January, California’s high-speed train project received $2.25 billion, the largest share of federal funding set aside for such projects under the 2009 American Recovery and Reinvestment Act.

California foreclosure activity was again mixed in July, with fewer notices of default and trustee sales on a month-over-month and a year-over-year basis, according to Discovery Bay-based ForeclosureRadar.com. “Despite a tsunami of mortgage delinquencies we continue to see no signs of a foreclosure wave,” said Sean O’Toole, founder and chief executive of ForeclosureRadar. “Lenders and government intervention continue to delay foreclosures despite their continued failure to find a long term solution to unsustainable negative equity.” Foreclosure activity remains muted in the Bay Area. Just more than 850 notices of default, the first step in the foreclosure process, were filed in July in Alameda County, roughly 100 fewer than a month earlier and about half that filed in July 2009. Meanwhile, 645 default notices were filed in Santa Clara County in July, about 100 fewer than in the previous month and 1,000 fewer than July 2009. Both San Francisco and San Mateo counties saw a fraction of those numbers. By way of comparison, Los Angeles County alone saw 5,322 notices of default filed in July alone while Riverside County saw 2,545.

Laguna Hospital First LEED Hospital in California

Orchard Grows a New Leaf

San Francisco’s Laguna Honda Hospital and Rehabilitation Center at 375 Laguna Honda Blvd. in the Twin Peaks neighborhood is the first hospital in the state to receive certification from the U.S. Green Building Council. Anshen+Allen designed the renovation and replacement project in a joint venture with Stantec Architecture. Laguna Honda Hospital, a skilled nursing and rehabilitation center owned and operated by the San Francisco Department of Public Health,

Silicon Valley’s Orchard Commercial has been selected to manage a 10-building, 691,019 square foot office/R&D portfolio in Sunnyvale and San Jose. The company provides integrated property management, leasing, marketing, mechanical and construction services to 8.5 million square feet of Bay Area commercial real estate on behalf of institutional clients, major companies and banks. The San Jose company has 55 employees.

State Seeks More Federal Money for High-Speed Rail

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PEOPLE on the move One Workplace Adds Industry Veteran Terry de la Cuesta joins One Workplace as Director of Sales for its healthcare company, Synergy 4 Health. Formerly a Senior Interior Designer and Associate at RMW architecture and interiors, she brings over 25 years of healthcare experience to the company. Terry is widely recognized for her healthcare design work throughout the Bay Area, including work with complex institutional projects, HMO’s, multi-specialty clinics and community wellness centers. At Synergy 4 Health she will be responsible for leading a dedicated healthcare sales team focused on furniture, equipment, and architectural products used in the healthcare environment. She also serves as a healthcare planning resource to the Bay Area Architectural and Design community. Terry became a Certified Interior Designer in 1988 and a LEED Accredited Professional in 2009. In 2008, she was made President of the International Interior Design Association, Northern California Chapter.

Law Firm Doubles Its Sacramento Office San Francisco-based law firm Hanson Bridgett LLP has expanded its real estate and construction group with the addition of eleven attorneys from Sacramento-based McDonough Holland & Allen PC. Joining Hanson Bridgett as partners are André K. Campbell, Morgan T. Jones, William A. Lichtig, Tyson M. Shower, Sean-Thomas P. Thompson and Robert W. O’Connor, who is currently head of McDonough’s construction practice. In addition, Dawn M.D. Balzarano, Joel W. Darrington, John W. Klotshce, Erin K. McDonough and Robert J. Wood have joined Hanson Bridgett as associates.

Housing Developer Looks to Buy Urban housing developer City Ventures has hired Phil Kerr as its vice president of development for City Ventures’ residential and mixed-use properties in Northern California. Santa Ana-based City Ventures has acquired more than 20 properties in the last year. It is being backed by an affiliate of Ares Management LLC, an alternative asset manager that has pledged a $100 million equity investment. The company will close on both entitled and unentitled property, Kerr said. City Ventures is pursuing townhome development, broken condominium projects and re-entitlement opportunity in infill Bay Area locations.

Taube Koret Campus Project Manager Promoted San Mateo-based Sares Regis Group of Northern California has promoted Dave Hopkins to vice president for the commercial division. Hopkins joined Sares Regis in 2007 and was project manager for the $300 million Taube Koret Campus for Jewish Life development in Palo Alto. His responsibilities include site selection, feasibility analysis, underwriting, entitlements, financing, due diligence, contract negotiations and construction oversight.

Retail Veterans Join Grubb Kenneth Brownell and Peter Mikacich, founders of Brick & Mortar Commercial, and two of their associates have joined Grubb & Ellis to lead its retail practice in San Francisco, Marin County and the San Francisco Peninsula. Brownell and Mikacich join as senior vice presidents. Cameron Baird is a vice president and Shaun Bloomquist a senior associate.

Brownell has devoted his career to retail brokerage. His transactions have included fitness company Crunch LLC, Walgreen Co., Talbots Inc., Wells Fargo & Co. and Smart&Final Inc. Mikacich began his commercial real estate career in 1992. He has completed more than 400 lease and sale transactions throughout the Bay Area.

Dome Construction Adds Four Dome Construction has added Eric Grimsby as MEP specialist, Mike Norrdin as project manager and John Rodgerson and Dustin Merzalek as project engineers.

Grimsby brings 15 years experience including work with Genentech, Hewlett-Packard, IBM, Chiron, UC Berkeley and Lockheed Martin. Norrdin brings 14 years of construction experience, specializing in laboratory tenant improvements, biotech facilities and modifications to existing building systems. Rodgerson has completed several renovations for various Embassy Offices in Washington, D.C. and has extensive experience with sustainable building. Merzalek has been in the construction industry since 2007 and brings experience working for clients around the Bay Area including BART, AvalonBay and CalTrans.

Construction Engineer Opens Bay Area Office Shared Systems Technology Inc. has opened a Benicia office to serve Northern California and the Western region. Martin Kindred will run the office. Kindred has 30 years experience as a marketing and operational executive with construction and specialty subcontracting companies and consulting firms. SST does structural repair and strengthening, building envelope repair, waterproofing and protection and protective and thermal linings.

Broker Appoints Manager of San Francisco Office Cornish & Carey Commercial has named Bryan Courson a senior vice president and manager of its San Francisco office. Courson was managing partner of Cassidy Turley BT Commercial’s San Francisco operation. Courson specializes in tenant representation.

Arborist Promotes Safety Director Bill Owen has become the first safety director for California tree-care company Arborwell responsible for the company’s safety, emergency preparedness and hazard communication. Owen has worked in the tree-care industry for 16 years, three with Arborwell. The company has its continued on page 32

COMMERCIAL MARKET REPORT

Landmark Plaza, Daly City

UCB: Uncontrolled Commercial Banking San Francisco’s United Commercial Bank is one of only four banks nationwide that have lost TARP money.

By Sharon Simonson

Senior United Commercial Bank management and the circumstances of more than 150 loans are now “being investigated by other units within and outside of the FDIC.” Office of the Inspector General, Federal Deposit Insurance Corp.

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P hoto C O U R T E S Y O F J e sus NAVA

L

osses from the November failure of San Francisco’s United Commercial Bank are approaching $2 billion, including $1.5 billion drained from the Federal Deposit Insurance Fund and nearly $300 million lost by the U.S. Treasury from its Troubled Asset Relief Program, according to an evaluation of the bank’s regulators prepared by the FDIC’s Office of Inspector General. Rosy underwriting on real estate and a much higher concentration than banking peers of development and commercial real estate loans contributed greatly to the downfall, the report concludes.

UCB is one of only four lenders nationally that have lost TARP money, according to the Treasury. United Commercial received the maximum federal funding for which it was eligible under TARP’s guidelines, according to the Inspector General’s report. That, despite multiple red flags raised during regulator examinations in the preceding years and a welltimed but anonymous email to federal officials questioning the TARP outlay after it was approved but before it was disbursed. UCBH Holdings Inc., the bank’s parent, is now in bankruptcy.

The results of United Commercial’s failure are evident across the Bay Area in multiple struggling property developments. Pasadena-based East West Bank acquired United Commercial’s assets from the FDIC and is

unraveling the mess, according to public records. UCB-financed developments in Cupertino, Sunnyvale, Santa Clara, Fremont, Daly City and San Jose all have stumbled. Multiple lawsuits are slowly playing out in federal and state courts. East San Jose’s Vietnam Town, a nearly 200,000 squarefoot retail condominium development that has been in trouble since early 2008, is in receivership. Santa Clara Square LLC, a proposed high-density housing project on 12.6 acres on a high traffic corner in Santa Clara, and Saigon Village LLC, a 29-unit commercial condominium development in Fremont, are both in bankruptcy. East West is fighting with borrowers in each case over the current value of the collateral.

Emily Chen, a principal for Santa Clara Square, was also a player in the proposed redevelopment of the former Vallco mall in Cupertino, re-named Cupertino Square. UCB was also a lender on that project; the mall’s remake has a long history of fits and starts. In 2006, UCB also lent $21 million to RREEF America REIT III on a cluster of parcels adjacent to the Sunnyvale Town Center redevelopment. The borrower ultimately defaulted on the loan, and Peter Pau of Sand Hill Properties now owns the property.

A trickle of properties related to the failure are being sold as East West labors through the problems. A soaring, 95-unit condominium development, Landmark Plaza in Daly City, is on the market. UCB lent the developer some $46 million. The broker marketing the site, Anton Qiu of TRI Commercial, estimates the property will sell for considerably less than the loan amount.

The FDIC Inspector General deconstructed regulators’ roles leading up to UCB’s failure including the basis for the FDIC’s recommendation to the U.S. Treasury to extend TARP funding. The report identifies numerous lapses in regulator oversight and suggests that the FDIC should have acted sooner to step up its scrutiny. The report singled out a Hong Kong branch for its especially deficient underwriting, noting that UCB staff did not verify borrowers’ financial conditions or obtain tax returns from borrowers or guarantors, nor were consistent standards for debt-service coverage applied.

Banking examiners also did not criticize UCB’s concentration in commercial real estate lending until April 2009, the report says. That was well after the bank had begun losing millions of dollars on its property-related loans. The bank’s loan portfolio blossomed to a high of $8.7 billion at the end of 2008, up from $3.81 billion in December 2003. Examiners told the Inspector General that they realized too late the poor underwriting of loans extended in 2006 and 2007 because markets were strong, the loans were performing and appraisals typically supported the values.

Senior UCB management and the circumstances of more than 150 loans are now “being investigated by other units within and outside of the FDIC,” according to the report, which several times suggests illegal activity at the bank. The scope of the Inspector General’s review does not extend to whether the FDIC “should have been cognizant of UCB’s alleged violations of securities laws at an earlier time ... ,” the report notes.

The Inspector General attributed the bank’s failure mostly to faulty management and weak board oversight and to a drive, accelerated after 2002, to reach $10 billion in assets so it could meet an eligibility threshold to purchase a bank in mainland China.

The FDIC received one last nudge to question its approval to send the TARP money. An anonymous email arrived in federal offices on Oct. 27, 2008, five days after the FDIC had recommended the bank receive the $298.7 million capital injection. The message questioned the decision and “the integrity of UCB’s CEO,” according to the Inspector General. The following month, the money was sent anyway. n

Adobe, San Jose LEED EB PLATINUM

For adherents, embracing sustainability is not a burden but a means to improve financial performance.

GREEN ISSUE

Beyond Green A new set of global sustainability standards is going to raise the performance bar for real estate-related companies.

By Michael Fitzhugh

P hoto C O U R T E S Y O F J e sus NAVA

E

ven as the real estate industry grapples with the deep economic downturn and a new mandatory building code that will push adoption of green-building techniques to every corner of California, another hefty challenge is coming. A continent away, the creator of the world’s most widely used sustainability reporting system is preparing new guidelines designed to track how well the sector is adopting sustainable business practices. That includes not only protecting the natural environment, but also caring for workers and communities and ensuring customers are not harmed by products.

Some of the industry’s biggest names, including three well known in the Bay Area, are working with Amsterdam-based Global Reporting Initiative to bring the effort to reality. They include global engineering and planning company Arup; global property development and investment company LendLease; and ProLogis, a global provider of distribution facilities with more than 475 million square feet.

Just like climate change, recently determined to be material to financial reporting by the U.S. Securities and Exchange Commission, sustainable business practices are becoming increasingly relevant to companies. While such reporting remains largely voluntary, countries such as Denmark, France and Sweden have made it compulsory. The notion underlying the movement is that responsible enterprises must reconcile financial performance with measures designed to track other benefits and costs, including the impact on future generations. For adherents, embracing sustainability is not a burden but a means to improve financial performance.

To date, a combination of foggy guidance paired with voluntary and timeconsuming disclosure systems have left the promise of sustainability unrealized in the real estate arena, said Jean Rogers, a principal at Arup’s San Francisco office. Rogers has researched the sustainability movement in conjunction with David Wood, director of Harvard’s Initiative for Responsible Investment, and Steven Lydenberg, chief investment officer at Domini Social Investments.

Rogers and her London-based colleague, Jonathan Ben-Ami, are deeply involved in developing the new GRI standards for the real estate industry. Rogers argues that the benefits are not solely better public relations. “If you understand your impacts and can better manage them, there are huge opportunities to be a better-run, better-managed company,” she says.

The GRI already has special reporting standards for industries such as electric utilities and financial services, and it is in the initial stages of creating tailored standards for the telecommunications sector and public agencies, among others.

The gamut of special standards for real estate runs wide. So far, based on working documents, it encompasses such metrics as community impacts, including effects on “vulnerable groups;” corporate affiliations with advocacy organizations; labor practices of the companies and their suppliers. It further extends to corporate governance and ownership; investment and procurement practices; and contributions to the larger economy.

Arup and its working group partners are not beginning from scratch. After real estate returns for institutional investors dove in 2008, Rogers collaborated with Lisa Michelle Galley, founder and managing principal of San Francisco’s Galley Eco Capital, and Harvard’s Wood to compile an initial set of responsible property investment metrics.

In trial use of those metrics, reported to the Urban Land Institute’s Fall Council Forum in a November 2009 paper titled “Metrics for Responsible

Property Investing,” the Bay Area Council found that “the use of responsible property investing metrics during acquisition can help pinpoint opportunities to improve an asset’s tangible value and its environmental and social profile at the same time.”

The GRI standards for the construction and real estate industry, due to be finalized in 2011, were opened to public comment earlier this year, and promotors will continue to solicit feedback this year. “People should be lobbying like crazy to make sure that the standards reflect the things that really matter to the real estate industry,” Rogers says.

Sarah Martinez, vice president of corporate responsibility for ProLogis, says that the Global Reporting Initiative is setting the bar for corporate transparency.

