THE
Registry
P.O. Box 1184 San Mateo, CA 94403 415.738.6434
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.
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.
NORTH
Publisher
Vladimir Bosanac vb@theregistrysf.com
President
Heather Bosanac 415.738.6434 heather@theregistrysf.com
Marc Cunningham President AllWest
Bruce Dorfman
Principal Thompson | Dorfman Partners, LLC
Editor-in-Chief
Daniel Huntsman, LEED AP
President & Founding Principal Huntsman Architectural Group
Jesshill E. Love III Partner Ropers, Majeski, Kohn & Bentley
Sharon Simonson 408.334.2512 ssimonson@theregistrysf.com
Design
Jelena Krzanicki Janet Raugust
Photographer
Chad Ziemendorf
Daniel Myers
Partner, Real Estate Practice Group Leader Wendel, Rosen, Black & Dean LLP
Jeanne Myerson
President & Chief Executive Officer The Swig Company
Tim Tosta
Partner Luce Forward
Anton Qiu
Principal TRI Commercial
Writers
Brad Berton, Douglas Caldwell, Michele Chandler, Robert Celaschi, Janis Mara, Sharon Simonson, Sasha Vasilyuk
Contributors
Phil Williams, P.E., LEED AP
Daniel Huntsman, Peter Ingersoll, Rob La Eace, John McNellis
Vice President Webcor Builders
Paul Zeger
Principal, President & CEO Pacific Marketing Associates
Advertising
Denise Franklin 408.366.1984 denise@theregistrysf.com
SOUTH
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.
Jennifer Dizon, CPA Audit & Advisory Partner Hood & Strong, LLP
Erik W. Doyle
Executive Managing Director Newmark Knight Frank 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
The Registry is a registered trademark of Mighty Dot Media, Inc. ©2011 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.
2 theregistrysf.com
J U ly/A u g ust 2 0 1 1
Norman C. Hulberg, MAI
President 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
Jeffrey A. Weidell
Executive Vice President NorthMarq Capital
Contributors Daniel Huntsman On Turning Thirty pg. 22 Daniel Huntsman is founding principal and president of Huntsman Architectural Group in San Francisco and a LEED accredited professional. He is also an editorial board member for The Registry Bay Area Real Estate Journal.
Peter Ingersoll The Ride of a Lifetime pg. 26 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.
Rob La Eace The Monkeys in the Middle pg. 30 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 everyday. Today, these same skills are an asset to those who work with this San Francisco native in his career as a broker associate with Paragon Real Estate Group. 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.
John McNellis Principals with Principles pg. 28 John McNellis is a Palo Alto-based retail developer and investor. Since its inception nearly 30 years ago, McNellis Partners has developed more than 50 projects in Northern California, primarily shopping centers ranging from 30,000 square feet to 200,000 square feet. McNellis serves on the national board of trustees for the Urban Land Institute and is a ULI governor. He is a member of the International Council of Shopping Centers and serves on the Policy Advisory Board for the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. He also serves on the national board of directors for Outward Bound USA and the board of Rebuilding Together Peninsula, a volunteer partnership to rehabilitate homes and community facilities. He is a former board member of Lambda Alpha International (Golden Gate Chapter), an honorary society for the discussion of land-use and economics. On occasion, he lectures for the ULI, the ICSC and Stanford University’s schools of business and law.
Letter from the Publisher Dear Reader, The year of the tech IPO is upon us. In the annals of capitalism, 2011 will be remembered as the year that brought the resurgence of the initial public offering. After 10 long years of relative dearth, the gold rush is (back) on. On Jan. 27, Mountain View’s LinkedIn Corp. filed its initial offering documents, reporting $10 million in net income and 65 million unique visitors in the three months that ended Dec. 31. On June 2, Groupon Inc., which just leased space in Palo Alto, filed its S-1, reporting $644.7 million in revenue (and $113.9 million in losses) in the first quarter of 2011. Then on July 1, San Francisco’s Zynga Inc. filed its IPO documents, reporting net income of $90.6 million on revenue of $597.5 million last year and revenue of $235.4 million in the first quarter of 2011. Over the next several years, many a prospector is sure to converge on the Bay Area in search for a share of the bullion. And that’s just around the IPO market. Consider the economic impact of Apple’s new three million square-foot campus, Google’s latest foray into social networking and AOL’s resurrection as a media company. Undoubtedly, our region is beginning another boom, leading a cluster of recovering markets nationwide including energy-driven Denver and Houston and tech- and tourism-driven New York. Even the Midwest’s Chicago is waking up, leveraged by a revived global economy and its elaborate transportation links. In the Bay Area, the flow of investment is generating jobs and creating demand for commercial and residential real estate. Google alone leased close to 600,000 square feet of space in the second quarter in Mountain View, helping drive the submarket’s vacancy rate down 5.4 percentage points to 8.9 percent. And VMware, fresh from absorbing the 850,000 square foot Roche campus in Stanford Research Park, helped push Palo Alto’s vacancy rate down more than 11 percentage points to 4.7 percent. Housing prices are beginning to recover. Apartment rents are rising. Hooray for tech! True, the country and world feel lingering pain. The vertigo induced by the housing crash and its financial aftermath still lurks at the periphery of our consciousness. During the last week of June, The Wall Street Journal reported layoffs on Wall Street. The
4 theregistrysf.com
J U ly/A u g ust 2 0 1 1
Greek, and likely Portuguese, debt crisis has been and will continue for some time to be a source of worry for world financial markets. Some ominous clouds are circling our magic kingdom, too. Cisco is shedding around 4 percent of its global work force. A large Bay Area financial institution is expected to make a reorganization announcement that will most likely result in layoffs. The state and local governments are still in deep distress. In so many ways, it really is the best of times and the worst of times. One statistic noted by our esteemed Final Offer interviewee this month, John Challenger of the global outplacement firm Challenger, Gray & Christmas, is that the nation’s GDP is roughly the same as it was in 2007, $13.5 trillion, yet this is achieved with seven million fewer workers. That is staggering on several levels. Practically, it means we were not efficiently utilizing our resources before the recession, and we hadn’t even realized it. It illustrates how much greater technology’s influence and power can be. But it also means that the current arrangement is unsustainable. People may be working harder and more diligently now, but over the longer term they will want (and have to have) a more measured life. They will seek more time with family, more time to recover from grueling work weeks. Rehiring must and needs to happen, which in turn will drive everything else and begin the virtual, beneficial process of continued economic expansion. It is already happening in the Bay Area and select markets nationwide. Ultimately it will spread, even if it is mixed with some bad news along the way. The last technology boom saw the birth of (real and imagined) tech clusters with clever names like Silicon Alley (Manhattan) and Silicon Prairie (claimed by locales in Texas, Illinois, Wyoming and the Midwest). Chances are this boom will again spread. Rejuvenated by recent company valuations and investors’ desire to put money somewhere to good use, the Bay Area could again be ground zero of an economic revival the country and the world desperately need. And not a moment too soon. Regards, Vladimir Bosanac
Media Partners The Registry would like to acknowledge its partnerships with the following organizations:
www.norcal-ai.org
News
SENT to us
Desk
Partnership Buys Peninsula Apartments New York City real estate investment firm The Praedium Group and San Francisco investment company McDowell Properties have acquired Daly City’s Skyline Heights for $45 million, or just over $175,000 a door. The seller of the 256-unit complex was American International Group Inc. The acquisition represents Praedium’s and McDowell’s first joint venture. The garden-style property is a gated community with a heated swimming pool, fitness center, barbeque and picnic area. It is 93 percent occupied. Praedium has been a sponsor of commingled real estate private equity funds since 1994. Investors include public and corporate pension funds, financial institutions, insurance companies and endowments. Praedium Fund VII L.P. is a $900 million real estate private-equity fund with purchasing power of $3 billion. It is acquiring properties nationwide. McDowell Properties is a real estate investment company that focuses on the acquisition, management and repositioning of multifamily properties in U.S. growth markets. Its current portfolio consists of 14,518 apartments. McDowell has recently invested in commercial mortgage-backed securities representing more than $2 billion in loans.
Santa Clara Campus Secures Financing LG Business Park, a joint venture between Carlyle and Sand Hill Property Co., has secured $33 million acquisition financing through CB Richard Ellis Group, Inc.’s Capital Markets Debt & Equity Finance division. The loan financing was provided for the Los Gatos Business Park, a ten building office/R&D campus containing approximately 250,000 square feet of rentable area in the West Valley submarket of Santa Clara County. CBRE placed the acquisition financing for the campus with a national bridge lender, which carries a floating rate spread priced over the 30-day Libor. The non-recourse financing is priced interest-only over the term of the loan. John Nelson, executive vice president and Michael Walker, lead analyst of CBRE Capital Markets in San Francisco, originated the loan on behalf of the buyer. CBRE’s Nelson & Walker also provided consultation on the joint-venture equity structure.
Experts for Hire Lightner Property Group, a San Francisco property management and real estate development company operated by licensed attorneys, has launched Opine Experts. Opine matches the expertise of contractors, structural engineers, property managers and other specialists with law firms, civil litigators, insurance defense and investors for a variety of needs including litigation support, due-diligence investigation and project management. The company was co-founded by Bill Lightner and Merrie Turner Lightner. “Our vision is to become known as the go-to place for expertise in all matters touching real estate, whether it’s about bricks and mortar, financial, transactional, landlord-tenant, operational, environmental or regulatory matters,” said Merrie Turner Lightner. Currently, Opine is fielding inquiries to populate its talent roster. Qualified experts can engage Opine as their exclusive or non-exclusive agent.
Walnut Creek Retail, Housing Sell Menlo Park commercial real estate firm Deerfield Realty has acquired the retail portion of a mixed-use development in Walnut Creek from Prometheus Real Estate, the Bay Area’s largest private owner of multifamily properties. The Mercer Retail, located at 1615-1699 N. California Blvd., consists of 22,000 square feet of ground-floor retail below 181 luxury apartments and condominiums. The Mercer Retail is currently 83 percent
PEOPLE on the move
leased to Mike’s Bikes, Metamorphosis Spa, Continuing Cosmetology Academy, Skin Spirit, Galaxy Nails and The Counter. Forrest Gherlone, Mike Zylstra and Cece Vohs Cimino of Cornish & Carey Commercial Newmark Knight Frank’s Walnut Creek office together with Michael Maffia and Putnam Daily of NKFCornish & Carey Commercial’s Leased Investment Group—Maffia Team represented Deerfield and Prometheus in the sale.