ProLogis is working at a company-wide level to put a more formal sustainability program in place, Martinez said. The program is nascent, but “at a high level, we want to better understand the health, safety and labor issues in our supply chain and learn how to best manage and minimize risks,” she says.

Some might ask if it is really possible to achieve positive investor results when a business is trying to meet multiple goals—the so-called triple bottom-line of economic, social and environmental returns? “Yes!” says Kellie McElhaney, cofaculty director at the Center for Responsible Business at UC Berkeley’s Haas School of Business. “If it’s done smartly, by linking actions to your core competencies and core business objectives,” achieving all three is possible, she says.

McElhaney does not believe that the real estate sector has developed social enterprise strategies well beyond the U.S. Green Building Council’s Leadership in Energy and Environmental Design program. “I don’t think real estate has experienced the kind of broad-scale pain that other industries have,” she says, referring to some of the reformational forces that have shaped the retail and banking industries in years past. “It’s a business opportunity they’re missing out on, an opportunity to create more users,” she says.

ProLogis does not see corporate social responsibility and profit-making as mutually exclusive, either, Martinez says.

While the current emphasis on triple bottom line investing might feel new to some, the notion of addressing both the financial bottom line and social issues in combination has a long history. The foundation of worker cooperatives, for instance, dates back as early as the mid-1800s. More recently, the movement has given birth to Bay Area ventures like the worker-owned Cheeseboard Collective, founded in 1967 in Berkeley, and business-oriented non-profits such as The Delancey Street Foundation, which uses its non-profit food, transportation and other business to transform the lives of ex-convicts, former substance abusers and other troubled people.

The Bay Area’s real estate and construction industry has done an admirable job of tackling the environmental impact of new and existing building projects— winning 10 LEED Platinum awards from the U.S. Green Building Council in this year alone. But it seems yet to have mastered the art of addressing social concerns with the same efficiency-minded approach.

As the authors of the Urban Land Institute paper put it, “There has yet to develop a fully elaborated set of issues, vocabulary and measurement that investors can use to evaluate whether their portfolios are achieving their environmental and social goals, or that enable investors to evaluate the relationship between environmental, social and governance data and financial performance.” n

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GREEN ISSUE

The Bay Area has spawned a rash of startups that are creating products to make buildings use less energy.

By Robert Celaschi

“If it is longer than a two-year payback, it is hard to justify for many people.”

Chief Executive Harry Sim, Cypress Envirosystems in San Jose

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T

I mage C o u rtesy of R e dwood S y s t e m s

Waste NOT

here’s money in making older buildings energy efficient.

That’s why a host of Bay Area startups is chasing the market. The source of the interest is obvious: Commercial offices use 37 percent of California’s electricity.

But, according to the U.S. Department of Energy, building electricity use could be cut by 80 percent. If renewable energy generation is added, buildings can even become energy neutral.

Venture capital firms, including more than a dozen in the Bay Area, are betting heavily on the sector. Technology companies focused on energy efficiency raised $1 billion in 2009 and are set to become the second-largest segment of venture capital investment in 2010, according to a white paper produced for San Francisco research firm Next 10 by Collaborative Economics Inc., a San Mateo consultancy.

Demand is also expected to grow globally. David Gottfried, founder of the U.S. Green Building Council and now head of Berkeley-based U.S. Regenerative Network, sees the market getting much bigger. “There are 72 countries creating green-building councils,” Gottfried said. “People from China and India and Korea are calling. I’m doing a fair amount over there, including introducing China to some of these firms.”

Energy management covers a spectrum of products and services. It includes devices that use less electricity themselves and others that monitor energy use or switch appliances or light fixtures off when not needed. Lighting and climate control are considered low hanging fruit in the energy-management business, much easier to accomplish than, say, re-insulating an older building.

The American Council for an Energy-Efficient Economy estimates that total energy efficiency-related investments in commercial buildings totaled $51 billion in 2004 and that venture investments in clean-energy technologies will top $226 billion by 2016.

“It is an interesting period for startups,” said Joseph Gillespie, an analyst for ARC Advisory Group, a Boston-based research and advisory firm for industry and infrastructure. “The market really hasn’t shaken itself out yet.”

That said, lighting, fire and safety, HVAC and other systems are all merging toward a single set of integrated controls. Some innovators will be scooped up by established industry heavyweights such as Honeywell International, German conglomerate Seimens and Johnson Controls Inc., which have more resources to develop markets, Gillespie predicts. At the same time, the different segments are at differing stages of maturity. The lighting controls field is “incredibly immature” and chasing customers that can easily achieve 20 percent more efficiency in their buildings.

“There are 50 or 60 companies that I’m aware of that do lighting control to one degree or another,” Gillespie said.

HVAC, on the other hand, is a more mature market already dominated by the likes of Seimens and French energy-management company Schneider Electric. The bigger players are already putting out feelers to partner with or acquire startups, he said, letting the entrepreneurs do the development work and test the markets first. Startups are likely to be receptive to the overtures. “It’s much

more difficult for a small startup, even if their technology is fantastic,” he said.

Adura Technologies in San Francisco is going after the lighting market with low-power, Webbased wireless controls. “The key geographic target markets correlate directly with the highest utility rate markets,” said Mercy Ringelmann, Adura’s sales director for green buildings.

California’s new CalGreen building code and stiffer local codes may help the late adopters catch up, she said, but early adopters cared more about lowering costs and increasing tenant comfort.

Adura is backed by $17 million in venture capital from NGEN Partners, VantagePoint Venture Partners and Claremont Creek Ventures.

Other Bay Area startups are also taking the Web approach.

Lucid Design Group Inc. has a Web-based dashboard product that lets people view and share information on building energy and water use. The Oakland company, founded in 2004, got $1.5 million in Series A funding early this year from Dry Creek Ventures. Agilewaves Inc. in Menlo Park has Web-based software that monitors electric, gas and water use while automatically calculating a carbon footprint. Founded in 2006, it has customers across the country, including Equity Office Properties Inc. Software company Scientific Conservation Inc., based in San Francisco, has created SCIwatch, a vendor-neutral energy analytics platform that connects with building energy management systems to check patterns in energy use for diagnostics, issuing work orders and tracking results. Founded in 2007, SCI landed $9 million in Series A funding this past June from The Westly Group and Draper Fisher Jurvetson.

Cypress Envirosystems in San Jose, a subsidiary of Cypress Semiconductor Corp., is focused on helping existing buildings save energy and enable demand response. Founded in 2006, it provides technologies to retrofit legacy HVAC, steam and mechanical systems using wireless digital controls.

For Cypress, the key to success was starting with small spaces (10,000 to 20,000 square feet) for big clients. “We picked big guys like Google, Kaiser hospital and Cushman & Wakefield because other people follow them,” said Chief Executive Harry Sim. “In this business, you need some guys who have a big name behind you, or people won’t stick their neck out to do it.” The systems can be installed in 20 minutes without ripping up walls or ceilings.

The company claims the investment pays for itself in 18 months.

“If it is longer than a two-year payback, it is hard to justify for many people,” Sim said.

The strongest demand so far has been in the MUSH market, he said: municipal, university, school and hospital. Those organizations tend to have money set aside for capital improvements or were able to get federal stimulus dollars. But the commercial market has shown interest in recent months, he said.

Sunnyvale’s Serious Materials Inc. attacks the problem from

the outs i d e with windows that reflect heat but let in light. Its SeriousGlass blocks both ultraviolet and infrared light.

About $120 million in VC money has come in from 10 different firms, including New Enterprise Associates Inc., Foundation Capital and Mesirow Financial. Serious has been tapped by Johnson Controls to upgrade more than 6,500 windows for the Empire State Building.

Soladigm Inc. in Milpitas has likewise entered the window market, backed by Khosla Ventures and Sigma Partners. Its approach is to use a patented film that can darken or lighten in the same way a light bulb can be dimmed. But, though founded in 2006, it still hasn’t brought a product to market.

In Fremont, Redwood Systems also sells lighting efficiency through a central control for light-emitting diode systems. Each LED comes with temperature, motion and light sensors to monitor rooms. “We’re trying to take a data-networking system and power lights with it, and we can do that for the first time with LED,” said Jeremy Stieglitz, vice president of marketing.

The company is backed by Battery Ventures and U.S. Venture Partners. It began sales last summer, about the same time it received $4 million in Series A funding.

The hurdle for Redwood is that LED fixtures cost more than florescent, Stieglitz said. But the low-voltage LED systems are cheaper to install. The return on investment could be two to five years, depending on the age and efficiency of the system being replaced.

But customers are finding benefits that the company never thought of, he added, such as monitoring the temperature of a conference room to show whether it was really being used when it was booked.

One hurdle for the companies is that energy-efficiency investments are borne by the landlord but the lower utility bills go to the tenants, the Next 10 report pointed out. Still, more tenants are making energy efficiency a condition of signing a lease. Next 10 quoted a 2009 Rand Corp. study showing that buildings with LEED or Energy Star certification command 6 percent to 7 percent higher rents and maintain higher occupancy rates than other buildings within one-quarter mile radius. Adura’s Ringelmann said she had a client that has made LEED Gold certification a requirement for renewing a multi-floor lease in a Class A building in another state.

Building comfort is also crucial for retaining tenants, said Sim of Cypress. He cited a survey by the Building Owners and Managers Association claiming that 40 percent of leases get canceled or not renewed because people feel uncomfortable in their offices. n

Above: Illustration of Redwood Adapter, which senses light, motion, heat, and power.

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GREEN ISSUE

Theories are flying about the effect the state’s actions will have on current third-party rating systems, including USGBC’s and Berkeley-based Build It Green’s.

The Power of

the State

CalGreen, California’s new green building code, sets the stage for the rest of country.

T

here is no denying that green building programs like LEED have gained incredible momentum in Northern California despite the fact that they are voluntary and require significant investment. According to the U.S. Green Building Council, the non-profit that developed the Leadership in Energy and Environmental Design rating system, the region holds an impressive 6 percent of the world’s certified projects. Yet, despite the growing interest, the majority of new buildings are still constructed using old methods.

To fix that, the state has approved a mandatory new building code that makes California the first in the union to set the bar higher for all new construction to be more energy efficient, less water intensive and produce less waste. Dubbed CalGreen, the law goes into effect Jan. 1, 2011. It is an extension of the California Global Warming Solutions Act of 2006, which seeks to cut the state’s greenhouse gas emissions to 1990 levels by 2020, a 30 percent decline, and by 2050, to cut such emissions to 80 percent below 1990 levels.

Buildings are the state’s second largest source of greenhouse gas emissions, at nearly 25 percent, after transportation, which is nearly 40 percent, according to the California Air Resources Board. Many believe it is only a matter of time before state legislators look to the existing building stock, a far bigger target than new buildings, to meet environmental goals. There is also considerable speculation that voluntary, more stringent provisions in CalGreen will ultimately be mandated. Even now, cities can require those tougher standards if they choose.

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Theories are flying about the effect the state’s actions will have on current third-party rating systems, including USGBC’s and Berkeley-based Build It Green’s. “That has been a big topic of conversation,” says Donald Simon, an attorney and partner at East Bay law firm Wendel Rosen Black & Dean LLP. Simon is a cofounder of the Northern California Chapter of the USBGC and former president of Build It Green. Some speculate that the state will trample rival regulators of the built environment. “It is way too early to determine the impact of CalGreen,” says Simon.

David Walls, executive director of the California Building Standards Commission, which is implementing CalGreen, offers a commonsense explanation for the state’s actions. “While there are several jurisdictions that were adopting third-party certifications, they were adopting different ones. There are also a number of locations throughout the state that would have never adopted a green building code of any kind. This effectively captures and spreads out the carbon footprint through the use of the code,” Walls says. The state doesn’t view CalGreen as competing with voluntary certification programs because the voluntary programs offer a marketing advantage that a building code doesn’t have, he says.

Still, state-produced education material comparing the public and private systems emphasizes the virtues of CalGreen, noting the “transparency” of the public process in developing it while describing the point-based systems as something generated by “private” entities limited to “members.” The material highlights the post-construction cost of certification under LEED, placing it as high as $50,000. It also notes that the new state code uses

P hoto S C O U R T E S Y O F J e sus NAVA

By Sasha Vasilyuk

nomenclature common to other state building codes regulating electrical, plumbing, mechanical and other building systems.

That commonality allows existing professionals to understand CalGreen easily while builders and businesses often turn to hired consultants for help with third-party systems, costing additional money, the state says.

Industry professionals dispute some of these assertions. The cost of government will inexorably rise, they argue. Building performance is far removed and more complicated than counting the number of parking spaces or toilets needed for a proposed occupancy, says one regional attorney. In addition, many observers believe cities will have to raise their inspection fees to compensate for the cost of staff training and increased inspections, so it is unreasonable to say the new standards are without new expense.

“It is complicated and a new paradigm. It is a new way for building departments to evaluate work against a different set of standards.

It is going to require a lot of outreach to the professional design community and a lot of internal staff training. This is not your mother’s building code,” says Ilene Dick, an attorney with Farella Braun + Martel and a member of the San Francisco Code Advisory Committee.

As it is currently written, CalGreen is a pared-down version of programs like LEED and Build It Green’s GreenPoint Rated. It borrows language from both but doesn’t require as much. For instance, although the new state code has three levels, the most basic level would get an applicant an equivalent of 16 LEED credits.

That’s less than half needed for LEED’s most basic certification.

In some ways, the demise of the USGBC and Build It Green is the point, says Simon. “Our goal is to improve design and construction standards up to the levels of sustainability we have been developing in partnership with industry stakeholders. Both organizations are nonprofits; the objective is to transform the building industry and go out of business,” he says. “But there is a long way to go” before buildings are constructed sustainably, he adds.

LEED also was never intended to be mass marketed. Rather, it is a standard for the top 5 percent of buildings to achieve and others to aspire to, says Simon. LEED and GreenPoint Rated requirements can and will evolve. The building code is a baseline from which USGBC and Build It Green work. In addition, creating these programs was also about something more than the entities themselves. “Without these standards, you never would have had the impetus that is driving CalGreeen,” he says. In addition, the third-party systems have germinated market demand for new

products to help building owners and developers implement LEED and Build It Green requirements. Simon also argues that the thirdparty verification system inherent in LEED cannot be matched by city inspectors, who don’t have the technological tools.

Still, brokers in Silicon Valley and San Francisco routinely say that most tenants are not that interested in LEED-certified buildings, raising questions about an essential driver of change: Demand from the end user. “In the beginning it was a differentiator, but not anymore,” says Frank Fudem, a senior vice president at Cassidy Turley BT Commercial who represents tenants. “There are tenants to whom it’s very important. But in the San Francisco market, for a lot of tenants it’s more of ‘a nice to have.’ When we ask tenants what their most important requirement is, most don’t immediately talk about LEED.” Richard Shapiro, an attorney at Farella Braun who specializes in real estate and construction law, also says CalGreen will suspend the marketing advantages that LEED has offered even further.

“What was best practices has become legally required,” he said.

For cities, CalGreen means evaluating their existing ordinances and stepping through new regulatory hoops. Cities can keep existing green building laws as long as they can prove they are equal or more stringent than CalGreen. San Francisco, which has had its own green building program since 2008, has been working on a new code that incorporates CalGreen and preserves the more stringent requirements of its existing program for the last several months.

The timeline for the new law hasn’t left much time for cities to come up to speed. “After they have laid off a lot of staff because there hasn’t been much development, cities now have to figure out how to adopt a much more complicated building code by January without a lot of support from the state,” said architect William J. Worthen, vice president of San Francisco’s green-building consultancy Simon & Associates and a LEEDaccredited professional. “It could have been done with a lot more thought than the way it was.”

All such pondering aside, perhaps the most compelling aspect of CalGreen is that it applies to everyone. If the goal is to save natural resources, having everyone save a little is more powerful than having a few people save a lot, says architect David Baker, who is currently working to certify the mixed-use Parker Place project in Berkeley as LEED Silver. “Then you change the whole discussion.” n

Above (left to right): 303 2nd Street, San Francisco LEED EB, Gold Stormwater drain located on NetApp’s campus, Sunnyvale 45 Fremont Street, San Francisco LEED EB, Gold NetApp, Sunnyvale LEED NC, Silver 44 Montgomery, San Francisco LEED EB, Gold

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Sustainability Base, Moffett Field

Something from

Nothing

Sustainability Base, NASA’s demonstration project at Moffett Field, is supposed to be net zero.

L Right: Pearl River Tower, China

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By Sharon Simonson

eadership matters. Without leadership, it is difficult to know where one is going. With concern about the cost and headache of CalGreen, the state’s new green-building code, it seems reasonable to ask: Does it at least set a new global pace for sustainable development?

The East Bay’s Sanjiv Bhandari, a principal at BKBC Architects Inc., thinks not. Born and raised in India, professionally trained in Holland and a U.S. resident for 26 years, Bhandari has worked in eight countries over the last decade from China, Korea, Japan and Singapore to the Middle East. “We in California like to think that we are ahead of the curve, but we are not,” he says.

Driven by dependence on foreign energy sources, South Korea has adopted building codes with sustainability requirements that he believes are more stringent than any in the United States. A 71-story building under construction in China, the 2.3 million square-foot Pearl River Tower, is billed by its architects as the world’s most energy efficient high-rise. It has four wind turbines integrated into the building’s structure and myriad

T O P L E F T I mage C o u rtesy of AECOM and William McDonough + Partners; LEFT IMAGE COURTESY OF SOM; Right photo Courtesy of Bill LaBranche

GREEN ISSUE

“Some of this is very experimental and leading edge. We hope it will work.”

Steven Zornetzer, Associate Center Director, NASA Ames Research Center, Moffett Field, overseeing Sustainability Base development Right: Early construction phase of Sustainability Base

additional sustainable features. India and some Middle Eastern countries like the United Arab Emirates are also supporting innovative development, he says.

“All of the professional knowledge used in these advanced sustainable projects is from the United States. The architectural design and construction management for such specialized projects is being done by U.S. firms. We are designing better buildings outside the U.S. than we are building here,” he says.

Skidmore Owings & Merrill, an international architectural and engineering company founded in Chicago, is behind the Chinese tower, for instance. (The cost of the tower is confidential, an SOM spokeswoman said.)

The East Bay architect has a point, says Marc Weiss, chairman and chief executive of Global Urban Development, a nonprofit that researches and advocates for sustainable economic development worldwide.

Other countries, including those Bhandari cites plus several in Northern Europe such as Germany, Denmark, Finland and Sweden are pushing the envelope farther than the United States in exceptional, often governmentsubsidized “demonstration projects.”

But, he says, if leadership were defined more broadly, California should be given kudos. State energy efficiency requirements for construction and appliances implemented largely in the 1970s and early ’80s have quietly driven profound change. He cites work by the California Energy Commission that shows the average Californian consumed 40 percent less electricity than the average American in 2005. Based on Census Bureau and U.S. Department of Energy information, the California commission also found the state’s building and appliance efficiency standards saved $56 billion in electricity and natural gas costs since 1978 and will save another $23 billion by 2013. CalGreen builds on that success, Weiss says. Moreover, he feels highly confident that California’s standards are enforced. Without that, he notes, they are meaningless.

Both forms of leadership have their place, he says. “The point is we have to learn how to go from unsustainable to sustainable. The only way to do that is to try things on the ground. Advanced research and demonstration-prototype activity is vitally needed.”

By that measure, the United States also is not without ambition as the Sustainability Base under construction at NASA’s Ames Research Center on Moffett Field illustrates. Touted as the greenest and most forward-looking development in the U.S. government’s portfolio, the twobuilding, 50,000-square-foot complex is built to achieve Platinum certification under the U.S. Green Building Council’s Leadership in Energy and Environmental Design. Swinerton Builders is the general contractor.

AECOM is the architect of record and William McDonough + Partners is the design architect.

At some level, Sustainability Base is a typical office. It will house 210 Ames workers, two-thirds of whom perform operational functions typical of most modern organizations. But that is where the usual ends.

The government seeks the elusive net-zero operation for the buildings, meaning energy consumption equals or falls below that produced by the building itself, says Steven Zornetzer, the associate Ames director who is overseeing the $29 million project. There is no traditional heating, ventilation or air-conditioning system, he says. Instead, radiant heat is generated by the sun; radiant cooling is provided by the natural underground temperature at Ames of 58 degrees. Walls are nearly all glass to capture as much natural light as possible; models predict workers will need overhead lighting only 40 days a year. The buildings have no central pillars so they do not obstruct sunlight or wind flow. Siting is based on the arc of the sun to assist photovoltaics. Design accounts for prevailing winds and temperature profiles unique to this corner of the world. Office accoutrements such as the telephone system, laptops and copiers are screened based on energy consumption. Employees are trained to be better stewards.

Sensors throughout the complex will detect conditions in spaces as tight as two or three cubicles and direct the building to respond, says Jack Carter, Swinteron senior project manager for the Silicon Valley division. Software will tell windows to open or close based on interior and exterior temperatures; lighting will respond to nuances as subtle as sun-blocking clouds.

And these capabilities are mundane compared to what else will be attempted. The other one-third of workers housed at Sustainability Base will be part of Ames’ Earth Science Climate Modeling Group, which is researching climate and sea-level change. NASA and Swinerton are working with Lawrence Berkeley National Labs to take existing modeling software called Energy Plus, now used to design buildings, and modifying it to allow real-time monitoring of energy use. It is expected that each employee will see his consumption of energy at each work station at any moment and compare that to energy used in the days and weeks before.

At the same time, the intent is to use the building to evaluate the predictive accuracy of Energy Plus itself, says Dan Gonzales, Swinerton corporate manager of virtual design and construction. “The real issue on LEED projects is that they aren’t operating as they were designed. Some of the concepts were [only] concepts, and they don’t work. Ubiquitous sensors will feed information back into Energy Plus, and we can say, ‘Energy Plus predicted it would do this, and it is actually doing that,’” he says. That knowledge will be used to make Energy Plus better, and as the product of public largesse, it will be disseminated to the world.

Perhaps most astounding, the building software is expected to learn.

It will be able to garner weather projections by accessing the Web on its own. “We will define optimal [interior] conditions up front, and then we can change that optimal based on what occupants say. Then the system can come up with with different alternatives to get there,” says Zornetzer.

“Some of this is very experimental and leading edge,” Zornetzer says.

“We hope it will work.”

The intent is to monitor the building for decades. Delivery and move-in are slated for April 2011. n

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GREEN ISSUE

Saving

Luxuriously Hotel looks to couple the good life with efficiency.

F “We discovered that the thermostats had been installed improperly. They were sensing the temperature in the walls, not the room.”

Harry Hobbs, engineering director, InterContinental San Francisco Below: Front reception area at the InterContinental San Francisco

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or Harry Hobbs, director of engineering for the InterContinental San Francisco, gaining LEED certification for the 550-room hotel brings a specific twist: Steps to save energy and water or divert waste from the landfill can’t make guests feel they experience anything other than luxury.

“Nothing we do can do anything less than enhance our clients’ experience,” he says. “The tension is more a perception than the reality.”

Sometime in August, Hobbs expects to learn if a hotel-wide effort begun exactly two years ago will render Gold-level certification through the Leadership in Energy and Environmental Design program of the U.S. Green Building Council. Climbing to this threshold has touched all of the hotel’s 350 employees and a huge percentage of its operations. The achievement, if attained, will be especially compelling because the hotel, which took a decade to get through San Francisco entitlements, was not built with LEED in mind.

The hotel now collects 600 gallons of compostable waste a day. Stairwell and elevator lighting have been changed on every one of its floors. Thermostats in each of the guest rooms have been tested (and found wanting) as part of a 2009 retro-commissioning. “We discovered that the thermostats had been installed improperly.

They were sensing the temperature in the walls, not the room,” he says. In the winter, the air behind the walls was

colder than the room’s. In the summer, it was hotter. The difference was as great as 6 degrees. “This is a good example of how the process actually improves the guest experience. We were wasting a ton of gas and electricity, but we were making people uncomfortable,” he said. In the year-to-date, the hotel has clocked 28 percent savings in natural gas use that Hobbs attributes directly to the commissioning.

The LEED pursuit began with an eco-charrette including all hotel managers to consider each of the 100 potential LEED credits. The group selected 67 points that members considered attainable or possibly attainable. An early win was the discovery following a survey that “95 percent of our employees use public transportation,” Hobbs said. The effort also benefitted greatly from hundreds of volunteer hours provided by a group of San Francisco State University students studying hospitality and tourism management.

Perhaps the biggest challenge has been cutting electricity use. Two hundred and sixty light fixtures in two sets of stairs that travel the entire height of the hotel (35 stories, including two below-grade levels) have been retrofitted. Work to change aesthetically critical lighting at the lobby check-in counter had to pass muster with hotel owners, hotel managers, interior and lighting designers, facilities and maintenance staff, accountants and Pacific Gas & Electric. A new waterside economizer that uses cool (and free) San Francisco air was flown in by helicopter to help generate chilled water for air conditioning, reducing reliance on mechanical cooling. “We have hit a home run [saving energy], but it has been a $250,000 investment,” Hobbs says. The hotel has recouped nearly $150,000 in rebates from the city and the federal government to help offset the cost. The rest will come from operating savings of about $198,000 a year.

Assuming the hotel successfully grabs the gold, it will have to be re-certified again in five years. That does not imply out-of-sight, out-of-mind for the next 48 months, however. Instead it means monthly sustainability reports, constant monitoring to track and document resource use and disposal, and replacing worn appliances with Energy Star-rated ones when possible. Everything has to be transparent. “I would love to be able to report in real time the difference we are making to those who want to know,” Hobbs said. Five years from now, if the hotel struggles to prove it should be re-certified, “it probably means we have failed,” Hobbs says. n

P hoto C O U R T E S Y O F Ri e n va n Rij t h ov e n

By Sharon Simonson

LEED PROJECTS IN THE BAY AREA KEY: LEED CI: Commercial Interiors; LEED CS: Core and Shell; LEED EB: Existing Building; LEED NC: New Construction; LEED ND: Neighborhood Development

Address

City

Gross Sq. Ft.

Certification Level

Project Type

LEED System Name

Certification Date

Clark Kerr Campus Renewal

2601 Warring St

Berkeley

108,445

Gold

Campus (corp/school), Higher Education, Multi-Unit Residence

LEED CI

12/21/2009

Downtown Berkeley YMCA

2001 Allston Wy

Berkeley

28,655

Gold

Community Dev., Hotel/Resort, Recreation

LEED CI

04/22/2010

Bay Center Offices - 6425

6425 Christie Ave

Emeryville

122,527

Silver

Commercial Office

LEED EB

05/01/2010

Bay Center Offices - 6475

6475 Christie Ave

Emeryville

121,603

Silver

Commercial Office

LEED EB

05/01/2010

1111 Broadway

1111 Broadway

Oakland

612,038

Gold

Commercial Office

LEED EB

11/16/2009

Lake Merritt Plaza

1999 Harrison St

Oakland

480,330

Gold

Commercial Office

LEED EB

09/11/2009

KEMA Oakland Office

155 Grand Ave

Oakland

34,000

Gold

Commercial Office

LEED CI

11/30/2009

HRS-Upper School Building

4315 Linclon Ave

Oakland

26,500

Gold

K-12 Education, Laboratory

LEED NC

09/17/2009

Municipal Boathouse Rehabilitation

1520 Lakeside Dr

Oakland

16,542

Gold

Assembly, Other, Park (eg. greenway), Recreation, Restaurant

LEED NC

07/06/2010

MacArthur BART Transit Village

N/A

Oakland

N/A

Gold

Neighborhood Development

LEED ND

7/31/2009

180 Grand

180 Grand Ave

Oakland

281,123

Silver

Commercial Office

LEED EB

08/10/2009

Jack London Market

55 Harrison St

Oakland

205,608

Silver

Commercial Office, Restaurant, Retail

LEED CS

01/11/2010

LEED NC

12/16/2009

Oakland International Airport: Customer

1 Airport Dr

Oakland

76,540

Silver

Commercial Office, Public Order/Safety, Transportation

Oakland Museum of California Renovation

1000 Oak St

Oakland

62,518

Silver

Other

LEED NC

04/02/2010

CA-DGS #602 Elihu Harris Bldg

1515 Clay St

Oakland

506,380

Certified

Commercial Office

LEED EB

08/10/2009

Plaza 360

360 22nd St

Oakland

122,256

Certified

Commercial Office

LEED EB

08/21/2009

Shell Remodel and Tenant

534-540 20th St

Oakland

13,718

Certified

Commercial Office, Retail

LEED NC

06/11/2009

Workday-PCC

6230 Stoneridge Mall Rd

Pleasanton

69,132

Gold

Commercial Office

LEED CI

07/21/2009

3055 Oak Rd

Walnut Creek

241,798

Gold

Commercial Office

LEED NC

03/03/2010

1388 S. California Blvd

Walnut Creek

27,120

Gold

Community Dev., Other, Retail

LEED Retail (CI)