HUD Doles Out Community Development Cash San Francisco is to receive nearly $18.6 million in community development block grant funding, $7.6 million in HOME Investment Partnerships funds and close to $10 million in the Housing Opportunities for Persons with AIDS program, according to the U.S. Department of Housing and Urban Development under its fiscal 2011 spending plan. San Jose is to receive nearly $9.2 million in CDBG money and more than $4 million in HOME money. Oakland will receive more than $7.5 million in CDBG money and not quite $4.2 million in HOME money. Community development block grants are typically aimed at the rehabilitation of affordable housing and the improvement of public facilities. CDBG money is distributed based on a legal formula that takes into account population, poverty, the age of the housing stock and the extent of overcrowding. The HOME Investment Partnerships Program is the largest federal block-grant source to local and state governments aimed exclusively at affordable housing for low-income families. Overall federal CDBG funding was reduced by 16.5 percent, or more than $600 million in 2011, while HOME program funding was reduced by 11.7 percent, or more than $200 million.
Silicon Valley Buildings Gain LEED Sunnyvale City Center has earned LEED certification under the Existing Buildings: Operations & Maintenance category from the U.S. Green Building Council. The buildings, 100 Mathilda Place and 150 Mathilda Place (left) earned LEED gold and LEED silver, respectively. The 472,000 square-foot commercial center, built in 2002, is managed by Jones Lang LaSalle Americas Inc. The LEED certification arises from multiple factors and practices. More than 14 percent of the building’s occupants use alternate transportation to get to work. Building managers also offset 62.5 percent of annual energy consumption with renewable energy.
Leases Fill New San Leandro Warehouse Arizona-based Beltmann Group Inc., a family-owned moving and storage company, and US Air Conditioning Distributors LLC will occupy a 56,000 square-foot warehouse at 1991 Fairway Drive in San Leandro. Construction on the building was completed in 2009. Both tenants are relocating from within San Leandro. “The San Leandro market has seen an increase in activity,” said Todd Severson of Colliers International’s Oakland office. “As class A industrial product continues to become more scarce, rents will trend upwards.” Severson and Greig Lagomarsino represented the landlord, Fairway San Leandro LLC, in both transactions. Beltmann Group was represented by Dan Bergen of Colliers’ Pleasanton office. Lagomarsino and Phil Krevoy of Realatrends’ Southern California office represented US Air Conditioning Distributors.
Bay Area Properties Get Financing Real estate capital services company Cohen Financial has secured $15 million in refinancing for the Paradise Point Executive Center, a fully leased, multi-tenant office development in Corte Madera, north of San Francisco. The 97,000 square-foot property is located at 5639 to 5725 Paradise Drive and houses the corporate headquarters of Restoration Hardware. continued on page 34
Biotech Organization Selects Executive
Real Estate Services Firm Grows Capital Markets Groups
Scott Korney has been named the new chief operating officer for Prescience International in San Francisco. Prescience promotes the commercialization of science and technology through starting and managing research centers, incubators, foundations and institutes. It manages the San Jose BioCenter, which provides specialized facilities, capital equipment and laboratory services to life-science and clean-technology companies; the UC Berkeley BioExec Institute; and the Environmental Business Cluster, a clean-tech incubator founded in 1994 and also in San Jose. The company is currently collaborating with the city of San Francisco to evaluate a 260,000 square-foot incubator at Hunters Point for cleantech, biotech and high-tech companies.
John Manning joins the firm as managing director of the Real Estate Investment Banking (REIB) team. Joe Euphrat will lead the firm’s Healthcare Capital Markets practice on the West Coast within the firm’s Americas business.
6 theregistrysf.com
J U ly/A u g ust 2 0 1 1
Manning brings more than 12 years of capital markets expertise to Jones Lange LaSalle. Most recently, he was a partner in the San Francisco office of Highland Realty Capital, a leading regional real estate investment banking firm. Prior to forming Highland, Manning was a vice president at Buchanan Street Partners. Manning has closed an excess of $1 billion of capital in his career. He is an
experienced transactor across all product types with specialties in office and hotel product. Prior to joining Jones Lang LaSalle, Euphrat served as the vice president and director of Kaufman Hall & Associates and senior vice president of Shattuck Hammond Partners. Euphrat is also the co-president of the Board of Directors for San Joaquin Lumber Company. He is a graduate of the Haas School of Business from University of California, Berkeley.
Lab Designer Joins Architect in Bay Area J. Stuart Lewis, a laboratory designer, has relocated from the HOK office in Atlanta to San Francisco as a vice president and senior laboratory planner. His move improves HOK’s capacity to respond to fast-growing corporate, institutional, academic and government laboratory design needs on the West Coast. During the past 13 years at HOK, Lewis designed research facilities for Auburn University, Emory University, the University of Georgia, Georgia Institute of Technology, the University of Florida, Florida State University, Oregon Health and Science University, specialized forensic laboratories for the U.S. Army and Department of Defense and public-health laboratories for the states of New York and New Jersey.
Grubb & Ellis Appoints Regional Director Dina Simoni has been made regional director of research and marketing for Grubb & Ellis Co.’s San Francisco Bay Area offices. Simoni joined Grubb in August 2007 as research manager of the company’s San Jose office. She began her real estate career in 1999 in residential real estate and has worked in the research and marketing management capacity for companies in the title and lending industries.
Industry Veteran Joins Cassidy Turley Edward Suharski has joined Cassidy Turley’s capital markets group as a senior vice president in the firm’s San Francisco office. Suharski has 30 years of real estate investment experience and handles property dispositions and acquisitions for both institutions and substantial private equity investors. Suharski was an executive vice president with Grubb & Ellis Co. and a director of its Institutional Capital Markets Group. Since 2005, he has closed over $2.6 billion in real estate transactions and was the number one producer nationally in both 2005 and 2007.
Brokerage Expands with Tenant Rep, Project Manager Brad Werner has joined Cassidy Turley BT Commercial as a senior vice president and partner. He will continue his focus on tenant representation, working throughout the San Francisco Bay Area. David Nikoley has joined Cassidy Turley as vice president of project and development services based in the Santa Clara office. Werner’s experience includes the analysis and negotiation of complex leases, marketing properties for disposition, strategic planning and construction supervision. He is a co-author of the BayBio Real Estate Survey, a comprehensive look at how life-science companies rate space issues and other factors affecting their occupancy. He recently completed lease transactions for intellectual property lawyers Kenyon & Kenyon LLC and Kilpatrick Townsend & Stockton LLP, business attorneys. His most significant assignments include leases for Accenture for 125,000 square feet and security-software maker McAfee, a wholly owned subsidiary of Intel Corp., for 100,000 square feet. Nikoley most recently worked as a senior project manager on the new, one million square-foot Facebook Inc. campus in Menlo Park. He has worked for Wells Fargo & Co., Charles Schwab & Co. Inc., Sun Microsystems Inc. and PG&E Corp.
Architect Announces Promotions in San Francisco Cliff Peterson (left) has been promoted to director of technical architecture and quality control for Studios Architecture. Peterson joined Studios in 1989 and has more than 25 years of experience managing large, complex projects both nationally and internationally. Kristin Lacy (right) has been promoted to sustainability program manager. Lacy joined Studios in 2004.
Long-Time Company Leader To Retire John Kocal, a partner at Campbell-based Gidel & Kocal Construction Co. Inc., will retire from the company in the fall after 30 years on the job. The firm has 36 employees and has managed commercial projects as varied as an auto dealership in Mexico City and a medical clinic in Santa Rosa. continued on page 34
COMMERCIAL MARKET REPORT
Illiquid Becomes Liquid Palo Alto startup helps companies convert excess office space into cash, 15 minutes at a time.
S
ometimes a coffee shop just won’t do for an impromptu business meeting—especially if you need an HDTV to make a PowerPoint presentation. A formal office lease, on the other hand, can mean far too much commitment, particularly for today’s breed of free-agent worker. A Palo Alto startup called LiquidSpace aims to bridge the gap. Its mobile application lets users find and book a spare desk or conference room on quick notice for as short as 15 minutes or as long as a day. The app is the core of the company’s business strategy, which is premised on the growing prominence of mobile and independent contract workers and the drive to squeeze efficiencies from the fixed costs of real estate by owners and lessees alike. “You literally can walk down the street, punch the app and see pictures of the space within a half-mile,” said Chief Executive and co-founder Mark Gilbreath. The description, controlled by the company offering the space, can include photos visible on mobile devices. Space can be sorted by type, based on tags attached to the file. It even lists public spaces such as coffee shops and hotel lobbies. If access codes are required to get into an office, they are sent to the mobile device only after the member has arrived and checked in. Membership and space listings are free. Rather, LiquidSpace takes a percentage of whatever the owner of the space charges the user. So far, the company has raised not quite $5 million in two rounds of venture funding. In May, it got $3.6 million in a Series A round from Menlo Park’s Shasta Ventures and the Floodgate Fund out of Palo Alto. That financing is aimed at rolling out the service
“By making space into a liquid asset, the person who owns the office space can get liquid value.” Mike Maples Jr., managing partner, Floodgate Fund
8 theregistrysf.com
J U ly/A u g ust 2 0 1 1
nationally. Before that, the company closed a $1.3 million seed round led by Mike Maples Jr., managing partner of Floodgate, which backs technology startups with investments of $1 million or less, and Reid Hoffman of the Greylock Discovery Fund, a Menlo Park investment fund for tech startups. LiquidSpace began beta testing this year with four Bay Area locations: co-working venues RocketSpace and NextSpace in San Francisco, and Pacific Business Centers in San Mateo and Palo Alto. LiquidSpace also has forged a partnership with office furniture maker Steelcase. “Think of them as the Xerox PARC of workspace,” Gilbreath said. “In the last couple of decades they have been focused on how to make workspaces work harder.” With much of the country still struggling economically, excess space is easy to find. Maples believes that even when vacancy rates tighten up, there will be enough empty bits left for LiquidSpace to work. “The average office space even in good times is not 100 percent occupied,” he said. “This is a way for people to turn their overprovisioning into an asset rather than a wasted cost they pay every month. If you own commercial real estate, every day you have space that goes unused you lose money. It’s like unused seats in an airplane. By making space into a liquid asset, the person who owns the office space can get liquid value.” LiquidSpace quotes a 2010 study from market research firm International Data Corp., which estimates there are 110 million mobile workers in the United States, including those based in offices, those based at home, and those with no base at all. By 2013, IDC projects 119.7 million mobile U.S. workers. “There is simply more interpersonal, collaborative, plural work happening now,” Gilbreath said. Some firms also don’t assign permanent spaces to their workers. One such is international strategy and design consultant DEGW, which helps clients make the most of their physical space to improve organizational performance and productivity. The London-based company’s San Francisco office just moved into about 4,000 square feet on Market Street. It’s more space than needed right now, so DEGW put a listing on LiquidSpace in late June. “We probably have capacity for another 20 people, potentially,” said Managing Director Georgia Collins. Meeting rooms, open-meeting space and multiple workstations are available. One company concern is security. “I think the most logical thing people jump to is ‘how do you know who is coming in, and how do you know they are the right sort of people?’ That is one of the things we are going to test,” Collins said. “My sense is you aren’t going to get a bunch of people walking in off the street.” In addition to recapturing some of the cost of excess space, there’s a social element, too: DEGW is making the space available for free to clients and partners, for example.