01/21/2009

Pacific Plaza

1340 Treat Blvd

Walnut Creek

277,236

Silver

Commercial Office

LEED EB

08/06/2009

Urban West Business Park

1350 Treat Blvd

Walnut Creek

124,400

Silver

Commercial Office

LEED EB

08/25/2009

2121 N. California Blvd

Walnut Creek

37,789

Certified

Commercial Office, Other

LEED CI

07/16/2009

250 Middlefield Rd

Menlo Park

20,000

Gold

Commercial Office

LEED CI

04/22/2009

Deerfield One

4040 Campbell Ave

Menlo Park

41,112

Silver

Commercial Office

LEED CS

06/30/2009

Palo Alto Office Center

525 University Ave

Palo Alto

202,600

Gold

Commercial Office

LEED EB

06/20/2009

450 Cambridge - Palo Alto

450 Cambridge

Palo Alto

11,827

Gold

Commercial Office

LEED NC

05/06/2010

Dostart Development Office

145 Addison

Palo Alto

03,675

Gold

Commercial Office

LEED NC

09/18/2009

San Jose City Hall

200 E. Santa Clara St

San Jose

530,000

Platinum

Commercial Office

LEED EB

03/07/2009

Re-certification: 345 Park Ave

345 Park Ave

San Jose

391,339

Platinum

Commercial Office

LEED EB

01/05/2010

Re-certification: 151 Almaden Blvd

151 Almaden Blvd

San Jose

272,598

Platinum

Commercial Office

LEED EB

01/05/2010

Fortune Data Center

2001 Fortune Dr

San Jose

78,541

Gold

Commercial Office, Other

LEED CI

09/04/2009

Harker School Science-Technology Bldg

500 Saratoga Ave

San Jose

49,579

Gold

K-12 Education

LEED NC

06/11/2009

Casa Feliz

525 South 9th St

San Jose

32,860

Gold

Multi-Unit Residence, Special Needs

LEED NC

11/19/2009

Roosevelt Multi-Service Community Center

901 East Santa Clara

San Jose

30,000

Gold

Community Dev., Park (eg. greenway), Recreation

LEED NC

12/23/2009

Happy Hollow Park and Zoo

1300 Senter Rd

San Jose

23,340

Gold

Animal Care, Commercial Office, Interpretive Center, Park (eg. greenway), Recreation, Restaurant

LEED NC

06/21/2010

CA-DGS #470 San Jose Bldg

100 Paseo De San Antonio

San Jose

130,000

Silver

Commercial Office

LEED EB

04/05/2010

BAE Systems - 2811 Orchard

2811 Orchard

San Jose

81,926

Silver

Commercial Office

LEED CI

07/01/2010

BD Biosciences 2Qume

2222 Qume Dr

San Jose

81,000

Silver

Commercial Office, Laboratory

LEED CI

02/23/2009

Citibank San Jose, Ca

1310 El Paseo De Saratoga

San Jose

5,000

Certified

Commercial Office, Financial

LEED CI

04/03/2009

DLR-1525 Comstock

1525 Comstock

Santa Clara

42,585

Platinum

Other

LEED CI

12/23/2009

Blach Construction Office TI

469 El Camino Real, Ste 100

Santa Clara

12,427

Gold

Commercial Office

LEED CI

02/23/2010

328 Brokaw Trailer Renovation

328 Brokaw

Santa Clara

10,680

Silver

Office: Administrative/Professional

LEED CI

07/06/2010

Moffett Towers Lot 1

1040 H St

Sunnyvale

866,145

Gold

Commercial Office

LEED CS

08/25/2009

Moffett Towers Amenities Building

1080 Enterprise Way, Ste 100

Sunnyvale

43,565

Gold

Commercial Office, Financial, Recreation

LEED NC

02/23/2009

Lockheed Building 179

1111Lockheed Martin Way

Sunnyvale

28,500

Gold

Commercial Office, Industrial

LEED NC

01/26/2009

NetApp B8

1375 Crossman Ave

Sunnyvale

189,788

Silver

Commercial Office

LEED NC

06/18/2010

525 Almanor Avenue

525 Almanor Ave

Sunnyvale

166,300

Silver

Commercial Office

LEED CS

03/04/2010

East Bay, Peninsula & South Bay LEED Certified projects from 2009 to the present.

SAN MATEO & SANTA CLARA

Basic American Foods Foundation Capital, Menlo Park Office

CONTRA Costa

Station Landing Elephant Pharm

Alameda

Project Name

LEED PROJECTS IN THE BAY AREA SAN Francisco

KEY: LEED CI: Commercial Interiors; LEED CS: Core and Shell; LEED EB: Existing Building; LEED NC: New Construction; LEED ND: Neighborhood Development Project Name

Address

City

Gross Sq. Ft.

Certification Project Type Level

LEED System Name

Certification Date

560 Mission Street

560 Mission

San Francisco

778,782

Platinum

LEED EB

03/25/2010

Re-Certification: 601 & 625 Townsend St

601 & 625 Townsend St

San Francisco

353,650

Platinum

LEED EB

01/05/2010

Commercial Office

ClimateWorks Foundation

235 Montgomery St

San Francisco

13,166

Platinum

Commercial Office

LEED CI

02/06/2010

525 Market Street, San Francisco

525 Market St

San Francisco

1,161,736

Gold

Commercial Office, Retail

LEED EB

11/18/2009

CA-DGS #402 Civic Center Bldg

455 Golden Gate Ave

San Francisco

1,105,000

Gold

Assembly

LEED EB

08/06/2009

425 Market Street

Cushman Wakefield of California

San Francisco

1,052,296

Gold

Commercial Office, Retail

LEED EB

04/08/2010

Post Montgomery Center

1 Montgomery St

San Francisco

815,000

Gold

Commercial Office, Retail

LEED EB

10/07/2009

44 Montgomery

44 Montgomery St

San Francisco

760,565

Gold

Commercial Office

LEED EB

06/25/2010

303 Second Street

303 Second St

San Francisco

731,972

Gold

Commercial Office

LEED EB

04/27/2010

45 Fremont

45 Fremont St

San Francisco

584,663

Gold

Commercial Office

LEED EB

04/06/2010

The Pyramid

600 Montgomery St, Ste 200

San Francisco

547,966

Gold

Commercial Office

LEED EB

11/18/2009

100 First Street

100 First St

San Francisco

465,000

Gold

Commercial Office

LEED EB

08/26/2009

199 Fremont Street

199 Fremont St

San Francisco

461,934

Gold

Commercial Office

LEED EB

01/04/2010

101 Second Street

101 Second St

San Francisco

441,412

Gold

Commercial Office, Retail

LEED EB

11/18/2009

55 Second Street

55 Second St

San Francisco

437,477

Gold

Commercial Office, Restaurant, Retail

LEED EB

12/17/2009

100 Montgomery

100 Montgomery St

San Francisco

430,523

Gold

Commercial Office, Restaurant, Retail

LEED EB

08/03/2009

580 California

580 California St

San Francisco

356,000

Gold

Commercial Office

LEED EB

11/24/2009

600 California

600 California St

San Francisco

346,640

Gold

Commercial Office

LEED EB

11/17/2009

150 Spear

150 Spear St

San Francisco

286,510

Gold

Commercial Office, Retail

LEED EB

01/26/2010

505 Sansome

505 Sansome St

San Francisco

185,037

Gold

Commercial Office

LEED EB

11/18/2009

500 Washington

500 Washington St

San Francisco

110,000

Gold

Commercial Office, Retail

LEED EB

03/22/2010

Hotel Carlton

1075 Sutter St

San Francisco

73,480

Gold

Hotel/Resort

LEED EB

05/13/2009

Signature SFO FBO Terminal/ Hangars

1052 North Access Rd

San Francisco

65,342

Gold

Commercial Office, Industrial, Transportation

LEED CI

04/08/2010

Gibson, Dunn & Crutcher LLP

555 Mission St

San Francisco

62,800

Gold

Commercial Office

LEED CI

08/07/2009

Building 1808 - Presidio

1808 Wedemeyer St

San Francisco

30,662

Gold

Commercial Office

LEED CS

04/05/2010

Recology Inc

50 California St

San Francisco

30,000

Gold

Commercial Office

LEED CI

09/21/2009

555 Mission L19 Project Managers Office

555 Mission St

San Francisco

12,640

Gold

Commercial Office

LEED CI

12/03/2009

GCI Corporate Office

825 Battery St

San Francisco

10,843

Gold

Commercial Office

LEED CI

05/26/2010

California State Parks Foundation

50 Francisco St

San Francisco

8,363

Gold

Commercial Office

LEED CI

11/04/2009

Enovity Office

100 Montgomery St, Ste 600

San Francisco

7,600

Gold

Commercial Office

LEED CI

10/28/2009

Starbucks Mariposa & Bryant

2727 Mariposa St

San Francisco

3,090

Gold

Restaurant

LEED CI

05/07/2010

Hunters View

N/A

San Francisco

N/A

Silver

Neighborhood Development

LEED ND

05/26/2010

San Francisco Giants

24 Willie Mays Plaza

San Francisco

1,230,000

Silver

Stadium

LEED EB

03/30/2010

201 Mission

201 Mission St

San Francisco

566,848

Silver

Hospital

LEED EB

01/12/2010

Laguna Honda Hospital Replacement Program

375 Laguna Honda Blvd

San Francisco

508,414

Silver

Health Care

LEED NC

06/18/2010

100 Van Ness

100 Van Ness Ave

San Francisco

437,783

Silver

Commercial Office

LEED EB

02/17/2010

455 Market Street

455 Market St

San Francisco

397,298

Silver

Commercial Office

LEED EB

08/03/2009

100 California

100 California St

San Francisco

305,904

Silver

Commercial Office, Retail

LEED EB

09/16/2009

CA-DGS #418 Public Utilities Commission

505 Van Ness Ave

San Francisco

293,340

Silver

Commercial Office, Daycare, Restaurant

LEED EB

08/04/2009

500 Terry Francois

500 Terry Francois

San Francisco

291,355

Silver

Commercial Office, Retail

LEED CS

09/01/2009

W Hotel

181 Third St

San Francisco

289,418

Silver

Hotel/Resort

LEED EB

02/09/2010

N4P1 MISSION BAY

300 Berry St

San Francisco

232,785

Silver

Multi-Unit Residence, Retail

LEED NC

07/13/2009

Bently Reserve

301 Battery St

San Francisco

198,509

Silver

Assembly, Commercial Office

LEED CS

11/20/2009

Rock Hall

1550 4th St

San Francisco

170,000

Silver

Animal Care, Campus (corp/school), Higher Education, Laboratory

LEED EB

08/28/2009

DPR San Francisco Office Remodel

1050 Sansome St

San Francisco

12,000

Silver

Commercial Office

LEED CI

08/11/2009

UCSF Campus Data Center

654 Minnesota St

San Francisco

7,900

Silver

Commercial Office, Other

LEED CI

09/03/2009

Silver

Assembly, Campus (corp/school), Commercial Office, Financial, Retail

LEED CI

12/15/2009

Charles Schwab 211 Main Auditorium

211 Main St

City National Bank

100 Montgomery St

San Francisco

3,098

Silver

Commercial Office, Financial, Retail

LEED CI

06/01/2010

Avalon Mission Bay - Phase III

185 Berry St, Ste 5505

San Francisco

407,106

Certified

Multi-Unit Residence, Retail

LEED NC

12/14/2009

201 California Street

201 California St, 6th Flr Stes

San Francisco

240,000

Certified

Commercial Office

LEED CI

11/23/2009

San Francisco

5,711

One Beach Stree

1 Beach St, Ste 101

San Francisco

6,700

Certified

Commercial Office

LEED CI

09/14/2009

The Wilderness Society

655 Montgomery St, Ste 1000

San Francisco

5,000

Certified

Commercial Office

LEED CI

08/21/2009

San Francisco LEED Certified projects from August 2009 to the present.

listings provided by the U.S. Green Building Council

GREEN ISSUE

Trust and Verify The U.S. Green Building Council is pushing owners and managers to track building performance after LEED certification.

T

By Dan Geiger

he U.S. Green Building Council’s LEED certification system is a widely recognized standard to define and verify the design and construction of green buildings. The Leadership in Energy and Environmental Design program has helped transform the real estate market and reduced buildings’ impact on the environment by espousing resource efficiency. To date, 35,000 projects in all 50 states and 114 countries are participating in the LEED system, comprising over 7.1 billion square feet of construction space.

But LEED certification is only one step toward fully greening the built environment. Understanding and ensuring buildings’ performance on an ongoing basis is the next critical stage. The U.S. Green Building Council has embraced this challenge by calling upon the building industry to join in its new Building Performance Partnership. The initiative began last fall with meetings in five major U.S. cities, including San Francisco. Builders, owners, operators and building designers were invited to give the USGBC ideas on how to ensure that buildings save as much energy and water as predicted when they achieved LEED certification.

Industry leaders in all sectors recognize performance as the next transformational development. “We see no higher, greater issue, in terms of either existing or new buildings than monitoring and making sure buildings perform as intended. You have to design green and then you have to deliver green, and those are two separate topics,” says Phil Williams, vice president of technical systems and sustainability for Webcor Builders, one of the region’s largest general contractors.

The Building Performance Partnership seeks to optimize building management using data collection, analysis and action. The initial goal is the population of a comprehensive green building database to enable standardization of reporting metrics and analytics and establishment of new performance benchmarks. The first phase of the program launched this spring and is focused on energy and water. Participation is voluntary for projects certified in systems prior to LEED version 3 but mandatory for LEED version 3 projects, the version implemented in 2009.

No building will be decertified for a performance gap. Rather, this new information will be used to inform and help projects achieve higher levels of performance.

“In order to improve upon LEED and for projects that perform lower than anticipated, BPP will help projects meet operational sustainability goals sought originally during the design and construction process. The data will shed light on external issues such as occupant behavior or unanticipated building usage patterns,” said USGBC Senior Vice President of LEED Scot Horst.

Subsequent phases of the performance partnership under consideration may explore areas such as automated energy and water data tracking and reporting infrastructures, monitoring systems for indoor air quality and measurements of waste reduction.

The LEED buildings that participate in the partnership will receive annual information comparing predicted or actual performance at the time of a project’s certification with the project’s current performance.

Additionally, the report will have aggregated data from like buildings and

certification levels. All reported data is anonymous, unless the building owner has granted permission to share it. Currently more than 120 projects are participating in Phase One. These projects will receive a basic performance report in time for Greenbuild 2010 in Chicago this November.

The Building Performance Partnership is just one facet of a much larger industry effort to ensure performance goals are met. Educating tenants, building engineers, operators, consumers and many others will be critical to raising consciousness, motivating people and providing the skills and tools to optimize building performance. Completing the feedback loop will give everyone the information needed to answer such fundamental questions as whether tenants forget to turn out lights when they leave a room or leave water running in bathroom or kitchen sinks. Facility managers, if they don’t already know, will understand the importance of having protocols for checking automatic controls and ascertaining if and when those controls are malfunctioning.

Clearly, a multi-faceted approach will be required. For instance, one important tool to ensure energy efficiency is sub-metering. Barry Giles, a former board member of the Northern California Chapter of the USGBC and chief executive of BuildingWise, a Bay Area consultancy that specializes in building operations to reduce environmental impacts, summed it up nicely when he said: “You can’t manage what you don’t measure.” One important tool to ensure energy efficiency is to track energy use at a more fine-grained level than an entire building. Giles is working on a project that is “taking sub-metering energy to the cubicle level,” he says. “This will produce fantastic data to provide all of us with details that will help benchmarking and sub-metering move forward.”

“It is essential that sub-metering be in place for all forms of energy and water use,” Giles says. “This is a big step, but with careful planning it will be a win-win.”

Challenges also vary according to building age. Margot Crosman, sustainability director for Unico Properties LLC, a large real estate investment and operating company with holdings in San Francisco, said, “Some new green buildings use cutting-edge technologies and techniques that present challenges to the predictive power of available energy-modeling tools.” Existing building performance, on the other hand, can be easier to measure and improve. Existing buildings typically “use well-understood technology, have a history of performance data and offer some straightforward opportunities to realize savings,” she said.

The emphasis on tracking building performance will be a key part of the USGBC’s ethos going forward, says the council’s Horst. The Building Performance Partnership is “the foundation of USGBC’s commitment to a meaningful demonstration of the value of building and operating green,” he says. Information gleaned through the partnership “will inform future iterations of LEED and ensure that LEED projects deliver on their extraordinary environmental and economic potential, ” Horst said.

More information on the USGBC Building Performance Partnership can be found on www.usgbc.org/bpp. n Dan Geiger can be reached at 415.738.5528 or dan@usgbc-ncc.org.

Understanding and ensuring buildings’ performance on an ongoing basis is the next critical stage.

S E P T E M B E R 201 0

theregistrysf.com 21

FINANCE

Very Interesting Common wisdom holds that borrowing costs will rise.

Probably, but not for some time.

By Peter Ingersoll

T

he consensus, or perhaps fear, among real estate investors with whom I talk is that interest rates must, must, must go up. At current levels, it is difficult to conceive that rates could possibly fall further. In addition, macroeconomic theory dictates that interest rates are under pressure based on our gaping federal deficits and the extraordinary level of our national debt.

However, we are likely to discover that this belief will prove inaccurate in the short and medium terms. Interest rates are not likely to rise for a long time. Why? The causes stem from the fiscal irresponsibility of other sovereign governments, the desires of our Asian trading partners to continue to sell to our consumers and Federal Reserve hopes of coaxing banks into renewed lending to support economic recovery and to rebuild their balance sheets.

Yet, we dare not imagine an extended period of low rates for fear we will make overly aggressive acquisitions that will come back to haunt us.

If investors predict interest rates will stay low for too long, they will be tempted to put the pedal to the metal and go on an acquisition burn, scooping up all those beckoning distressed deals. But the thoughtful will tread much more carefully. The risk remains of underestimating the future cost of borrowed money and its inexorable effects on capitalization rates.

Ignoring that risk could be devastating to valuations and investor returns.

The question then becomes not if rates will rise, but when. The answer lies in the relative strength of the dollar compared to other currencies and the time it will take for commercial banks to rebuild their balance sheets.

Domestically, reviving bank lending is so important that the Federal Reserve is flirting uncomfortably with the phenomenon of a liquidity trap. That happens when central banks lower their overnight lending rate to zero but even this radical move is insufficient to stimulate renewed lending. The Fed must keep interest rates low to avoid deflation and support the tenuous economic recovery, but as the chart below shows, our money supply is still shrinking, so we know that banks are not taking the Fed bait. Bank capital is so impaired that sustained lending has not taken hold. My guess is that it will take a long time to resume. We have seen the phenomenon in Japan, where it continues to be the case.

The Federal Reserve and all other central banks and treasury ministries have explicitly and implicitly stated that they will do anything to prevent Annual U.S. Money Supply Growth - SGS Continuation Monthly Average through June 2010 (Source: St. Louis Fed, SGS) M1

M2

M3 - SGS

18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6%

2006

22 theregistrysf.com

2007

S E P T E M B E R 201 0

2008

2009

2010

a deflationary spiral from taking hold. They realize that they must keep rates low to provide liquidity to asset markets and to allow banks to benefit from interest rate arbitrage. But they are tempting fate by playing with fire, in this case hyperinflation. Still, that seems better than the frozen Siberian landscape of a global deflationary economy. Thus rising inflation (and rising rates) is unlikely until vigorous bank lending resumes, which can’t happen because bank capital is significantly impaired, not least of which by commercial real estate loans. This makes commercial real estate both a cause of subdued lending and a good leading indicator of the emergence of high inflation.

The scale of the distress is much larger than reflected in the popular press. Most maturing commercial real estate loans could be described as “distressed,” whether or not they technically comply with special servicer or federal banking regulators’ definition of the term. Refinancing loans these days is grueling, even for seemingly safe, some might even say “trophy” assets. The enormity of the challenge before us is enough to stagger even the most optimistic of souls.

Only after we have cleansed the financial system of distressed commercial property loans can lending begin in earnest and the money supply again expand. And only then can monetary inflation become a risk.

For the moment, banks are advocates of a low interest rate environment to avoid exacerbating loan defaults and falling asset prices and also because they are making money hand over fist borrowing from the Fed at zero interest while investing in U.S. Treasuries, which are paying much higher rates. The approach appears risk-free—it is not, but that is the subject of another column.

After their loan portfolios are modified, written down or repaid—perhaps as early as 2013 or perhaps as late as 2018, depending on how robust our economic recovery will be and how bad defaults and losses become— then banks and other lenders will be decidedly in opposition to hyperinflation. By then, of course, it may very well be too late. Thus we all have to live with the risk of hyperinflation to climb from the hole that we have dug.

Based on the amount of CMBS and bank debt still outstanding, there will be significant risks in the commercial markets for at least another three years. The bulk of the bank debt will not mature until 2013, and the current CMBS debt will not pass through the system until 2017. It is likely that financial markets as a whole will struggle through at least the end of that period.

Little on the international horizon appears to mitigate this analysis. When stressors alarm global investors, they consistently flee to U.S. Treasuries, despite our national debt, continued out-of-control public spending and impossible-to-keep entitlement promises. For all intents and purposes, the Federal Reserve has become the world’s central bank. When the Fed reopened its credit facility on May 9 (a Sunday) to the European Central Bank (which loaned U.S. dollars to the ECB to provide euro zone liquidity), the dollar strengthened. This reopened credit facility helped seal the deal with the International Monetary Fund and created the $955 billion EU bailout that gave the PIIGS (Portugal, Italy, Ireland, Greece and Spain) some time to get their houses in order. In the immediate aftermath of the ECB announcement, U.S. Treasuries traded higher, clearly indicating that global investors believed the United States still provides the safest haven to park excess cash.

The scale of bank distress is much larger than reflected in the popular press.

Longer term, the European Union itself is at risk, and thus the euro.

Forecasting survival of the union is binary: It will survive, or it won’t.

I believe it won’t. However strongly German politicians defend the EU, eventually German citizens will reject continued subsidy of their spendthrift union partners, and without continued subsidy the union cannot hold. Modifying and extending sovereign debt simply delays the inevitable currency devaluation, collapse and/or hyperinflation, according to an exhaustive study of hundreds of sovereign financial crises over 800 years and particularly since the year 1800 by Carmen M. Reinhart and Kenneth Rogoff in the book “This Time is Different.” But there will likely be a long period of unraveling in which individual governments default, or teeter on default, then go hat-in-hand to the IMF for debt relief, probably supported by liquidity provided by the Federal Reserve. That process appears inevitably to support the notion that U.S. Treasuries are the safest haven for short-term liquidity.

For commercial property investors borrowing in dollars, the important question then becomes: How long will this continue? Will each successive member of the EU that falters drive more and more global investors toward U.S. Treasuries? For as long as it does, and I would argue it will for a good long time, the U.S. dollar hegemony is safe, and the dollar will remain steady relative to the Euro, thus keeping interest rates low.

Our Asian trading partners also have a vested interest in a strong U.S. dollar. Their unwavering desire to support full employment at home by remaining net exporters to the United States will push them to devalue their currencies against the dollar and continue to buy U.S. Treasuries as long as their current accounts continue to grow. An international banking friend of mine recently returned from a trip to Asia and remarked that many, if not most, of the smaller economies there are locked in fierce competition to keep their currency competitive with each other and China to ensure that they remain net exporters to the United States.

If this tendency unfolds as he describes, their determination to remain a net exporter by devaluing their currency will strengthen the dollar for the foreseeable future. A strong dollar will make it difficult for the United States to become a net exporter itself, but it will support continued low interest rates.

Also, let us not forget that if interest rates rise too much, the United States itself will choke on the payments associated with servicing our national debt, so we as citizens have an enormous stake in keeping the U.S. dollar strong even if it tends to dampen our economic recovery.

Thus, for the commercial property investor the calculus becomes: What is the cost of debt when buying, and more importantly, what will it be when selling a property? The question is even more important if the majority of your return depends on appreciation, rather than cash flow.

Low interest rates are an answer to many a commercial real estate participant’s prayers, but they are not a cure-all. Predicting the emergence of high inflation will likely be synonymous with predicting a rise in interest rates. My bet, based on the maturity horizons, is that it will take until 2015 to rebuild bank capital and set the stage for monetary inflation.

To mitigate risk, acquisitions between now and then should focus on the pricing power of the individual property and estimating the cost of interest payments when the acquisition loan matures. n Peter Ingersoll can be reached at peter@safeharbourequity.com

Certainly Uncertain

By Rob La Eace

I

NORTH 7

NORTHEAST 8

CENTRAL NORTH 6

NORTHWEST 1

CENTRAL 5

CENTRAL WEST 2

CENTRAL EAST 9

TWIN PEAKS WEST 4 SOUTHEAST 10

SOUTHWEST 3

SAN MATEO COUNTY/ NORTHWEST 11

Market Activity by Price Range (volume of sales by units) $2MM+ 4%

$1MM - $2MM 18%

$750K - $1MM 25%

24 theregistrysf.com

Under $500K 18%

$500K - $750K 35%

S E P T E M B E R 201 0

t’s August. How do I know? Well my free title company calendar (actually not sure if I’m allowed to say that with all the new RESPA laws??) tells me so every time I look up at my cork board. But, I’m a man of instincts, I revel in trusting my antennae, and they rarely let me down, my friends. I also happen to know it’s August because it’s 52 degrees outside and foggy, whenever I send a marketing email out, I get dozens of Out-of-Office replies, Arizona airfares are on sale, and my publisher is bugging me to put together a Q2 review of our market performance. So, here I am in my real estate command center, errr emm cubicle, to bring the news. I’ve decided to examine the second quarter of this year in San Francisco from a few different angles. As we are not well served to clump the city together as a whole, we’ll look at quantity sold and average sales price by district. Then we’ll examine how the market is stratified by price range.

The first six months of 2010 have followed our typical seasonal patterns. This was encouraging news and was viewed by some as a turn in the right direction towards normalcy. In our standard seasonal cycle, January proves the starting point, not only for the calendar year, but for our sales volume as well. The optimist would say that January is a great time to be a buyer. Clearly, the only people who list their homes in January are people who have to sell. From January the volume builds steadily to a crescendo in July, followed by a drop off from August through September. October normally has an upward spike, and then it’s all downhill through the holidays. Comparing second quarter of 2009 to the same period this year, with the exception of District 7 (please see map), every district in the city saw an increase in sales volume. The greatest increases were clustered in the city’s center and north: in District 6 (114 percent), District 4 (37 percent) and District 1 (31 percent).

When we look at the average sale price throughout the districts, we find that 70 percent of them saw increases in the second quarter—the big winners were Districts 8 (32 percent), 7 (16 percent) and 4 (15 percent). This is great news, however we have to keep in mind that 2009 was not a year to brag about.

Now that we’ve seen where the homes are selling, let’s look at the price ranges. 35 percent of the sales were in the $500,000-$750,000 range and 25 percent of sales took place in the $750,000-$1 million range. Even the up-to-$500,000 arena made up roughly 18 percent of

sales, making the sub $1 million market the most active with nearly 80 percent of all sales in San Francisco.

Compared to a year ago, across the board, condos, lofts and single family homes are selling closer to their original asking price—a sign of increased market health and also an indication that sellers have become more realistic about what their homes are worth. Condos on average had to shave off 3.2 percent of their list price, and lofts marked down their prices roughly 3 percent.

Single family homes, on average, sold for exactly their asking price. This is not surprising, as single family homes have appreciated at a faster rate than all other forms of housing in San Francisco for the past 15 years.

If you bought a single family home in San Francisco in 1995, on average, it would have appreciated by 185 percent. By comparison, a condo would have appreciated by 147 percent during the same time. This helps explain why 47 percent of single family homes sold for over asking price in the second quarter.

I’m sure I don’t have to tell you that it’s not all good news. Although since January 2009 average sales prices have appreciated by 24 percent there are other indicators that we may be in for a slow-down. Inventory of active homes continues to rise. We have a lack of ample willing, ready and able buyers out there and a lot of sellers. With continued high unemployment, we can only expect there will be more folks who need to sell and fewer who want to buy. Our inventory is now at its highest since October of 2008. Though, year to date, the number of new contracts is up by 14 percent, we saw a large drop in contract volume in July. Last year in July, 284 contracts were written, and this July, only 204, a drop of 28 percent. As we head into late summer, it will be interesting to see if a trend is developing.

The fact remains, homes are still bought and sold.

Granted, deals are far more difficult to put together, and our “new normal” includes a vocabulary that had rarely been uttered in some time: short sale, bank owned, foreclosure and seller financing to name a few.

All things considered, our market seems to be healing slowly. It will take time, and we must brace for the potential of more trying periods ahead. As experts both optimistic and pessimistic weigh in on where our market is going, it seems that we have but one conclusion to rally around. The verdict is in. Things are most certainly, and without a doubt…uncertain. n Rob La Eace can be reached at 415.290.7228 or rob@roblaeace.com.

Take a Deep Breath With planning, landlords can assure that their property investments don’t disappear in a cloud of smoke.

By Timothy Halloran and Jonathan Blute

I

n November 2010, California voters will head to the polls to decide whether to implement Assembly Bill 2254, formally known as the Regulate, Control and Tax Cannabis Act of 2010. The act would allow adults 21 years and older to possess, cultivate and/or transport marijuana for personal private use within California. It would be the first such law in the country.