T op I mage courtesy of D E G W ; A P P I M A G E C O U R T E S Y O F l i q u i d s pa c e
By Robert Celaschi
Pacific Business Centers has so much faith in the LiquidSpace app that it pulled the plug on its own reservations transaction system to make LiquidSpace the sole means of booking and paying for space. It’s a beta test, so there are always some bugs to work out, said Pacific Business Centers Chief Executive Laurent Dhollande. But he said that he has no doubt the service will bring in new business. “What a platform like LiquidSpace enables is for mobile workers to know where they can crash instantaneously in a professional setting,” he said. “We thought there would be a fair amount of pain,” he said of the transition to LiquidSpace; the fears proved unfounded. “It turns out, these guys are good.” The two companies have agreed on short-term performance milestones through September. If they are met, LiquidSpace and Pacific Business Centers plan to unveil some of the information that month at the annual Office Business Center Association International in Las Vegas. Floodgates’ Maples used the app in March when it was introduced at the South by Southwest (SXSW) Interactive Conference in Austin, Texas. People wanted to pitch ideas, and he wanted a suitably private meeting space. He booked one filled with trendy art for the afternoon. “People would be asking me, ‘How did you find this place?’ It was a good conversation starter, but it also was a classy venue,” Maples said. Gilbreath got the idea while taking a hiatus from Silicon Valley to develop an office prototype in Boise, Idaho. It combined green building practices with lots of technology to allow flexible interior spaces. It opened in the fall of 2008. “That was probably the worst time in the last 100 years to open an innovative real estate project,” Gilbreath said. It’s still sitting idle, but it suggested a new direction: Instead of creating green space, it would be even greener to make better use of the empty spaces already out there. “We consider ourselves to be the first example in the realm of workspace that has combined all the elements we consider critical,” Gilbreath said: the listings themselves, support for mobile devices and a mechanism for trusted sharing of information. But other startups are using at least some of the same elements to connect people and places for ultra-short stays. Brooklyn-based Loose Cubes Inc. claimed to have 1,268 work spaces available in 284 cities worldwide as of June. It has venture backing from Accel Partners and Battery Ventures, both of which have Silicon Valley offices. Loose Cubes uses an app (Instant Jelly) but primarily for members to set up co-working events rather than find space. Airbnb Inc. and Wimdu.com are somewhat similar services where travelers can go online to book places to stay for the night in private homes and apartments. San Francisco-based Rofo.com uses a phone app to let users get information on commercial real estate space, but only for regular leases. The two types of inventory are different, but the clientele might overlap to some degree. “I could see a case where the same person who is looking for a more permanent home for their business is also the same person who is on the road searching for temporary spots. I’m a good example of that person,” said Rofo founder Alan Bernier. Gilbreath expects competition. He won’t estimate how long LiquidSpace has to establish and hold a leadership position. He simply wants to get there first. n
RESIDENTIAL MARKET REPORT
The Bay Area is growing more racially and ethnically diverse. By Michele Chandler
T
he older and more ethnically diverse Bay Area population revealed by the latest U.S. Census data spells challenge and opportunity for the region’s housing industry. Asian and Hispanic populations are growing rapidly even as the white population decreases. Along with the rest of the state, the Bay Area is growing older. The number of baby boomers—the generation born from 1946 to 1964—living in all nine Bay Area counties is on the rise. But home ownership rates are falling, even as housing prices begin to recover from their precipitous 2007 through 2009 fall. After lagging the U.S. population growth rate in the last decade, the region should more closely match the national pace from 2010 through 2015, adding nearly 300,000 residents and not quite 260,000 jobs, according to new projections from Marcus & Millichap Real Estate Investment Services. Among the new residents and workers will be 125,000 young adults, aged 20 through 34. The rapid job growth, concentrated from 2013 through 2015, could in fact lead to housing shortages as rising demand collides with the slow development of the last several years and low vacancy across the existing housing stock. Yoked to global markets, economies like the Bay Area’s “are most likely to benefit from the new economic style that’s coming up, which is export-oriented, high tech, software engineering-driven growth,” said Gerd-Ulf Krueger, principal economist with HousingEcon.com, a real estate and economic analysis firm. The real estate industry should be preparing now for an inevitable surge in housing demand, Krueger said. With the region’s lowest housing-vacancy rate, Santa Clara County has the highest potential to experience housing shortage once employment accelerates and new hires seek to live close to work. Santa Clara County’s housing vacancy rate is an estimated 4.5 percent, he said, followed by San Mateo County’s 4.9 percent and Alameda’s 6.4 percent. San Francisco has the highest residential vacancy rate in the region—8.5 percent. “If you have any job growth” in communities that already have few vacant homes, apartments, town homes and condos, Krueger said, “the housing vacancy situation will get tight.” That could cause rents to rise so much that workers decide to buy instead, he said. Hispanic and Asian immigrants of all ages yearn for cultural interaction, said Shishir Mathur, an associate professor in the urban and regional planning department at San Jose State University. They “may be willing to give up more private space in lieu of a more vibrant public space, where the kids could play soccer or mingle with others.” Younger Asian and Hispanic immigrants also tend to have more children than American-born adults, contributing to their desire for more community space, he said. Recent immigrants also are much more likely than native-born Americans to live with members of their extended family, Mathur said. Throughout the Bay Area during the past decade, the population has become less white, more Asian and increasingly Hispanic. Across the region’s nine counties, the Asian and Hispanic populations each grew by not quite a third, while the white population fell nearly 5 percent. In Alameda County between 2000 and 2010, the Asian population grew 34 percent, the Hispanic population expanded 24 percent and the white population fell 7.8 percent, according to the Association of Bay Area Governments. Santa Clara County added nearly 150,000 Asian residents, the greatest of any Bay Area county. The Hispanic population grew by not quite 76,000. Cheryl O’Connor, governmental affairs advisor for the Building Industry Association of the Bay Area, expects the future to include “multi-generational communities” that appeal to both aging boomers and younger, first-time buyers.
10 theregistrysf.com
J U ly/A u g ust 2 0 1 1
She cites San Francisco’s Armstrong Place in the city’s Bayview District, which includes 124 town homes priced below market-rate and 116 rental apartments for low-income seniors. Developed by nonprofit Bridge Housing of San Francisco, the town homes opened in 2009 while the senior housing opened earlier this year, O’Connor said. Nearly four million baby boomers nationally are expected to downsize from single-family homes to smaller properties, according to Harvard University’s State of the Nation’s Housing 2011 report. The number of households over age 75 is expected to rise more than two million by 2020. The graying trend could fuel remodeling efforts to make Bay Area residences more senior-friendly, said Margaret Dyer-Chamberlain, managing director and senior research scholar at the Stanford University Center of Longevity. Features that attract older homebuyers could include everything from wider doorways to accommodate wheelchairs, step-in showers and easy to navigate entry ramps, additions “that will be appropriate not only when residents are raising children, but as they themselves are getting older,” Dyer-Chamberlain said.
BAY AREA POPULATION CHANGE The Bay Area became less white, more Asian and more Hispanic in the last 10 years. Population numbers in 1,000s. Asian Population Biggest Gainers: Santa Clara & Alameda Counties
2000
2010
600
500
400
300
200
100
0
Alameda
San Mateo
Santa Clara
San Contra Francisco Costa
Marin
Napa
Hispanic Population Biggest Gainers: Santa Clara & Alameda Counties
Solano
Sonoma
2000
2010
500
400
300
200
100
0
Alameda
Santa Clara
San Mateo
San Contra Francisco Costa
Marin
Napa
Solano
Sonoma
2000
White Population
2010
1,000 600 900 500 800 700 400 600 500 300 400 200 300 200 100 100 0
Alameda
Santa Clara
San San Contra Mateo Francisco Costa
Marin
Napa
Solano
Sonoma
DATA Source: Hing Wong, Association of Bay Area Governments
Population In Flux
With the region’s lowest housingvacancy rate, Santa Clara County has the highest potential to experience housing shortage once employment accelerates and new hires seek to live close to work. While increasing slightly in San Francisco, concentrations of people 65 and older rose solidly in Alameda, San Mateo and Santa Clara counties during the past decade. Declining birth rates, in-migration of younger adults from other countries and parents with younger children opting to move from the Bay Area to more affordable locales all contributed to the region’s rising maturity. During the past two decades, California has lost residents to other states, said Kevin Klowden, director and managing economist for the California Center at the Milken Institute, an independent think-tank focused on the economy. People are driven out by “affordability issues, or job issues, or they want to raise families,” he said. Some of the outmigration is reflected in the region’s shrinking white population. Santa Clara County lost more than 69,000 white residents over the last decade. Across the nine-county Bay Area, the white population dropped 185,864, according to ABAG. The state’s population shifts have made California an “immigrant nexus”— a magnet for newcomers that has surpassed New York and other traditional U.S. gateways, Klowden said. “If they don’t have as much money to spend, you’re dealing with a population that’s more likely to rent low-to-middle-income housing,” Klowden said. “And their spending patterns are not necessarily going to be quite as affluent as the group you might have previously attracted.” Maintaining a steady supply of skilled workers will be a long-term demographic challenge for the technology-focused Bay Area, he said. His research has shown that an increasing number of baby boomers—particularly engineers—are poised to take their job skills with them into retirement, while first- and second-generation immigrants arriving in the area tend to be less educated with fewer technical skills. Even with the growing number of immigrants in the region, Klowden said there have been fewer H-1B visas awarded to allow highly skilled technical specialists from other countries to work in the Bay region. Historically, those people have helped fuel Silicon Valley innovation. High housing costs throughout the region will continue to be a problem, Klowden said. Particularly in Santa Clara County, the main balancing act for the next decade will be to “have housing that’s affordable to the younger population,” he said. Demographer Hans Johnson of the Public Policy Institute of California sees the fastest population growth occurring in two very different groups—the superold and among young adults belonging to what he calls “tidal wave two,” who are also known as the echo boomers, millennials or children of the baby boomers. People aged 80 and older numbered about 1.2 million statewide last year, or about 3.2 percent of the population. That’s an increase from 2.7 percent of Californians who were super-old in 2000, census figures show. “They’re fairly small in number, but it’s actually, on a percentage basis, a fast-growing group,” Johnson said. On the other end of the spectrum, the millennial generation, those born roughly between 1982 and 1997, includes baby boomer kids, children of immigrants and younger immigrants who have recently moved to the state, Johnson says. This group holds great promise for the state’s housing industry, Johnson said. “They’re mostly in their 20s now, and they are entering the ages at which people traditionally form households and often purchase a home,” he said. “As tidal wave two goes through that aging process over the next 10 years, I think there is a real demographic potential to help us out of some of the housing problems we have been having.” n
HOT LOT | WALNUT CREEK
One Tough Nut Walnut Creek is weathering the recession well.