While the act would allow private possession, cultivation and consumption, use would still be barred in all public places and in all spaces where a minor is present. There could be no smoking in restaurants and bars or at Little League games.

The act does not authorize commercial processing, distribution, sale or use. So even if the proposed law passes, commercial landlords need not worry about tenants seeking to start recreational marijuana clubs on their properties (any more than they already do). The act does permit local governments to legalize and regulate commercial marijuana activity. However, it is unclear which communities would be receptive to this possibility and to what extent.

The act only requires approval of a simple majority of votes to pass: 50 percent plus one. If approved, it would be implemented as soon as the California secretary of state certifies the election results. Considering the significant campaigning in favor of the act, there is a very real possibility that come November, residential landlords will be faced with tenants who wish to grow and consume marijuana on their property.

Should this scenario unfold, attorneys will likely be inundated with questions from landlord clients about their rights to regulate marijuana use on their properties and the risks they run of renting to tenants who decide to exercise their state-given right to grow or consume marijuana in their apartments or backyards, even as the federal government continues to prohibit it.

The answer, like the air in your client’s apartment building, is hazy. On the state and local levels, your clients are safe. The proposed act specifically states that all adults 21 years and older may legally possess and/or cultivate marijuana for personal use on private property. Cultivation may occur within a 25-square-foot parcel, more than large enough to keep your average smoker and his or her guests well satiated for days.

As California courts have already struck down local authorities’ power to prosecute individuals for legal marijuana use in the medical context, it appears that as long as the tenant isn’t running an illegal commercial operation out of your client’s building, neither the state nor local authorities will have any reason to come knocking.

But what about the federal authorities? Even if the act is passed, the federal Controlled Substances Act makes marijuana cultivation and possession a federal crime and civil infraction. The U.S. Supreme Court has on multiple

occasions upheld the federal government’s right to enforce the Controlled Substances Act notwithstanding state laws legalizing marijuana cultivation or possession. In the past, the federal Drug Enforcement Administration has sent hundreds of threatening letters to California landlords whose tenants operate medical marijuana dispensaries on the landlord’s property, threatening criminal and civil prosecution, including forfeiture of the property itself. Most of these letters were ignored by the Justice Department and the landlords never prosecuted; however, charges have been filed and cases litigated.

In early 2009, U.S. Attorney General Eric Holder spoke out against this practice, vowing that under the Obama Administration, the Justice Department would not raid or prosecute legally established dispensaries or any other persons possessing marijuana legally under state laws. However, this is an informal policy and subject to change at any time.

Additionally, there is no telling what the next administration’s stance on this issue will be, especially with respect to such uncharted territory as legalized recreational marijuana use.

The good news for residential landlords is there are virtually no recent California cases in which federal authorities have targeted individuals growing or cultivating marijuana solely for personal consumption. While state and local authorities have done so, the act would eliminate that threat.

Therefore, we can expect that even if the federal government were to enforce federal marijuana laws in California after implementation of the proposed state act, such efforts would focus on large-scale commercial operations, as they have in the past.

That being said, “you probably won’t be prosecuted” likely isn’t strong enough language to allay landlords’ fears of reprimand—or worse—should state-sanctioned marijuana use occur on their property. Luckily, most California communities, including Oakland and San Francisco, allow landlords to regulate smoking at will. Nothing in the act would affect that right. Therefore even if the act passes, landlords can probably sidestep any worries by including a prohibition in all leases against marijuana and tobacco use. Alternatively, they can consider including an indemnification provision regarding at least civil federal prosecution due to tenant marijuana use or cultivation.

Ultimately, the threat to landlords under the proposed scheme is probably very low. However with a little planning and proper legal advice, even that small threat can be extinguished. So take a deep breath and try to relax. n Timothy Halloran can be reached at 415.788.1900 or thalloran@mpbf.com; Jonathan Blute can be reached at 415.788.1900 or jblute@mpbf.com.

There is a very real possibility that come November, residential landlords will be faced with tenants who wish to grow and consume marijuana on their property.

S E P T E M B E R 201 0

theregistrysf.com 25

Real S C E N E

O F

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Below: Joy Dunn, IFMA Chapter Administrator consoles Ed Novak, Chapter President, just out of the dunk tank

Left (l-r): IFMA Board members in the dunktank: Bob Kraiss, Adaptec, Julie O’Loughlin, Fenwick & West & Russ Golden, Eat My Dust

Below (l-r): Peter Sortwell, Arborwell, Kimberly Taylor, Arborwell, John Gachina, Gachina Landscape Management & Kris Yamaguchi, Arborwell

IFMA Silicon Valley’s ‘Green’ Block Party & Membership Mixer On July 21, 2010, the Silicon Valley Chapter of the International Facilities Management Association (IFMA) held their Diversity Party and Membership Mixer. There were 200 attendees and over $12,000 was raised for the Diversity Scholarship fund. The block party was held in a parking lot owned by Orchard Commercial and had a gritty urban feel complete with cyclone fencing, a dunk tank, ethnic entertainment and food served from taco trucks.

Below left (l-r): Bill Wright, Alan Pong, Comfort International, Carmen Jiron, InnerScape & Paul Friesen, Knight Consulting

Left (l-r): Tod Fukushima, Workhorse, Steve Vu, BT Mancini Company, Timothy Engen, Milliken Contract & T.J. Rissing, BT Mancini Company

Left middle (l-r): Kathy Schalesky, DFS Commercial & Aimee Hallgrimson, Skyline Construction

Right (l-r): Tracy Martin, John Hackett, Donnelly Kerley Builders & Chris McCants, Silver Shield Security Left (l-r): Orchard Commercial Team: Sean Johnson, Tana De La Cruz, Catherine Steele, Marissa Borgman, Shannon Freitag, Elizabeth Earl & Joe Lewis.

Right: In keeping IFMA-SV‘s environmental stewardship, this green event was completely powered by a portable clean, hydrogen fuel cell provided by Altergy Systems; (l-r) Chris Radley & Eric Mettler

26 theregistrysf.com

S E P T E M B E R 201 0

P H O T O S C o u rtesy of k e n t go e t z

Left (l-r): Sharon Marion, Gidel & Kocal, Diane Rebecchi, Metro Cleaning, Susan Torres, Grubb & Ellis & Janis Zinn, Roche

Real S C E N E

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S E E N DPR Construction, a leading national commercial construction company, rolled out the red carpet for more than 700 guests to celebrate 20 years of building great things.

DPR Construction Celebrates 20 Years of Building Great Things DPR Construction, one of the nation’s top technical builders, celebrated 20 years of building great things on July 14 at its Redwood City, office with more than 700 customers, architects, engineers, subcontractors and employees in attendance.

DPR Construction lego-logo centerpiece Left (l-r): Jody Quinton, Regional Manager of DPR Construction’s Redwood City office and Scott Greubel, Regional Manager of DPR Construction’s San Jose office.

Below (l-r): David Kaneda, Integrated Design Associates and Frank Jesse, Frank Jesse, AIA, Architect Left (l-r): Ron Davidowski, Co-Founder and “R” of DPR Construction, Jim Dolen, DPR Executive Vice President, and Doug Woods, Co-Founder and “D” of DPR Construction.

Right (l-r): Simon Wong, equal, Ted van der Linden, DPR Construction, and Ralph Gevirtz, Platinum Group, Inc.

Left (l-r): Irene Lo, Flad Architects and Robert Bailey, Robert F. Bailey, CE, Engineer

28 theregistrysf.com

S E P T E M B E R 201 0

P H O T O S C O U R T E S Y O F Ev e r e t t e Ros e t t e

Above (l-r): Brent Liebhardt, DPR Construction, George Hurley, DPR Construction, Susan Hurley, Ted van der Linden, DPR Construction, and Hamilton Espinosa, DPR Construction.

activity

Reports

commercial leaseS

City

Lease Stq. Ft.

Name of Tenant/Rep (Brokerage)

Name of Landlord/Rep (Brokerage)

Notes (ie. Lease type and/or lease longevity)

Enterprise Airport Center, 500 85th Ave (Bldg 3)

Oakland

147,500

Pet Food Express/Joyce Cunningham (Cassidy Turley BT Oakland)

ProLogis/Bob Bisnette (ProLogis)

128M Term, Warehouse Lease Transaction

Hayward Gateway Center B, 3343-3377 Arden Rd, Bldg B

Hayward

129,920

Containers Unlimited/Paul Mueller (Cornish & Carey Commercial)

Invesco Real Estate, TX/Jeff Starkovich & Jay Hagglund (Cassidy Turley BT Oakland)

Renewal, 84M Term, Warehouse Lease Transaction

2391 - 2399 W Winton Ave

Hayward

105,062

Door to Door Storage/Conor Famulener (CB Richard Ellis)

Principal Life/Greig Lagomarsino (Colliers International Oakland)

Warehouse/ Distribution, New Lease

Williams Street Industrial Park, 2020 Williams St

San Leandro

100,293

District Council 16/Jeff Starkovich & Jay Hagglund (Cassidy Turley BT Oakland)

Broadreach Capital Partners/Jeff Starkovich & Michael Karp (Cassidy Turley BT Oakland)

120M Term, Industrial Lease Transaction

33333-33377 Transit Ave

Union City

81,450

Blommer Chocolate Of California Co., Inc./Tom Damaschino (Cassidy Turley BT Oakland)

Tulloch Construction/Susan Munday (Tulloch Construction)

Renewal, 120M Term, Warehouse Lease Transaction

3371 Arden Rd

Hayward

75,715

Containers Unlimited/Paul Mueller (Cornish & Carey Commercial)

Invesco

Warehouse

Sears, 1900-1980 140th Ave, W

San Leandro

72,000

EPoly Star, Inc./Eddie Shuai (Cassidy Turley BT Oakland)

SEARS ROEBUCK & CO/John McManus & Andrew Briner (Cushman & Wakefield Oakland)

37M Term, Warehouse Lease Transaction

Davis Court, 2265-2295 Davis Ct

Hayward

68,621

Kinwai USA Inc/Ed Collantes (Collantes Realty Commercial)

Wallace Mercereau/Jay Hagglund & Paul Beckwith (Cassidy Turley BT Oakland)

89M Term, Warehouse Lease Transaction

3363 Arden Rd

Hayward

54,205

Containers Unlimited/Paul Mueller (Cornish & Carey Commercial)

Invesco

Warehouse

Hayward Industrial Park, 23783-23787 Eichler St, Bldg 3

Hayward

45,199

Sims Group USA Corporation/Jay Hagglund (Cassidy Turley BT Oakland)

UBS Realty Investors/Joe Fabian (Cornish & Carey Commercial Hayward)

Renewal, 12M Term, Warehouse Lease Transaction

Ardenwood Technology Park, 6200 Paseo Padre Pkwy

Fremont

44,352

Solaria Corp

Drawbridge Partners/Sam Wright & Brian T. McCarthy (Cassidy Turley BT Palo Alto)

61M Term, R&D Lease Transaction

6909 Las Positas Rd

Livermore

42,624

Country Floral Supply Inc/Lee & Associates Pleasanton

Catellus Finance I LLC/Michael Lloyd, SIOR (Colliers International Pleasanton)

Renewal

49026 Milmont Dr

Fremont

40,322

Biogenix Inc/John Hone & Nick Gallery Colliers International Pleasanton

Asilomar Partners Milmont LLC/Peninsula Land & Capital Menlo Park

R&D

48368 Milmont Dr

Fremont

40,320

Holman Plastics/Terry Healy (Colliers International San Jose)

AMB Property Corporation

Warehouse R&D

Address Alameda County

40919 Encyclopedia Cir, #B

Fremont

34,000

Santur Corporation

Trumark Commercial/David Sandlin (Colliers International San Jose)

6189 Preston Ave

Livermore

31,492

Prestige Furniture/Michael Lloyd, SIOR & Mike Donnelly (Colliers International Pleasanton)

Farrar Family Trust/ Lee & Associates Pleasanton

Industrial

Alvarado Business Park, 30400-30470 Whipple Rd (B)

Union City

27,818

Overhead Door Corporation/Michael Karp & Adan Martinez (Cassidy Turley BT Oakland)

RREEF, SF/Jeff Starkovich & Mark Maguire (Cassidy Turley BT Oakland)

60M Term, Warehouse Lease Transaction

2300 Clayton Rd

Concord

24,611

United Healthcare

One Concord Center/Breck Lutz, Alex Grell & Charlotte Quinn (Cornish & Carey Commercial)

Office

4020 Nelson Ave

Concord

24,338

Valley Relocation & Storage of Northern California, Inc./ Curt Scheve, Bill Hillis & Brian Slocum (Colliers International Walnut Creek)

WCV Commercial Properties/ Curt Scheve, Bill Hillis & Brian Slocum (Colliers International Walnut Creek)

Industrial, 3 yrs

Foundry Square II, 405 Howard St-Bldg II

San Francisco

45,884

IGT/Frank Fudem (Cassidy Turley BT San Francisco)

Sterling American Property|Hines/ Nick Slonek (Cornish & Carey Commercial)

89M Term, Office Lease Transaction

185 Berry St

San Francisco

31,891

Cisco/Jim Dublin (Jones Lang LaSalle)

RREEF & McCarthy Cook/ Richard Hayes (McCarthy Cook)

Expansion, 60M

153 Townsend St

San Francisco

28,175

Pier 38 Maritime Business Faciliities LLC/ Liz Hart (Cornish & Carey Commercial)

DLA Piper

Office

755 Sansome St

San Francisco

27,606

Fitness Anywhere/Phil Tippett (CB Richard Ellis)

Sansome & Pacific Investments LLC/ Tim Maas (Colliers International)

Class B Office, New Lease

Gateway Tech Center One/ The Ga, 901 Gateway Blvd

S San Francisco

110,428

Theravance/Tom Hayes (Cassidy Turley BT Burlingame)

Alexandria Real Estate Equities

Renewal, 120M Term, R&D Lease Transaction

SFO Business Center, 1070 San Mateo Ave

S San Francisco

60,000

Tobi.Com LLC/Jason Cranston (Cassidy Turley BT Burlingame)

Centrum Properties/Jason Cranston & Marshall Hydorn (Cassidy Turley BT Burlingame)

32M Term, Warehouse Lease Transaction

Bay Meadows II, 1100 Park Place

San Mateo

59,236

Epocrates, Inc./Kevin Waldman & Mike Moran (Cassidy Turley BT Burlingame)

JP Morgan/Phil Arnautou & Peter Carlston (Colliers International Redwood City)

Renewal, 61M Term, Office Lease Transaction

Pacific Shores Center, 2000 Seaport Blvd, Bldg 2

Redwood City

51,063

NIKU/Steve Levere (Jones Lang Lasalle Palo Alto)

Informatica Corp/Randy Arrillaga (Cassidy Turley BT Palo Alto)

12M Term, Office Lease Transaction

Skway Landing I, 959 Skyway Rd

San Carlos

40,257

Wells Fargo/Marcus Wood (Cassidy Turley BT Palo Alto)

Equity Office, Peninsula/Jon Moeller (CB Richard Ellis Foster City)

120M Term, Office Lease Transaction

245 Spruce, 245 Spruce Ave, S

S San Francisco

40,000

Shamrock Storage Inc/Tom Hayes & Marshall Hydorn (Cassidy Turley BT Burlingame)

AMB Property Corp./Randy Keller & Matt Squires (Cassidy Turley BT Burlingame)

60M Term, Warehouse Lease Transaction

2000 Sierra Point, 2000 Sierra Point Parkway

Brisbane

39,378

Tercica/Marc Pope & Ben Paul (Cassidy Turley BT Burlingame)

Diamond Properties/Jon Moeller & David Wright (CB Richard Ellis Foster City)

Renewal, 48M Term, Office Lease Transaction

Pacific Shores Center, 2000 Seaport Blvd, Bldg 2

Redwood City

34,074

Pano Logic/Steve Lico & Mike Michaels (Cresa Partners San Jose)

Starwood Capital Group/Randy Arrillaga (Cassidy Turley BT Palo Alto)

37M Term, Office Lease Transaction

Pacific Shores Center, 1700 Seaport Blvd, Bldg 5

Redwood City

33,859

Cardiovascular Simulation, Inc/Boyd Smith & Brian Rieben (Cassidy Turley BT Palo Alto)

Starwood Capital Group/Mike Moran & Ben Paul (Cassidy Turley BT Burlingame)

48M Term, Office Lease Transaction

360 Harbor Wy, 360 Harbor Wy

S San Francisco

28,670

Gourmet Xpress/Marshall Hydorn (Cassidy Turley BT Burlingame)

William Lowenberg/Marshall Hydorn & Jason Cranston (Cassidy Turley BT Burlingame)

120M Term, Warehouse Lease Transaction

Contra Costa County

San Francisco County

San Mateo County

30 theregistrysf.com

S E P T E M B E R 201 0

commercial LEASES CONTINUED Address

City

Lease Sq. Ft.

Name of Tenant/Rep (Brokerage)

Name of Landlord/Rep (Brokerage)

Notes (ie. Lease type and/or lease longevity)

Highway 280 and Serramonte Blvd

Daly City

26,588

Crunch/Jim Peterson (Cornish & Carey Commercial)

Daly City Serramonte Center

Retail

1710 Little Orchard, 1710 Little Orchard St

San Jose

212,840

Valley Relocation & Storage/Jim Kovaleski & Craig Kovaleski (Cassidy Turley BT San Jose)

RREEF, Dublin

Renewal, 72M Term, Warehouse Lease Transaction

3011 North First St

San Jose

146,882

Intermolecular, Inc./Mike Denevi, John Yandle & Shawn Kellenberger (Cornish & Carey Commercial)

Novellus Systems

Warehouse

450 - 496 S Abbott Ave

Milpitas

102,407

Extron Logistics, LLC/Chip Wiser (Cornish & Carey Commercial)

LBA Realty/Brian Matteoni and Chip Sutherland (CB Richard Ellis)

Warehouse/ Distribution, New Lease

4555 Great America Pkwy

Santa Clara

77,149

Tellabs Operations, Inc./Scott Kinder (Cresa Partners)

The Prudential Insurance Co/ Bob Steinbock (CB Richard Ellis)

Class A Office, New Lease

550 - 560 E Trimble Rd

San Jose

48,000

Nor Cal Moving/Brian Matteoni (CB Richard Ellis)

ProLogis/Brian Erlanson (ProLogis)

Warehouse/ Distribution, Renewal

Middlefield Business Park, 189 Bernardo Ave, N.

Mountain View

41,531

SETI/David Hiebert & Dan Persyn (Cassidy Turley BT Palo Alto)

Broadreach Capital Partners/Terry Haught & Mark Daschbach (Cornish & Carey Commercial Palo Alto)

132M Term, R&D Lease Transaction

1455 N Milpitas Blvd

Milpitas

41,082

Uni-Fab Industries, Inc

Milpitas 10/Craig Fordyce (Colliers International San Jose)

Industrial

International Business Pk, 21052125 Lundy Ave/2031 Concourse

San Jose

35,516

C & D Semiconductor Services, Inc./ Derik Benson (Cassidy Turley BT San Jose)

LBA Realty Fund/Mary Wadden & Dan Hollingsworth (Cassidy Turley CPS)

Term, R&D Lease Transaction

3047 Orchard Pkwy, 3047 Orchard Pkwy

San Jose

33,534

DFine/Boyd Smith (Cassidy Turley Palo Alto)

ECI Montague LLC

Renewal, 43M Term, R&D Lease Transaction

2070 S 7th St, #D

San Jose

30,000

Splash Events/John Allard (Allard Commercial)

Chaboya Ranch/Dave Evans (Colliers International San Jose)

Warehouse

600 W California Ave

Sunnyvale

28,023

Iron Key Real Estate/Steve Lico (CRESA Partners)

Synopsys, Inc (Legacy/PFG)/Gregg von Thaden (Colliers International San Jose)

R&D, Sublease

840 W California Ave, #100-110

Sunnyvale

27,550

Kana Software, Inc/Rod Scherba (Cornish & Carey Commercial)

Principal Global Investors/David Sandlin (Colliers International San Jose)

R&D

402 - 446 S Abbott Ave

Milpitas

25,716

Harmonic, Inc./Conor Flannery (Jones Lang LaSalle)

LBA Realty/Chip Sutherland and Brian Matteoni (CB Richard Ellis)

Warehouse/ Distribution, New Lease

2099 Gateway Pl, #500, 600 & 650

San Jose

25,253

VeriFone, Inc/Scott Macdonald (Cassidy Turley CPS)

Equity Office Properties Trust/Michael Rosendin (Colliers International San Jose)

Office

2071 Ringwood Ave, #C

San Jose

25,026

Akeena Solar, Inc

Lasceke Trust/Bob Shepherd (Colliers International San Jose)

Warehouse

20600 Homestead Rd

Cupertino

25,000

TJ Maxx

FBJ Homestead Associates/John Machado (Colliers International San Jose)

Retail

Santa Clara County

For-Sale Transaction Data Provided By:

Address

commercial SALES

City

Property Size (Sq. Ft.)

Buyer

Seller

Price

Product Type

Newark

43,400

SBS Development LLC-Jacob Alpren

Central Newark Investors LLC

N/A

Light Industrial

Alameda County 8407 Central Ave

Contra Costa County 3600 Sierra Rdg

Richmond

171,052

Prime Richmond Housing Partners LP

Hilltop Summit LLC

N/A

Apartment

2301 Stanwell Dr

Concord

15,040

LJK Properties LLC

Wells Family Trust

N/A

Industrial Park

9 Orinda Way

Orinda

2,820

Anabi R/E Development LLC Series C

Shell Oil Products US

N/A

Service Station

2253 Loveridge Rd

Pittsburg

2,300

Anabi R/E Development LLC Series D

Shell Oil Products US

N/A

Service Station

Shell Oil Products US

N/A

Service Station

Shell Oil Products US

N/A

Service Station

2850 Crow Canyon Rd

San Ramon

2,253

Anabi Real Estate Development LLCFred Whitaker

5545 Bridgehead Rd

Oakley

1,864

Anabi Real Estate Development LLCFred Whitaker

San Francisco County 333 Market St

San Francisco

694,334

HD333 LLC-Karla MacCary

333 Market Street LLC

N/A

Office

236 Front St

San Francisco

18,422

Front Street Building LLC-Rick Holman

Far East National Bank

N/A

Office

Redwood City

26,730

Sequoia Main Street LLC-Alyn Beals

Robert Frank

N/A

Hospitality

San Jose

359,554

FC Third Street Associates LP

Redevelopment Agency of City San Jose

N/A

Multi Family Dwelling

San Mateo County 800 Main St

Santa Clara County 99 S 4th St 4433 Fortran Dr

San Jose

76,297

Robins Nest I LLC

Fortran Court Investors LLC

$4,770,000

Industrial

3412 Hillview Ave

Palo Alto

63,996

3412 Exchange LLC

Board Of Trustees/Leland Stanford

N/A

R&D Facility

535 Coleman Ave

San Jose

33,000

LPF San Jose Retail INC

Cousins San Jose Marketcenter

N/A

Commercial Building

33 Las Colinas Ln

San Jose

17,716

Rams Rental LLC-Martha Sanford

JP Chase LLC

$2,150,000

S E P T E M B E R 201 0

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El Segundo Engineer Completes Due Diligence for Oakland City Center Sale Partner Engineering and Science Inc. provided the Phase I environmental site assessments for CB Richard Ellis Strategic Partners U.S. Value 5 for the $360 million acquisition in downtown Oakland. The 1.6 million square-foot portfolio of buildings includes 1300 Clay St., 499 14th St., 501 14th St., 505 14th St., 500 12th St. and a parking garage. The acquisition also included the LEED Gold certified buildings 1111 Broadway and 555 12th St., which represent more than a million square feet. The buildings are located above the 12th Street Bay Area Rapid Transit station that is the hub for the entire 104-mile BART system.

New Affordable Housing for San Mateo Community College San Mateo County Community College District has completed its second faculty and staff housing development, the 60-unit Cañada Vista in Redwood City. Cañada Vista was developed

by Mill Valley-based Education Housing Partners, a non-profit affiliate of Thompson | Dorfman Partners LLC, and designed by KTGY Group Inc. Architecture and Planning. It offers one-, two- and three-bedroom apartments with rents ranging from $975 a month to $1,600, approximately 50 percent of the current market rate for similar apartments in the area.

The property is within walking distance of campus classrooms and facilities. The district uses the housing as recruitment tool, said Barbara Christensen, director of community and government relations for the San Mateo college district.

Online Commercial Marketplace Goes Mobile San Francisco-based LoopNet Inc., which operates a popular online commercial real estate marketplace, has launched two mobile products to allow access to commercial property information in the field including the online LoopNet.com marketplace and a new iPad application.

The LoopNet mobile Web site allows clients to view sale and lease availabilities, listing details, property photos and contact information for the listing broker. As of June 30, the LoopNet marketplace carried more than $455 billion of property listed for sale and 6.7 billion square feet of space listed for lease.

Professional Social Network Adds Real Estate Application San Francisco-based Rofo Inc., a real estate and office space search engine, has launched Real Estate Pro on LinkedIn. Real Estate Pro is an electronic application designed for use by real estate professionals and landlords. LinkedIn is an online professional network with more than 75 million members worldwide. Real Estate Pro allows users to import property listings, view and follow other professionals in their market and share details of their latest deals including property photos. Rofo was selected as part of the social-network company’s strategy to expand its applications portfolio and provide working professionals with new tools.

Venture-backed Medical Device Company Moves to San Jose Baxano Inc. has relocated from Mountain View to 21,000 square feet at 655 River Oaks Parkway in San Jose, according to the San Jose Redevelopment Agency. The company’s first

PEOPLE on the move

GVA Kidder Mathews Adds to Redwood Shores Office Bay Area commercial real estate veteran Tim Castello has joined GVA Kidder Mathews’ San Francisco Peninsula office in Redwood Shores. He will serve as a senior vice president specializing in landlord representation in the leasing of offices. Castello has leased more than 7.6 million square feet of office and R&D space with an aggregate value of $900 million.

General Contractor Promotes in San Francisco Sean Yudice is the new vice president of operations for Novo Construction in its San Francisco office. Yudice joined Menlo Park-based Novo in 2003 as project executive and was instrumental in starting and building the firm’s San Francisco presence. His promotion expands his role overseeing a group of project managers and working with clients on project delivery. His recent projects include 125,000 square feet of office space for Leap Frog in Emeryville; 25,000 square feet of offices and classrooms for Kaplan College in San Francisco; and 60,000 square feet for Thoratec Corp.

Grubb & Ellis Hires Business Operations Manager Natalie Dalessio-Castillo has joined Grubb & Ellis Co. as associate vice president and business operations manager of the San Francisco, Walnut Creek and Redwood City offices. She returns to Grubb after 11 years as a regional director of operations for Colliers International Inc., where she oversaw the Walnut Creek brokerage and Northern California property management divisions.

Jones Lang Creates Regional Post for Public Institutions Practice Jones Lang LaSalle has promoted Bob Hunt to managing director, Public Institutions for the Pacific Northwest. Hunt, who was previously a senior vice president in the firm’s brokerage division, assumes the newly created position immediately and will be based in San Francisco. He will lead the firm’s interactions with federal agencies and public-sector clients at the state and municipal levels. Hunt has extensive experience working with the Transbay Joint Powers Authority, U.S. General Services Administration, the cities of Seattle and San Diego and the counties of Marin, Napa and San Mateo.

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Peninsula Offices Earn LEED Gold Oyster Point Marina Plaza, the largest office complex in San Mateo County with approximately 470,000 square feet, has been awarded LEED-EB Gold certification by the U.S. Green Building Council. The property is owned by Kashiwa Fudosan America and managed and leased by Cushman & Wakefield.

Burlingame Office Garners LEED Silver Bay Park Plaza II, a 139,000 square-foot office building at 555 Airport Blvd. in Burlingame, has been awarded LEED Silver certification by the U.S. Green Building Council. The building is the headquarters of Virgin America, the California-based airline launched in 2007. Virgin recently signed a renewal and roughly 24,000 square-foot expansion of its lease with Equity Office Properties, which owns the building. The airline now occupies more than 50,000 square feet of the five-story building.

New Senior Housing Opens in Palo Alto Alta Torre, a development by BRIDGE Housing Corporation at 3895 Fabian Way, has opened.

Alta Torre provides 56 high-quality, affordable apartments for very low income seniors as part of a larger 12-acre mixed-use redevelopment of the former Sun Microsystems headquarters.

Annual income limits range from $10,632 to $37,280, with allowable households of up to three people; rents range from $443 to $742 per month, depending on income and household size.

Alta Torre was designed by Steinberg Architects, and Segue Construction was the general contractor.

New East Bay Venture Focuses on Multifamily Sector Apartment broker Joel Kelly and real estate owner and developer Metrovation have formed Bay Apartment Advisors. The brokerage and asset management firm will focus primarily on the East Bay apartment market and has its offices in the Uptown district of downtown Oakland.