W
alnut Creek’s long-envied destination downtown is pulling the city out of the economic doldrums, generating property and retail sales-tax revenue faster than expected and setting the pace for other cities still seeking to recover. “Walnut Creek has made good planning decisions,” said Eric Zeemering, a professor of public administration at San Francisco State University who recently completed a study of 40 Bay Area cities and their responses to state budget cuts and the recession. “Cities that focus on a downtown development strategy are in a position of strength if they attract a good combination of business and residential in addition to some office space and other commercial activity. Walnut Creek has been more successful than other cities in finding that balance.” The town is seeing new construction, increased sales and better property-tax revenue than budget projections. Auto sales, which historically contributed 30 percent of the city’s total sales-tax revenue, are re-surging. “People are starting to buy cars again,” said Lorie Tinfow, Walnut Creek’s assistant city manager. Volkswagen of America is building a nearly 30,000-square-foot auto dealership and showroom downtown. A 92,000-squarefoot Neiman Marcus store is slated to open downtown next spring. The city’s building department has seen a gain in projects and permits to the tune of an extra $100,000 a year, according to a progress report on the 2010-12 budget presented at the March 1 City Council meeting. The city had expected property-tax income to fall 6 percent in the two-year budget period 2010-11. New projec-
12 theregistrysf.com
J U ly/A u g ust 2 0 1 1
tions show a 2 percent decrease for the current fiscal year and no decline for 2011-12. The turnaround means $1.7 million in unexpected tax revenue. Also, instead of declining 3 percent this year, updated projections have sales-tax receipts holding steady for the next two years. “We’re hopeful,” said Tinfow. “The budget is stabilizing.” The city had to cut $20 million from its expenditures in 2010, resorting to layoffs, frozen positions, early retirements and pay freezes, leaving 55 positions unfilled. However, the recession hasn’t wreaked nearly as much havoc with Walnut Creek as, say, Vallejo, which was forced to declare bankruptcy in 2008, or foreclosureridden Stockton. Downtown has been the city’s focus since its first general plan in 1961. Walnut Creek turned down the Sun Valley mall, which ended up in Concord in 1967, to protect its traditional downtown and outdoor shopping mall, Broadway Plaza. Cities all over the Bay Area regard Walnut Creek’s downtown much the way a wallflower regards the prom queen at a high school dance. “Highend chain stores in downtown Walnut Creek have the strongest regional draw in [Contra Costa County], pulling shoppers from around the Bay Area,” said the authors of a retail assessment by the city of Martinez in 2003. In downtown, stores like Nordstrom, Tiffany & Co., Burberry, Coach and Talbots are complemented by upscale restaurants such as Vic Stewart’s, Prima Ristorante and Va da Vi. “Having a reputation as an affluent, desirable location may overcome larger economic forces that weigh on both business and resident location decisions, so in
P hotos by C H A D Z IE M E N D O R F
By Janis Mara
WALNUT CREEK | HOT LOT
that sense, such places as Walnut Creek are in a stronger position to weather economic calamity than more upand-coming or transition places that might quickly go from hot to cold,” said Justin Hollander, an urban planning professor at Tufts University who authored “Sunburnt Cities,” an analysis of cities across the country most affected by the recession. Downtown isn’t responsible for all of the city’s good fortune. The average household income in Walnut Creek is $105,065, according to the 2005-2009 American Community Survey by the U.S. Census Bureau. Of the city’s roughly 30,000 households, more than 21,000 have incomes in excess of $50,000 a year, and more than 11,000 bring in $100,000 a year or more. Of the 66,584 people living in Walnut Creek in 2010, 56 percent have a bachelor’s degree or higher, according to the state’s finance department. On an annual basis, sales tax per capita in 2010 was $226, the highest in Contra Costa County. Home prices have remained heady, with the median price for a single-family detached home in Walnut Creek at $699,000, according to the Bay East Association of Realtors. Late last year, Walnut Creek’s City Council authorized a tourism business improvement district to levy fees on Walnut Creek’s five hotels. The fee is $2 per room a night for hotels with 100 or more sleeping rooms and $1.50 for hotels with fewer than 100 sleeping rooms. The money is used to promote the hotels and create marketing campaigns to draw tourists. “We just ran a two-page ad in [AAA publication] Via” with some of the proceeds, said Jay Hoyer, chief executive of the Walnut Creek Chamber of Commerce. The $15,000 ad drew 400 responses from readers, Hoyer said. A long-awaited transit-oriented development at the downtown BART station could also spur recovery. Walnut Creek Transit Lifestyle Associates, a subsidiary of BRE Properties Inc., is building the 596-apartment transit village, which includes 22,000 square feet of re-
tail and commercial space and a garage for BART replacement parking. Though the group scaled back the project in light of the recession, it’s still on. “The project is moving forward, and we are hopeful to finish development entitlements such as the design review, the environmental review, the rezoning and a general plan amendment in the coming months,” said Walnut Creek City Planner Scott Harriman. Mark Hall, chief executive of Hall Equities Group, is pursuing multiple projects in Walnut Creek. A 107unit multifamily apartment building at 1250 Arroyo Way is currently working its way through entitlements, said Hall. The City Council in April approved Geary Marketplace, a 35,000-square-foot center anchored by a Sprouts Farmers Market grocery store, near the intersection of Geary Road and North Main Street. “We will start demolition within two weeks,” Hall said in midJune. The center is expected to open within a year. “We just completed phase one of Centre Place for the Schwab company, an 18,000-square-foot shopping center on a 2-acre site on California Boulevard,” he said. He is also putting up 47,000 square feet for a 24-Hour Fitness and Chick-fil-A at 2800 Main St., Hall said. It will be under construction concurrently with the Geary Marketplace. The 4-acre site was previously a concrete and asphalt distribution facility. All is not rosy for Walnut Creek, however. When the City Council closed the $20 million two-year budget gap in 2010, it did so in part by cutting millions from the budget. It turns out that $2.4 million of income expected to help close that gap isn’t going to materialize, the progress report said. For one thing, $150,000 a year in revenue expected from a new impound yard isn’t going to happen, nor will an expected $40,000 annually from the library coffee bar. Nevertheless, those with boots on the ground say they see a difference. “We had a very good May and are remaining on track,” said Sid Savarani, owner of Walnut Creek Ford. “Things are improving.” n
“Cities that focus on a downtown development strategy are in a position of strength if they attract a good combination of business and residential in addition to some office space and other commercial activity.” Eric Zeemering, professor of public administration, San Francisco State University
J U ly/A u g ust 2 0 1 1
theregistrysf.com 13
SPECIAL SECTION
Silicon Valley Demand Drives Rapid Growth for Skyline Construction Santa Clara office expands core businesses of data center and tenant improvements to include life science division. by Patrick Galvin
S
kyline Construction, the Bay Area’s only 100% employee-owned general contractor, has served Silicon Valley from its Santa Clara office since 2001. Strategic hires in Skyline Construction’s Santa Clara office have expanded the company’s service offerings to include a life science division which complements the company’s core businesses in data center/infrastructure construction and high end corporate interiors. With three strong business units operating in Santa Clara, Skyline Construction has more than doubled its revenue and employee count in Silicon Valley in the past 3 years. Skyline has been securing significant new business while bidding against large regional construction firms. “This year, Skyline Construction is on pace to break its annual revenue record in Silicon Valley and grow its employee headcount by over 40%. This is largely due to increasing market awareness of the success of the company’s three major divisions,” said Peter Copriviza, director of operations and senior vice president of Skyline Construction in Santa Clara.
Server Farm Realty Data Center Santa Clara, CA
Align Technologies San Jose, CA
Skyline Construction continues to be a leader in law firm construction throughout the Bay Area. The company recently completed projects for Wilson Sonsini Goodrich & Rosati and Wilmer Hale in Palo Alto and Ropes & Gray and Gibson Dunn & Crutcher in San Francisco, both of which were LEED-certified.
Align Technologies, the maker of Invisalign, selected Skyline Construction to build its 125,000 sq. ft. corporate headquarters in San Jose. The campus features a state-of-the-art research and development lab; a data center that services the company’s worldwide technology operations; and office space to accommodate approximately 320 employees. “We’re pleased to have selected Skyline Construction for our technical campus renovation. The Skyline team is competent, driven, and excels at innovative client solutions for lab, data center and tenant improvement construction,” said Emory Wright, vice president of operations for Align Technologies.
Oracle San Jose, CA Skyline Construction is in the final construction phase of Oracle’s 488 Almaden building, a $2.5 million project in San Jose that involves a fitness center, large corporate café, conference areas, and a parking structure. This work precedes PricewaterhouseCoopers’ move into the previously unoccupied structure. “The Skyline team has succeeded again in completing a large and complex build out for Oracle on an accelerated schedule while keeping lines of communication open and all parties informed,” said Cliff Berry, senior director of facilities at Oracle.
In collaboration with Server Farm Realty, Skyline Construction constructed one of the country’s most innovative data centers. Highlights of the $20 million project in Santa Clara include: •A n earthquake importance factor of 1.5, which means that the building and infrastructure remain completely operational following an earthquake (this is the same standard used to build hospitals, fire and police departments). • Green build – the data center is LEED Silver certified and offers among the most cost-effective power per server pricing in Santa Clara. • Size – in the world of mega-size data centers where 500,000 sq. ft. buildings are the norm, this small, purposefully designed data center space serves customers who value quality over quantity.
Law Firm Construction
To learn about other Skyline Construction projects and client testimonials in Silicon Valley and beyond, visit www.skylineconst.com. (Left) Wilmer Hale, Palo Alto (Below) Server Farm Realty Data Center, Santa Clara; Align Technologies, San Jose
TRANSPORTATION
Bus? Rapid Transit? No oxymoron here; buses can rapidly transit. By Doug Caldwell
“This is a transportation project, not just a transit project.”