The company’s services include asset management, property acquisition and disposition and 1031 tax-deferred exchanges for multifamily investors.

SKA, Swinerton Open Green Fire Station The community of East Oakland and the Oakland Fire Department have unveiled the first LEED certified fire station in Oakland, the LEED gold certified Fire Station 18. Located at a highly visible, busy thoroughfare in Central East Oakland, Fire Station 18 provides an important new landmark for this mixed-use working class neighborhood. The architectural design goals for the new station were to create a new community anchor and provide an accessible and welcoming street presence for surrounding residents and station visitors. n

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administrative offices in Hayward and regional offices in San Carlos, San Diego, Sacramento as well as Orange county.

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commercially available product is a system of spinal surgery instruments that allow surgeons to remove tissue causing symptoms from a condition known as lumbar spinal stenosis. The new location includes engineering labs and manufacturing space. Baxano has 40 employees and expects to double its growth by 2011.

BCCI Adds Five New Members to its San Francisco Team BCCI announced the addition of five new staff members to its San Francisco office. The firm’s new employees include Tom Ramlan as superintendent, Andrew Parsons as senior project manager, Doug Barbero as project manager, Jeff Harold as estimator and Angelina Munoz as insurance and contracts administrator.

C&C Names Hayward Vice President Gregory T. Jones was appointed vice president for Cornish & Carey Commercial based in the firm’s Hayward office. In addition to traditional brokerage, Jones will provide advisory services to help clients attain city approvals for tenant improvements and new-construction entitlements. Jones was previously city manager of the City of Hayward overseeing more than 850 employees in the planning and implementation of a $240 million annual budget. His 20-year career in government includes working with the City of Concord and City of Chico, where he was assistant city manager and city manager, respectively.

Architect Promotes STUDIOS Architecture promoted Peter Van Dine to associate principal. Van Dine has 40 years experience managing and designing commercial, institutional and retail projects for a wide range of clients. Director of Business Development Becky Zegar and designers Meaghan Strahorn, Brandon Marshall and Tamara Roth have been promoted to associate.

Jones Lang Expands Bay Area Multifamily Expertise Jones Lang LaSalle has added Jordan Moss as a vice president to its multifamily practice in San Francisco. Moss is charged with growing the business throughout the Bay Area. He brings more than eight years experience in the multifamily industry and has sourced, negotiated and structured the acquisition of $400 million in commercial real estate.

Anshen+Allen Principal Name To NonProfit Board Sharon Woodworth, associate principal of the San Francisco architecture firm Anshen+Allen, has been named to the board of directors for the Society for the Arts in Healthcare. n

CALENDAR OF EVENTS

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USGBC Northern California Chapter will host a Green Building Technology and Innovation Showcase from 6 p.m. – 8 p.m. at 555 Mission St., 19th Floor, San Francisco. Members $0 and non-members $15. Visit www.usgbc-ncc.org for more information.

Appraisal Institute Northern California Chapter will host a Uniform Appraisal Standards for Federal Land Acquisitions Seminar at University of Phoenix, 3590 North First St., San Jose. Register online at www.norcal-ai.org/event.html.

CREW Silicon Valley will host an Annual Developer’s Panel luncheon at Larkspur St. Claire, 302 S. Market St., San Jose. Visit www.crewsv.org for more information.

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CREW San Francisco will host a Membership Madness event. Contact Amber Brumfiel at amber.rye@sdma.com or call 415.781.7900 with questions.

BOMA Silicon Valley will host a membership luncheon with speaker Charles J. Toeniskoetter from 11:30 a.m. – 1:30 p.m. at Crowne Plaza San Jose, 282 Almaden Blvd., San Jose.

Visit www.boma-sv.org for more information.

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BOMA San Francisco will host a membership luncheon from 11:30 a.m. – 1:30 p.m. at The City Club, Main Dining Room, 155 Sansome St., 11th Floor, San Francisco. Members $55 and non-members $70. Visit www.crewsf.org to register online.

BOMA Oakland/East Bay will host a luncheon called How LinkedIn Can Help Your Business starting at 11:30 a.m. at Scott’s Seafood Grill and Bar, #2 Jack London Square, Oakland. Visit www.bomaoeb.org for more information.

BOMA Oakland/East Bay and Restoration Management Company will host a Facilities, Disaster Preparation and Recovery Course from 10 a.m.

– 11 a.m. at Scott’s Seafood, 2 Broadway, Oakland.

Visit www.bomaoeb.org for more information.

BOMA Silicon Valley will host an Emerging Leaders in Commercial Real Estate Council Mixer at Rosie’s McCann’s at Santana Row. Visit www.boma-sv.org for more information.

USGBC Northern California Chapter will host a presentation on Materials and Resources – Certification, Branding and Life Cycle course from 6 p.m. – 8 p.m. at Walnut Creek Library, 1644 N. Broadway Ave., Walnut Creek. Members $15 and non-members $30. Contact Bridgit Koller at bridgit@bridgitkoller.com with questions or register online at www.usgbc-ncc.org.

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IFMA Silicon Valley will host a CFM Exam Review Class from 8 a.m. – 5p.m. at SAP, 3475 Deer Creek Rd., Bldg. 7, Palo Alto. Visit www.ifmasv.org for more information.

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CREW East Bay will host a brown bag luncheon called Reassess Your Value: Identifying Opportunities for Property Tax Savings from 12 p.m. – 1 p.m. at Argo Insurance Brokers, 2300 Contra Costa Blvd., Ste. 375, Pleasant Hill, CA. This is a free members-only event.

RSVP to Brenda Goodrich at Brenda_goodrich@propertytaxhelp.com.

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CREW San Francisco will host an Effective Strategic Thinking for the Savvy Planner workshop with Ann-Margaret Vann from 11:30 a.m. – 1:30 p.m. at RIM Architects, 140 Second St., 2nd Floor, San Francisco. Members $25 and non-members $35. Lunch is included with the registration. Visit www.crewsf.org to register online.

BOMA San Francisco will host the 2nd Annual Emergency Preparedness Seminar from 8:30 a.m. – 11 a.m. at Ferry Building, Port Commission Hearing Room. Members $85 and non-members $100. Visit www.crewsf.org for more information.

ULI San Francisco will host an event called California High Speed Rail TOD MarketPlace from 8 a.m. – 4:30 p.m. at Anaheim Convention Center, 800 West Katella Ave., Anaheim. To register, visit www.ulisf.org or call 800.321.5011.

BOMA San Francisco Young Professionals will host a Networking Fall Mixer from 5:30 p.m.

– 8:30 p.m. Admission includes appetizers, 2 drink tickets and a chance to win some great door prizes.

Contact Wendy de Lara at 415.362.2662 ext. 110 for more information or visit www.bomasf.org.

NAIOP Silicon Valley Chapter will host their Annual NAIOP Barbeque. Visit www.naiopsv.org for more information.

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BOMA Oakland/East Bay will host Casino Night starting at 5 p.m. at Scott’s Seafood, 2 Broadway, Oakland. Register online at www.bomaoeb.org.

Appraisal Institute Northern California Chapter will host a Litigation Appraising Seminar at University of Phoenix, Oakland City Center, 1200 Clay St., Oakland. Visit www.norcal-ai.org for more information.

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Appraisal Institute Northern California Chapter will host a Workshop and Networking Social at Four Points by Sheraton, Pleasanton. Send an email to pat@norcal-ai.org for more information.

BOMA Oakland/East Bay Young Professionals will host a wine tasting event at Verbena in Oakland. Visit www.bomaoeb.org for more information.

CREW East Bay will host a luncheon called What the Future Holds from 11:30 a.m. – 1:30 p.m. at Garibaldis, 5356 College Ave., Oakland. Members $45 and non-members $60. For more information, visit www.eastbaycrew.org.

IIDA Northern California Chapter will host an IIDA Leaders Breakfast from 7:30 a.m. – 10 a.m. at Four Seasons Hotel, 757 Market St., San Francisco.

Amy Tan, acclaimed best-selling author of The Joy Luck Club, will be the guest speaker. Visit www.iida. org to register online or contact Carmen O’Donnell at 888.799-IIDA with questions.

CoreNet Northern California Chapter will host a chapter meeting from 3:30 p.m. – 7:30 p.m.

Visit http://nocal.corenetglobal.org/CORENETGLOBAL/NorthernCalifornia for more information.

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USGBC Northern California Chapter will host a LEED AP Interior Design and Construction Exam Prep Workshop from 8:30 a.m. – 5 p.m. at Haworth Showroom, 555 Mission St., Ste. 1950, San Francisco.

Visit www.usgbc-ncc.org for more information.

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IFMA Silicon Valley will host a Global Facilities Management monthly meeting from 5 p.m. – 8 p.m. at NASA. Visit www.ifmasv.org for more information.

BOMA San Francisco will host a seminar called Critical to Emergency Preparedness: Neighboring Buildings from 12 p.m. – 1 p.m. at Transamerica Building, 600 Montgomery St., 48th Floor, San Francisco. This is a free members-only event. Visit www.crewsf.org to register online.

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BOMA San Francisco will host BOMA Gran Prix from 3:30 p.m. – 6:30 p.m. at GoKart Racer, 1541 Adrian Rd., Burlingame. Visit www.bomasf.org for more information or email michael.steele@glenborough.com.

NAIOP San Francisco Bay Area Chapter will host the Seventh Annual Capital Markets Report Luncheon from 11:30 a.m. – 1:30 p.m. at Four Seasons, 757 Market St., San Francisco. Visit www.naiopsfba.org for more information.

USGBC Northern California Chapter will host a LEED Green Associate Exam Prep Workshop from 8 a.m. – 4:30 p.m. at Fort Mason Center, Marina Boulevard and Buchanan St., San Francisco. Visit www.usgbc-ncc.org for more information.

USGBC Northern California Chapter will host a LEED for Existing Buildings: O&M – Intro, Overview and The Business Case Workshop from 8 a.m. – 4:30 p.m. at Fort Mason Center, Marina Boulevard and Buchanan St., San Francisco. Visit www.usgbc-ncc.org for more information.

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CREW Silicon Valley will host a Sponsor Reception/Dinner at Hotel Valencia Cielo Deck. Visit www.crewsv.org for more information.

Appraisal Institute Northern California Chapter will host a National Uniform Standards of Professional Appraisal Practice Update at Carr America Conference Center, Hacienda Business Park, 4400 Rosewood Dr., Pleasanton. Visit www.norcal-ai.org for more information.

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FINAL OFFER Starting Anew

❯ JIM FOWLER

By Sharon Simonson

Like many entrepreneurs, Jim Fowler, Arne Ericson and Robert Williamson spent years dreaming and preparing before they started Novo Construction Inc. After finishing their formal educations in 1994, they worked for various general contractors and saved their money. Each partner ultimately ponied up $60,000 for the launch in the final heady months of the dot-com boom. Their dreams never included events awaiting them. In their first month, March 2000, in a newly leased Redwood City office seated at a fold-out table, Fowler and Williamson watched, mouths agape, as the NASDAQ began its plunge. Over the next five years, Silicon Valley and San Francisco lost nearly 220,000 jobs. “Our first project was to put up a white board for a semi-conductor company in Milpitas,” Fowler says. But a decade later and with the 2008-2009 global financial collapse behind them, too, Novo’s founders have grown annual revenue to $188 million from $2 million their first year. They have expanded from Silicon Valley, opening a San Francisco office in 2004. Today they have more than 90 employees, divided evenly between Menlo Park and the city. And they are looking to hire. Their clients include Cisco Systems Inc., LinkedIn Corp., Oracle Corp., VMware Inc., Genentech Inc. and global law firm Latham & Watkins LLP. Over the next decade, Fowler hopes to double his company’s revenue and employee count. But growth depends mostly on the quality of workers he can retain because Novo has built its business based on relationships, he says. Born and educated in Hong Kong until he was 8 years old, Fowler speaks fluent Chinese and Cantonese. His mother is Chinese and his father was an American. His own heritage and background jibes well with the Bay Area’s, Fowler says.

“I come from a very mixed background, and the great thing about the Bay Area is that it is entirely mixed as well.”

How do you feel about business?

JF❯ We are starting to see pent-up demand requiring companies to look for new space. People are talking about work related to the PwC (PricewaterhouseCoopers) lease (for more than 150,000 square feet in downtown San Jose) and the McAfee lease (for 241,000 square feet in Santa Clara). A year ago, no one was talking about projects that size. Competition is still stiff. There is still not enough work for everyone, and that is true across the board for the real estate industry.

What was Novo’s first big break?

JF❯ Our first client who believed in us was [corporate facilities director] Adony Benaires at Mercury Interactive. (Mercury Interactive Corp. is now owned by Hewlett-Packard Co.) He called us when we were having rolling blackouts [in 2000] and asked us to put in two emergency generators. It was a $1 million job. I spent the entire weekend there, all day and all night, when we were transferring the power from their permanent power source to the generator. That is the way we built the company.

Our guys show up day or night to fix a problem even if it is a roof leak. The idea is that our phone number is the only one they will ever need.

How is the Silicon Valley business culture different from San Francisco’s?

JF❯ In the valley most of our work is directly with corporate facilities or corporate real estate directors. In San Francisco, you are working for construction managers and landlord representatives who are handling work for others, often institutional clients. You are working for people like Jones Lang LaSalle and Cushman & Wakefield. Consequently, the way you get work and do work and the way work is awarded is completely different. The best part of having an office in San

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Francisco is that big architectural firms there start a lot of the work that comes down to the valley, so we gain a leg-up.

Housing developers say that land and construction costs are down 10 percent to 15 percent. What do you see on the commercial and industrial side?

JF❯ Construction costs are down, too. Some union labor rates have actually gone up, but the materials and some other trades have gone down. I do believe that costs have bottomed.

Projects going forward now will save 10 [percent] to 20 percent versus a year from now. Drywall, steel prices and carpet pricing are all up. Lead times are longer. If you were to ask for light fixtures or an HVAC (heating, ventilation and air conditioning) unit, it was two [weeks] to four weeks to get it.

Now it is up to eight weeks, which is more normal. Whatever you are building now, you get products from everywhere in the world, so costs depend on global demand, and you have to wait for materials.

What are your thoughts on green building and the U.S. Green Building Council’s Leadership in Energy and Environmental Design program?

JF❯ We currently have 20 LEED accredited professionals in the company, and our new offices in Menlo Park are certified LEED Silver. You cannot build anything any more and not do some LEED certification. There are benefits. You can use a lot of recycled products on your flooring and countertops that do not add much cost.

How many of your clients are pursuing LEED certification?

JF❯ Clients are going down the path of least resistance. They want to be environmentally friendly, but they don’t want to spend a lot. n