I
t’s 5 p.m. on a Wednesday a few years hence. Arch criminal Lex Luthor is fleeing down San Jose’s Santa Clara Street in his BMW M5, one of the most powerful automobiles on the planet. Shirley, he will he get away, you say. Not likely, because Superman is taking the bus, replies Shirley sagely. Why wrinkle the cape when you can sit in a comfortable seat aboard a rapid-transit bus using a dedicated lane down the center of Santa Clara Street, bypassing traffic, including arch-villain Luthor? Messrs. Superman and Luthor may be fiction, but bus rapid transit is not. It’s coming to Silicon Valley in just more than two years, putting the region on par with cities worldwide in offering a fast, economical and quickly implemented form of mass transportation often known by its shorthand, BRT. “We’re listening to what people are most frustrated about in transit service here. That is, basically, it doesn’t go where people want to go, and it is not fast enough,” said Kevin Connolly, transportation planning manager for the Santa Clara Valley Transportation Authority and one of the region’s biggest BRT boosters. Current street congestion and growth were main determinants for identifying the initial three routes, on Santa Clara Street, El Camino Real and Stevens Creek Boulevard, Connolly said. El Camino already is taking
24 theregistrysf.com
J U ly/A u g ust 2 0 1 1
on a different look in many of the cities that it bisects with high-density housing and more mixed-use development, he said. “The BRT’s concept really fits in with today’s environment.” The Santa Clara-Alum Rock line is in final design and set to begin construction next year. Once complete in 2013, it will travel from the HP Pavilion in downtown San Jose seven miles east to the Eastridge Mall. Its projected capital cost is $128 million. Two years later, the El Camino line is expected to begin service, traveling from the Palo Alto Transit Center to the HP Pavilion, a not-quite 17-mile trek, with a projected capital cost of $216 million. Then in 2017, the Stevens Creek line is set to open. It would travel 8.6 miles from De Anza College in Cupertino to downtown San Jose. It has a projected capital cost of $145 million to $231 million, with the larger cost related to a proposed structure at Westfield Valley Fair mall. Service is scheduled to start in 2016 or 2017. Santa Clara County’s Measure A, a local sales tax approved by voters for transportation projects, is expected to be the biggest money pot tapped for the BRT projects. Overcoming public perception about the bus-riding experience will be the first operational challenge the system faces. That has been
P hoto by C H A D Z IE M E N D O R F
Andy Vobora, Lane Transit District, Eugene, Ore.
a problem wherever bus rapid transit has been started, especially in the United States. “We’ve historically under-invested in public transportation in this country, particularly our bus systems. So people have this image of a bus as a sort of slow, dirty, uncomfortable form of transportation,” said Bill Vincent, director of the Breakthrough Technologies Institute, a Washington, D.C., nonprofit dedicated to promoting technologies to improve the environment. With the right equipment, service level and branding, the bus rapid transit “becomes a mobility experience, as opposed to just getting on a clunky old bus and getting from A to B,” Vincent says. In some cities, BRT even gets traffic-signal priority, allowing buses to travel somewhat like fire engines, with control over traffic lights. BRT systems are cropping up in cities across the country, Vincent said. Los Angeles has the Orange Line, while Cleveland has the HealthLine and Boston, the Silver Line. BRT-like systems also are operating in Miami and Pittsburgh. In the Bay Area, San Francisco’s Muni and AC Transit in the East Bay are also planning BRT systems. In the East Bay, construction could begin within two years and the first buses would roll two years later. At an estimated cost of $234 million, the system would link Berkeley, Oakland and San Leandro. Earlier this year, AC Transit submitted a draft environmental impact report to the Federal Transit Administration, a first step in the planning process. San Francisco, meanwhile, has proposed two corridors for bus rapid transit, on Geary Boulevard and Van Ness Avenue. On Van Ness, the two mile-route from Mission Street to Lombard Street is expected to cost about $120 million with construction concluding in 2015. Muni hopes to open service on the Geary line the same year. Marketing plans for the VTA system are still being formed, but Connolly said the experience should be a good one, with little waiting and well-lit, safe stations. Most importantly, he said, “It is going to beat the flow of traffic.” Besides the dedicated lanes, stops are limited to once a mile. In addition, riders are able to get on and off at every bus door instead of the usual system of getting on at the front, fumbling for the correct change and finally exiting at the rear. Based on the experience in other cities, bus ridership should increase 30 percent from current levels on the selected routes, Connolly said. That translates into about 40,000 riders a day on the El Camino route at full build out, for example, about double the current ridership, Connolly said. Eugene, Ore., population 156,185 in last year’s census, had the country’s first bus rapid transit system, starting the discussion in 1995 and rolling its first rapid-transit bus in 2007. Andy Vobora, director of the Lane Transit District’s Department of Service Planning, said despite the Great Recession, the Eugene BRT lines immediately exceeded ridership projections, in large part because they are far faster than regular buses. The first BRT line, running about four miles from downtown Eugene to downtown Springfield, a suburb, exceeded 20-year ridership projections with 1.5 million boardings the first year. Eugene’s second bus rapid transit line opened in January. “This is a transportation project, not just a transit project,” Vobora said. “Not only is automobile traffic going to move better through the [BRT] corridor because they’re not hung up behind buses, but transit is going to work better. And when we make these improvements, we can improve the pedestrian environment and the bicycling environment.” n
FINANCE
The Ride of a Lifetime Roller coasters are fun, and they can make you sick. By Peter Ingersoll
Sorry, did I get any on you?
S
ummer is here and that means baseball, theme parks and roller coasters. Those monster twirling, spinning and careening rides are the favorites of teenagers, but the truly terrifying ride, the mother of all roller coasters is the Double Dipper. This ride makes even bankers in air-conditioned, corner offices sweat uncontrollably and prompts otherwise coolheaded Treasury officials to fervently polish their resumes, hoping for a plum Wall Street position as a plunderer rather than protector. We in the Bay Area live with our own form of roller coaster: dynamic and global technology companies that, so far, have insulated us from much of the ravages affecting other, distant parts of the country like Stockton, Sacramento and Rancho Cucamonga. The IPO stock price for LinkedIn doubled in eight hours. Decadeold marketing pieces from the tech craze are being dusted off, repackaged and sent swirling around social-media channels. Well-funded exchanges are being formed to buy the private shares from employees of pre-IPO companies wanting to cash out sooner than the tedious exercise of creating sustainable earnings to be capitalized through an offering of public stock. Groupon is rumored to be negotiating tough with their team of i-bankers to price their IPO at triple the most optimistic valuation. Because of Facebook’s private equity deal with Goldman Sachs,
26 theregistrysf.com
J U ly/A u g ust 2 0 1 1
company founder Mark Zuckerberg is worth $200 quadrillion— before going public. In sum, in the Bay Area, our view of the world is being colored by where we live. Meanwhile, the investment banking elite in Emerald City are behind the curtains, pronouncing that the next wave of economic magic is about to commence. I can see their tap-dancing feet, though people in my neighborhood continue to lose their homes and move back in with their families to survive, and I live in a pretty upscale neighborhood. For-sale signs on the lawns of bank-owned homes swing in the breeze as the grass turns brown and sprouts weeds. Consumer spending is being bolstered not by rising employment or soaring incomes but by home owners defaulting on their mortgages and using the savings to provide for their families. This swirl of seemingly contradictory economic news—the frothy social-media IPO explosion and obscene Wall Street bonuses even as people continue to lose their homes and millions remain out of work—is too much for a plodding real estate guy like me to digest. Yet, I do know a couple of things. There can be no U.S. economic recovery until the housing market recovers. Consumers cannot spend their way to financial stability, and U.S. consumer spending will not lead the way out of this recession. Odds are 60 percent or greater that Greece will default on its debt, which will trigger payments on a wide swath of credit-default swaps, force European banks to take further losses and could potentially result in the European Central Bank refusing to extend credit to Greek banks. The U.S. government has its own debt issues, which—at least to date—remain unsolved with little in the way of leadership rising to meet the challenge. On the positive side, the U.S. Treasury has a 20-year supply of ink and paper, in case we need any freshly printed currency. The San Francisco Bay Area has a trifecta for future growth: we are a gateway for imports and exports; we are a gateway for the flow of funds to and from Asia; and we have the hottest technology going—not to mention that our weather, cuisine and wine are magnifique! The Bay Area has a job-growth engine that seems poised to roar out of the garage and around the track at a record pace. But the rest of the country—excluding other rare pockets and Texas, which is booming at a level the Bay Area hasn’t seen in decades—seems to be a land of lost dreams and shrinking opportunity. Our country—for all of the Bay Area’s myopia—is strapped to the Double Dipper roller coaster. We may be coming out of a
dark tunnel, but it leads to a last terrifying descent. According to CoreLogic, the owners of 10.8 million homes, or 22.5 percent of all residential properties with mortgages, owed more than their properties were worth at the end of last year. In Las Vegas 67 percent of all homes with a mortgage are underwater. “Negative equity is a primary factor holding back the housing market and broader economy. The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity,” said Mark Fleming, chief economist with CoreLogic. According to the National Association of Realtors, existing home sales fell 15.3 percent in May year-over-year and the existing median home price fell 4.6 percent. Gary Shiller is predicting another 20 percent drop in home prices. Shiller is the co-creator of the S&P/Case-Shiller Housing Index and has been eerily accurate in predicting the fall of housing prices before, during and after the financial crisis. Should a 20 percent price-drop come to pass, then in aggregate 40 percent of all homes with mortgages—19.2 million homes—would be underwater, according to both CoreLogic and Shiller. That’s more homes than the entire population of Greece. Strategic default is becoming more widespread, even fashionable. And no wonder, with Wall Street and bankers bringing down millions in salary and bonuses, why should homeowners be the suckers stuck with the bill? A whole new industry has been born: home flopping. With a little bit of moxie and planning, a family can stay in a home for 18
months, 24 months or even longer, rent free. If the lender can’t find the original promissory note, the borrower can stay in the home forever and not pay a dime. Pretty sweet deal! Between the robo-signing debacle, the Mortgage Electronic Registration System (MERS) mess, the state Supreme Court rulings requiring banks to produce original promissory notes to have the legal standing to foreclose and improper transfers of mortgages by originators into securitization pools, banks and special servicers do not even know if they have clear title to back their loans. This means that the projections of losses that banks have made are likely to be woefully inaccurate, that they will be hard-pressed to swallow additional losses and that more pain will be experienced by banks and homeowners alike. So let’s enjoy the summer of 2011 while understanding it may be a last hurrah. The causes of the financial crisis have not been resolved, notwithstanding the Bay Area’s evident resurgence. Real estate investors casting about for opportunity should think long and very hard about what they are doing: Prices have recovered in the Bay Area such that the risk is once again outweighing reward unless there is nothing but a smooth ride ahead. Properties outside the Bay Area are much cheaper, but the nascent economic recovery may be felled by the Double Dipper. Whatever the outcome, however, it promises to be a thrilling ride—if we can avoid throwing up our popcorn and soda at the last hairpin loop-de-loop. Sorry, did I get any on you? n
retail
Principals with Principles Do unto brokers as you would have them do unto you. By John McNellis
Even though Darwin never mentioned ‘survival of the fittest’ and that dogs, if given the choice, don’t really eat other dogs all that often, too many in business have warped Darwin into a justification for endless rapacity.
28 theregistrysf.com
T
here could be a fat book detailing the myriad ways in which brokers have been screwed by principals. Such a financial Kama Sutra might even be read by developers. Why ‘might even?’ Because except for the sports page, self-help books that guarantee profits or ancient musings on warfare that can be applied to business, developers don’t read. Yet somehow developers have cleverly managed to boil all of natural science down to a convenient misunderstanding of poor Charles Darwin. Even though Darwin never mentioned “survival of the fittest” and that dogs, if given the choice, don’t really eat other dogs all that often, too many in business have warped Darwin into a justification for endless rapacity. With or without this bent ideology, landlords have been putting it to their brokers since Babylon’s gardens were first hung. How many agents have only learned about the buyer’s own broker—inevitably his brother-in-law—in the second round of purchase-contract comments? How many developers have informed a listing agent after the deal was struck that, while a trifle dusty, they happened to have a broker’s license and were representing themselves? How many sellers have agreed to less than a full price offer only if their brokers choked down a wickedly disproportionate hit on their commission? How many brokers have silently suffered through buyers and sellers joking, “We’re only a commission apart?” How many principals have simply stiffed their brokers at closing? A boatload. Not only is this wrong, but it’s bad business. Principals with any brains know that the food chain (an analogy with undeniable appeal for those on top) is probably the worst science to apply to business. What sits atop the food chain in any ecosystem? And do the biggest, baddest carnivores ever get any cooperation from the rest of the animal kingdom? Would Thumper ever bring a deal to B.B. Wolf? Better to forget Darwin and instead study the principle of reciprocity. As at least one Bay Area reader of The Registry has noted, wise principals dedicate quality time in a big way to their favored brokers. Why? Because getting the ever-popular “first look, last call” on deals is never easy, even if you have been trustworthy, loyal, helpful, friendly and even downright charming. Forget either the first call or the last look if you’re known as a predatory jerk. Big-time corporate developers often embrace the hugyour-broker approach, holding dinner parties for their goto agents at ICSC Vegas or taking out splashy thank-you ads in their favorite periodicals. (The Registry’s phone lines are
J U ly/A u g ust 2 0 1 1
open 24/7.) Why? Maybe because some old cynic once said that gratitude is really nothing more than the expectation of future benefits. Maybe because they’re just great guys (and anything is possible). Or maybe they have figured out that it’s good for business, and they really hanker after that first call. So, simple advice for younger principals not already too set in their ways: Take all calls and return (at least) all of those in which the unknown broker is polite and not acting like the call is a big favor to you; stick with whatever deal you cut with your broker; and keep your broker in the loop during the negotiations, due diligence and closing. Beyond those basics of treating brokers fairly and with respect, choosing the right one for the job also isn’t a bad idea. The best brokers are as specialized as the best developers. The major houses with their vast marketing networks are superb at extracting the last nickel out of buyers and thus are brilliant if you’re a seller and not—unless you have a pathological need to overpay—all that useful to professional buyers. The small shops tend to be where the best deals on the buy side are ferreted out, usually a result of time, determination and local knowledge. In retail, the best brokers on the buy side are more often than not leasing agents, rather than those specializing in investment sales. This is intuitive: Retail is all about tenants, about delivering the right tenant to the right location, and the tenant reps know exactly where their clients want to open stores. Often enough, these agents encounter sites where the existing ownership is unwilling—or unable—to execute on development opportunities, thus leaving them in a great position to bring deals to a preferred developer. And once you’ve selected that just-right broker and are treating him or her the way you would wish to be treated, remember this—disclose everything except your bottom line. While “you get in enough trouble being honest” is true and useful advice, it’s also true that one can suffer from being, if not too honest, then at least too forthcoming. Sharing too much information with your agent can be expensive. Even if Gandhi were representing you, letting him know your won’tgo-a-penny-lower selling price when you sign a listing agreement could easily result in a spate of quick offers within spitting distance of that price, depriving you of the potential higher offer. If Lincoln himself were your broker, do you think he could withstand the temptation of telling sellers how many days remained before you had to designate your 1031 exchange property? Trust your fellow human, but recognize the frailty of human nature. n
Real S C E N E
O F
T H E
S E E N
The registry’s Tech event Far left: Panelists left to right: Matthew Garratt, Battery Ventures; Per Johanson; Bill Roberts, HewlettPackard Co. & Russell Hancock, Joint Venture: Silicon Valley Network Left: Lance Anderson, Miller Starr Regalia Below right: Tim Tikalsky, Rina Accountancy Corporation & Anush Alexander, Miller Starr Regalia
On Thursday, June 16th, 2011 The Registry hosted a technology event at AOL’s new office in Palo Alto. The by-invitation-only crowd gathered to hear from industry leaders on how they are capturing innovation. Sponsors for the event were law firm Miller Starr Regalia, general contractor NOVO Construction, design firm Studio O+A and accountants Rina Accountancy Corporation. Right: Rick Knauf, Colliers International and Arne Ericson, NOVO Construction
P hotos by C H A D Z IE M E N D O R F
Below: Randy Gabrielson, Cornish Carey Commercail Newmark Knight Frank & John Moe, Equity Office
Left: Primo Orpilla, Studio O+A & Soo Emens, Pod Office
J U ly/A u g ust 2 0 1 1
theregistrysf.com 29
The Monkeys in the Middle By Rob La Eace
W R s ’ ob
r
y t i l ea
es AR
ide
n
Col tial
um
n
demand for the good old American dream, i.e. the single family home. With the $1 million to $3 million single-family home range, it’s noteworthy to point out that although the median and volume remained constant, the days on market dropped considerably—perhaps at least partly to be attributed to the all cash deals we are seeing. The $3 million to $6 million range doesn’t offer enough raw data for us to draw huge conclusions, but once again, the sales volume paralleled the decline in available inventory. Now, taking a look at the condo group, I was shocked to see the low end outperformed the singlefamily home low end—the median price rising 7 percent from $794,000 to $848,000. Meanwhile, the volume dropped 30 percent, while the inventory rose 6 percent. Perhaps one explanation could be that one can buy a condo in a fairly upscale neighborhood for $700,000, yet one cannot buy a home for the same money in a comparable neighborhood. In any event, this begs the question, what makes prices go UP when supply INCREASES and sales DECREASE? That is a question worth pondering. Perhaps it is a combination of our new, young, well-off tech sector buyers and our downsizing, elevator-loving Baby Boomers? It stands to reason that with companies like Zynga, Twitter and Saleforce, to name a few, whose hipper, echo boomer employees in their prime, prefamily forming years could be driving demand for new housing in the prime parts of town. This may indicate that our demographic is leaning toward a more simple (condo) lifestyle, at least the buying demographic seems to be. It’s too early to tell, but we’ll keep our eyes on this. As for the $1 million to $3 million range, the data follows expected patterns, while the $3 million to $6 million range allows for no conclusions to be made because of low volume. Well my friends, let’s hope our government comes up with yet another incentive to bring the buyers to the front doors. With the looming reduction in Fannie Mae and Freddie Mac loan limits down to $625,500 in October, we sure could use a few bananas to dangle to get these monkeys off our sellers’ backs. Until next time. n Rob La Eace can be reached at 415.290.7228 or rob@roblaeace.com.
ell, here we are not too far off of the middle of our errrr summer. Yeah, baby! Get out those tiki torches and roll out the Weber. This here is BBQ weather! Though it doesn’t feel like the middle of summer, it is the middle of the year—and what a strange one it’s been. I don’t know about you, but I don’t like what I’ve seen so far. I’m very leery as we head into the doldrums of August. Being that summer is the appropriate season for Shakespeare in the park, I’ll quote a line from the Bard’s genius comedy, “As You Like It,” Sell when you can; you are not for all markets. Not to over-do the whole middle thing, but before we discuss medians in general, we should establish that the median sale price for all of San Francisco was $660,000 in May. This was up 3.7 percent from the $636,000 median in May 2010. But, May 2011 saw a decline of roughly 20 percent in sales volume when compared to May 2010—dropping from 616 sales down to 492 sales, according to Dataquick. To try to get my head around where our market is, I ran some data at three different price points. I looked at sales in San Francisco, comparing May 2010 to May 2011 in three price ranges: $700,000 to $1 million; $1 million to $3 million; and $3 million to $6 million. Some portions of the market appeared to perform as expected, but there was one aberration in what I like to call (for the sake of keeping a theme going) the monkey in the middle, i.e. our median price point. Gather your calculators and abacuses and without further ado, let’s look at the data! I took the above-mentioned price points and compared sales performance for the whole city in two categories: single-family residences and condos, lofts and co-operatives. In an effort to avoid including too much distressed sale data, I put the low end cut-off at $700,000. What didn’t seem to jive with me was the singlefamily home data in the $700,000 to $1 million range. The median sale price dropped 4 percent from $798,000 to $768,000, and the volume sold dropped 32 percent from 77 units to 52 units. Considering the city median as a whole was up, I found it strange that the single-family home median, in an affordable price range, was down. In a city in which nearly all new construction is condos, one would expect greater
What a difference a year makes… Single family homes
Median
Months supply inventory
(000s)
2010
2011
Change
2010
2011
Change
2010
2011
Change
2010
2011
Change
$798
$768
-3.8%
77
52
-32.5%
43
35
-18.6%
3.0
2.0
-33.3%
$1,000 - $3,000
$1,383
$1,385
0.1%
52
56
7.7%
71
35
-50.7%
2.5
2.0
-20.0%
$3,000 - $6,000
$3,676
$3,377
-8.1%
8
6
-25.0%
88
37
-58.0%
2.7
2.1
-22.2%
(000s) $700 - $1,000
Median 2010
2011
Sold Change
Days on market
2010
2011
Change
Months supply inventory
2010
2011
Change
2010
2011
Change
$794
$848
6.8%
76
53
-30.3%
65
40
-38.5%
3.4
3.6
5.9%
$1,000 - $3,000
$1,233
$1,300
5.4%
34
41
20.6%
48
55
14.6%
5.6
3.1
-44.6%
$3,000 - $6,000
$3,950
$3,840
-2.8%
2
4
100.0%
14
56
300.0%
8.0
4.7
-41.3%
Source: Dataquick J U ly/A u g ust 2 0 1 1
Days on market
$700 - $1,000
Condo/loft/ co-op
30 theregistrysf.com
Sold
Real S C E N E
O F
T H E
S E E N
Right: Members from Cornerstone Sponsor, the Hearst Corporation, gather for a group photo. Right: Mayor Ed Lee presents BOMA’s Ken Cleaveland and Marc Intermaggio with a proclamation declaring May 19, 2011 “BOMA Day” in San Francisco.
BOMA SAN FRANCISCO CENTENNIAL GALA
Below left: Congresswoman Jackie Speier presents Marc Intermaggio with a proclamation from the U.S. House of Representatives.
The Building Owners and Managers Association (BOMA) San Francisco celebrated its role in shaping San Franciso’s commercial landscape at its Centennial Gala on May 19 at the Palace Hotel with over 640 guests. Rising from the rubble of the San Francisco fire and earthquake more than a century ago, BOMA has supported the development of the world-class downtown. BOMA received accolades from the U.S. Congress, the State of California and the City and County of San Francisco for leadership in fostering commerce and economic development in the city since 1911, when the commercial real estate industry began building one of the world’s most iconic cities from the devastation of 1906. Below: BOMA’s Ken Cleveland, Jacki Nolen, Pyro Comm; Fred West, Marble West; and Rich Neves, Pyro Comm; enjoy the evening’s signature drink, The BOMAartini.
Above right: The historic Garden Court provided the venue for cocktail reception and dancing following dinner featuring Pride & Joy.
Above left: Executive V.P. Marc Intermaggio welcomes Nancy Gille, W3 Partners, who donned an authentic costume circa 1911.
Above right: BOMA Lifetime Member Ray Nann and wife Barbara celebrate the evening. Ray attended his first BOMA meeting in 1957.
P hotos by Dav e B u s h P hotogr a ph e r s
Left: Landmark Sponsor Gene Valla, The Lurie Company, talks with Centennial Gala Chairman Paul Richards, Wilson Meany Sullivan.
J U ly/A u g ust 2 0 1 1
theregistrysf.com 31
Left: GreenerBuilder2011 notebook
Real S C E N E
O F
T H E
S E E N
Below: Tradeshow representatives from Glumac
Above right: Tradeshow representatives from Armstrong Above left: David Kaneda, IDeAs
USGBC GreenBuilder Conference 2011 The second annual USGBC GreenerBuilder conference was held at the South San Francisco Conference Center on June 8, 2011. Over 500 attendees convened for the day to discuss the future of green building, learn from industry experts, and see the latest innovations on the expo floor. Find more details at www.usgbc-ncc.org/greenerbuilder.
Above: Michael Harlan, CEO, U.S. Concrete; Dan Geiger, Executive Director, U.S. Green Building Council Northern California Chapter Left: Opening Plenary, Michele Russo, McGraw-Hill Construction
32 theregistrysf.com
J U ly/A u g ust 2 0 1 1
Above: George Amburn, Jr., Mazzetti Nash Lipsey Burch; Greg Creighton, XL Construction; Caspar Wagner, XL Construction
P hotos by S i mon F u , ES C r e at i on
Left: George Salah, Google
Real S C E N E
O F
T H E
S E E N Right (l-r): Victor Jin, President of NCCAR, Property Investment Services; Catherine House, CCIM, Past President of RICS, Sperry Van Ness; Rob Platt, CCIM, Rob Platt & Associates; Buck Bukrinsky, Executive Director NCCAR, Cal-West Realty
Right (l-r): Aziz Khatri, Keller Williams Commercial Realty; `Frank Murphy, CCIM, Keller Williams Below left (l-r): Bill Mohr, CCIM, Mohr Financial and CI 101 Instructor; Ron Cook, Walnut Creek; Jared Hastey, Rental Property Professionals; James Viso, Grubb & Ellis
Commercial Real Estate Spring Mixer Members of four area commercial real estate associations gathered for a networking mixer April 4 in San Francisco. The event was held at the newly opened Carnelian By The Bay where CCIM was conducting a class in Commercial Real Estate Analysis. Participating in the reception were: the Northern California Chapter of the CCIM Institute (NCalCCIM); the Institute of Real Estate Management, San Francisco (IREM SF); the Northern California Commercial Association of Realtors (NCCAR); and the Royal Institution of Chartered Surveyors (RICS). Above right (l-r): Steven Ring, CPM, Cushman & Wakefield; Clay Dunning, CPM, Sierra Commercial Left (l-r): Tom Shephard, TerraCorp; Peter Wenzel, GLL Properties, Inc.; James Kirkpatrick, NAI Kilpatrick
Below (l-r): Hamid Ghaemmaghami, CPM, CCIM and Antoinette Pietras, City of Oakland, Community & Economic Development Agency
Above left (l-r): Christina Calvo, Woodruff Sawyer & Co.; Suzy Silvestre, BellaVerde, ML Nielsen Construction
RIght (l-r): David Saldivar, CPM, CCIM, President of IREM SF and Rob Platt, CCIM, Rob Platt & Associates RIght (l-r): Victor Jin, President of NCCAR, Property Investment Services; Romney Eyring, Eyring Realty, Inc.; Hawley Smith, Bradley Commercial
Left (l-r): Russell Larson, GSA; Jamie Philliposian, GSA; Mike Tokerud, CCIM, HL Commercial Real Estate
J U ly/A u g ust 2 0 1 1
theregistrysf.com 33
SENT to us
(continued from page 6)
Cohen also has arranged a $6.5 million refinance loan for Walnut Grove Apartments, a 117-unit, age-restricted (55 and older) multifamily property in Vacaville. The fully leased property is located at 1101 Alamo Drive. The lender was Fannie Mae via Walker & Dunlap, a finance company with a primary focus on multifamily lending. The borrower is Vandelay Development, a Californiabased multifamily investor and property manager.
Shorenstein Grows Green Two downtown San Francisco office buildings owned by The Shorenstein Co. LLC have been certified LEED Gold by the U.S. Green Building Council: 50 California St. and the Russ Building (left) at 235 Montgomery St. The Russ Building, held in partnership with The Swig Co., was built in 1927 and totals 509,000 square feet. The California Street building, constructed in 1972, totals 688,000 square feet. The buildings are two of the largest in Shorenstein’s national portfolio to reach LEED gold status. Shorenstein has certified nine properties through LEED and retains ownership of eight. “Our ongoing pursuit of LEED certification in key existing assets within the portfolio is just one part of our overall sustainability strategy, but it will result in more than 1.5 million square feet being certified this year with another one million-plus next year,” said Shorenstein Executive Vice President Stan Roualdes. Earlier this year, Shorenstein participated in the Environmental Defense Fund’s Climate Corps Initiative, a nationwide program to support business’ pursuit of energy efficiency in buildings and headquarters.
feet in Redwood Business Park. Basin Street valued the deal at approximately $13 million. In May, Basin Street acquired five office buildings totaling 160,000 square feet in the same business park for an undisclosed price.
Real Estate Services Firms Merge Jones Lang LaSalle and international property consultancy King Sturge will merge. All 43 King Sturge offices and businesses across Europe, including 24 in the United Kingdom, will become part of Jones Lang LaSalle and will operate under the Jones Lang LaSalle brand. Andrew Gould will serve as chief executive of the merged business in the UK. Richard Batten will assume the role of UK executive chairman.
San Francisco Apartment Building Goes for $4.75 MM A 30-unit apartment building in San Francisco located at 230 Central Ave. in the Haight-Ashbury district sold for $4.75 million, or just over $158,000 a unit. The sales price represented 12 times the gross rent multiplier, said Jeffrey Mishkin, first vice president and regional manager of Marcus & Millichap Real Estate Investment Services in San Francisco. Gross rent multiplier, or GRM, is a ratio that compares price to annual rental income before expenses. Clinton Textor and Dimitris Drolapas, multifamily investment specialists in the San Francisco office of Marcus & Millichap, represented both the buyer and the seller in this transaction. The seller was a San Francisco family, and the buyer is Klingbeil Capital Management.
Rubber Hits Road for Tire Seller In Hayward
Mobile Technology Provider Moves, Expands
Tireco Inc., a national tire distributor headquartered in Gardena, Calif., has expanded its warehouse base into the Bay Area with a 72,000 square-foot lease at the Winton Logistics Center in Hayward. The location is a portion of a 220,000 squarefoot warehouse and distribution facility on nearly 10 acres in the Hayward Crocker-North Industrial Park. The building will serve as one of Tireco’s Northern California regional distribution centers. This is one of the few new warehouse and distribution leases over 50,000 square feet completed in Hayward so far this year. Boston Properties sold the building in December 2002 to Principal Global Investors. The building was originally used as Mervyns headquarters and previously occupied by Kimberly Clark, Restoration Hardware and most recently, Guardian Logistics. Greig Lagomarsino and Casey Ricksen of Colliers International’s Oakland office represented landlord Principal, and Dave Mensinger of The Everest Group represented Tireco.
Former Mervyns Distribution Center Leased Special Dispatch of California, a privately held logistics company specializing in retail deliveries, has leased a 152,000 square-foot former Mervyns Northern California distribution center at 25509 Industrial Blvd., in Hayward. The company, which is expanding from a 70,000 square foot Newark facility, signed an eight-year lease. Casey Ricksen, a senior vice president for Colliers International in Oakland, represented the tenant and the property owner, The Anderson Family Trust.
Buildings Sold in Petaluma Business Park Basin Street Properties, a Reno, Nev., commercial property owner and investment company, has acquired three Petaluma office buildings totaling 210,000 square
PEOPLE on the move
Thomas J. Umberg has been elected the chairman of California’s High-Speed Rail Authority board of directors. Christopher Ryan has been made chief of staff for the authority’s chief executive, Roelof van Ark. Umberg is an attorney with law firm Manatt, Phelps & Phillips LLP, specializing in federal and state policy and regulatory matters. He served three terms in the California Legislature, most recently from 2004 to 2006.
J U ly/A u g ust 2 0 1 1
Good Technology is a provider of multi-platform enterprise mobility services. Scott Kinder and Peter Hamann of CresaPartners in San Jose represented Good Technology. Navin Ramani of CresaPartners in San Francisco is overseeing the project management and relocation planning for this assignment. The landlord, North Mary Office LLC., was represented by Phil Mahoney of Cornish & Carey Commercial Newmark Knight Frank.
Arborwell Buys Business, Adds Expertise Hayward-based tree and landscape-services company Arborwell has merged with West Bay Stump Removal and acquired its San Francisco and Peninsula customer base. Kevin Morgenstern, who previously owned West Bay, has joined Arborwell as its stump grinding production manager.
Broker to Compete in National Golf Tournament Greg Galasso, Silicon Valley-based senior vice president with Colliers International, has qualified for the U.S. Senior Open, which takes place at Inverness Club in Toledo, Ohio, beginning July 28. This is the second time in the last four years that he has qualified for the contest. Galasso was a member of the San Jose State University men’s golf team in 1979-1980. He had a successful amateur career with four consecutive Santa Clara County championships and a number of other local wins in prestigious amateur events. He is a member of the Society of Industrial and Office Realtors. n
(continued from page 7)
High-Speed Rail Authority Names Executives
34 theregistrysf.com
of its employees.
Good Technology Inc. has leased 80,000 square feet at 430 N. Mary Ave. in Sunnyvale. The company currently occupies 52,000 square feet at 101 Redwood Shores in Redwood City and is relocating to accommodate growth and better meet the needs
In the newly created chief of staff position, Ryan will administer the authority overseeing staffing needs, fiscal affairs and budgeting. Most recently, Ryan served as bureau chief of the Department of Technology Services within the California Department of Justice. He oversaw technology infrastructure, managed the development of new software, and led a staff of more than 100 with a budget of $11 million. n
08Calendar
january february march april may june july august september october november december
2
SPUR will host a celebration surrounding the exhibit opening of community designed Yerba Buena starting at 6 p.m. at 654 Mission St., San Francisco. Come hear from CMG Landscape Architecture and YBCBD staff about the community design initiative, followed by the exhibit opening. Members $5 and non-members $20. Visit www.spur.org for more information.
4 10
as they grapple with questions of artistic integrity, commercialism, experimentation and the future of their beloved city. This will be held at 654 Mission St., San Francisco. Members $0 and non-members $20. Visit www.spur.org for more information. BICB will host a luncheon. Visit www.bicb.us for more information.
BOMA Silicon Valley will host a membership luncheon from 11:30 a.m. – 1:30 p.m. at Crowne Plaza, 282 Almaden Blvd., San Jose. Visit www.boma-sv.org for more information.
CCIM Northern California Chapter will host a luncheon and election of the Board of Directors at Sequoyah CC in Oakland. Visit http://chapters. ccim.com/northerncalifornia for more information.
CREW East Bay will host CREW Cocktails and Texas Hold Em’ with CREW San Francisco. Visit www.eastbaycrew.org for more information.
18
IFMA Silicon Valley will host a luncheon called Top 10 OSHA Violations in the Built Environment and How to Avoid Them starting at 11:30 a.m. Members $20 and non-members $30. Visit www.ifmasv.org for more information.
11 16
BOMA Oakland/East Bay will host a luncheon featuring Oakland Mayor Jean Quan. Visit www.bomaoeb.org for more information.
SPUR’s Young Urbanists will host a screening of Echotone starting at 6 p.m. Echotone provides a telescopic view into the lives of Austin TX’s vibrant young musicians
CoreNet Northern California Chapter will host a chapter meeting. Visit http://nocal.corenetglobal.org/CORENETGLOBAL/NorthernCalifornia/Home/Default.aspx for more details. USGBC Northern California Chapter will host Silicon Valley Networking Picnic from 5:30 p.m. – 8 p.m. at Cupertino Memorial Park, 21267 Stevens Creek Blvd., Cupertino. For more information contact Kunjan at kshah@aedisgroup.com or visit www.usgbc-ncc.org. CREW East Bay will host a luncheon called Adaptive Re-use. Visit www.eastbaycrew.org for more information. CREW Silicon Valley will host a 30 Year Anniversary event. Visit www.crewsv.org for more information.
CREW San Francisco will host the 10th Annual Golf Tournament from 12 p.m. – 8 p.m. at Harding Park Golf Course, 99 Harding Rd., San Francisco. Visit www.crewsf.org for more information.
19
BOMA San Francisco will host an Emergency Preparedness Committee Workshop from 12 p.m. – 1 p.m. at The Pyramid Center, 600 Montgomery St., 48th Floor, San Francisco. This is a free event for members only. Visit www.bomasf.org for more information.
24 25
CREW San Francisco will host Membership Madness starting at 5:30 p.m. Visit www.crewsf.org for more information.
BOMA Oakland/East Bay will host Casino Night featuring Texas Hold’Em starting at 5 p.m. at Scott’s Seafood, 2 Broadway, Oakland. Visit www.bomaoeb.org for more information BOMA Silicon Valley will host an Emerging Leader’s End of Summer Wine Tour. Visit www.boma-sv.org for more information.
30
USGBC Northern California Chapter will host the Understanding the Living Building Challenge from 9 a.m. – 3:30 p.m. at Heron’s Head Eco Center, 1329 Evans Ave., San Francisco. To learn more about this event visit www.ilbi.org/workshop.
activity
Reports
commercial leaseS
City
Lease Size Sq. Ft.
Name of Tenant/Rep (Brokerage)
Name of Landlord/Rep (Brokerage)
Notes (ie. Lease type and/or lease longevity)
Hunt’s Business Park, 201 C St
Hayward
174,278
Owens Corning/Jones Lang LaSalle
Moses Libitzky/Jeff Starkovich & Tom Damaschino (Cassidy Turley BT Commercial Oakland)
Renewal, 8M Term, Warehouse Lease Transaction
47220 Bayside Pkwy
Fremont
72,486
Micron Technologies/Christian Marent (CB Richard Ellis)
JER Partners/Chris Shafer (Cornish & Carey Commercial Newmark Knight Frank)
Renerwal
2399 W Winton Ave
Hayward
72,431
Tireco, Inc/The Everest Group
Principal Capital Real Estate Investors, LLC/ Greig Lagomarsino, SIOR & Rick Keely (Colliers International Oakland)
New Lease, 85M
2399 W Winton Ave
Hayward
72,431
Tireco, Inc/Dave Mensinger (The Everest Group)
Principal Capital Real Estate/Greig Lagomarsino, SIOR & Casey Ricksen (Colliers International Oakland)
New Lease, 85M
Portal Publications, 31101 Wiegman Rd
Hayward
71,600
Unisource Solutions/Paul Beckwith (Cassidy Turley BT Commercial Oakland)
IBG Wiegman Road Assoc./Direct
Renewal, 45M Term, Warehouse Lease Transaction
48664 Milmont Dr
Fremont
68,441
Nova Solar
Arden Realty/Sherman Chan & Vince Machado (CB Richard Ellis)
New Lease
Hayward Industrial Park, 23783-23787 Eichler St, Bldg 3
Hayward
45,199
Sims Group USA Corporation/Jay Hagglund (Cassidy Turley BT Commercial Oakland)
UBS Realty Investors/Jay Hagglund & Joe Fabian (Cassidy Turley BT Commecial Oakland)
Renewal, 24M Term, Warehouse Lease Transaction
4601 Malat St
Oakland
42,340
Golden State Overnight
Western Door & Sash Company/David Henderson & Gabe Burke (Colliers International Oakland)
Renewal, 60M
1991 Fairway Dr
San Leandro
33,635
US Air Conditioning Distributors/Philip Krevoy (Realatrends) & Greig Lagomarsino, SIOR (Colliers International Oakland)
Fairway San Leandro, LLC/Greig Lagomarsino, SIOR & Todd Severson, SIOR (Colliers International Oakland)
New Lease, 84M
1037 Whipple Rd
Hayward
31,000
Truck Railing Handling, Inc/ Hunter Commercial Real Estate
Morgan Stanley/Greig Lagomarsino, SIOR & Casey Ricksen (Colliers International Oakland)
Renewal, 8M
1037 Whipple Rd Bldg B
Hayward
31,000
Truck Railing Handling, Inc/Richard Hunter (Hunter Commercial Real Estate)
Morgan Stanley/Greig Lagomarsino, SIOR & Casey Ricksen (Colliers International Oakland)
Renewal
Plaza 580, 4392 Las Positas Rd
Livermore
26,488
Big Lots
The Macerich Co./Patrick McGaughey & Sam Finne (Terranomics)
124M Term, Retail Lease Transaction
725 85th Ave
Oakland
25,233
Pacific Steel/Mark Maguire & Kevin Hatcher (Colliers International Oakland)
PFG/Cushman & Wakefield
New Lease, 60M
Cherry Business Park, 38505 Cherry St
Newark
25,000
KYO Computer/Michael Spiro (Cornish & Carey Commercial Newmark Knight Frank Hayward)
DCT-CA 2004 Portfolio L ( LP )/Jay Hagglund (Cassidy Turley BT Commercial Oakland)
Renewal, 12 Term, I ndustrial Lease Transaction
1055 Whipple Rd
Hayward
24,000
HT - US Evergreen/Cornish & Carey Commercial Newmark Knight Frank
Morgan Stanley/Greig Lagomarsino, SIOR & Casey Ricksen (Colliers International Oakland)
Renewal, 47M
1055 Whipple Rd, Bldg B
Hayward
24,000
HT-US Evergreen/Shawn Klein (Cornish & Carey Commercial Newmark Knight Frank Emeryville)
Morgan Stanley/Greig Lagomarsino, SIOR & Casey Ricksen (Colliers International Oakland)
Renewal, 47M
1991 Fairway Dr
San Leandro
22,365
US Air Conditioning Distributors/Realatrends
Fairway San Leandro, LLC/Greig Lagomarsino, SIOR & Todd Severson, SIOR (Colliers International Oakland)
New Lease, 84M
1991 Fairway Dr
San Leandro
22,365
Beltmann Group Inc/Dan Bergen (Colliers International-Pleasanton)
Fairway San Leandro, LLC/Greig Lagomarsino, SIOR & Todd Severson, SIOR (Colliers International Oakland)
New, 66M
1991 Fairway Dr
San Leandro
22,365
Beltmann Group Inc/Dan Bergen (Colliers International Pleasanton)
Fairway San Leandro LLC/Greig Lagomarsino, SIOR & Todd Severson, SIOR (Colliers International Oakland)
Whse/Dist
Amador Business Center IV B, 7888 Marathon Dr
Livermore
19,200
Rapid Truck Lines/Mark Dowling (Cassidy Turley BT Commercial Pleasanton)
Principal Financial Group/Mark Dowling (Cassidy Turley BT Commercial Pleasanton)
36M Term, Warehouse Lease Transaction
Vasco Commerce Center, 5874 Brisa St
Livermore
18,000
Joseph T. Ryerson & Son, Inc./Mark Dowling (Cassidy Turley BT Commercial Pleasanton)
Don Bruzzone/Dave Bruzzone & Andrew Zink (Cornish & Carey Commercial Newmark Knight Frank Pleasanton)
18M Term, Warehouse Lease Transaction
5950 Stoneridge Dr
Pleasanton
14,456
S&J Stadtler Inc/RE/Max Accord
Dutra Enterprises Inc/Jason Chandler & Ian Thomas (Colliers International Pleasanton)
Office, Class B
Hayward Gateway Center, 26572-26580 Danti Ct, Bldg E
Hayward
14,400
C-K Carpet Distribution/Jeff Starkovich/ Jay Hagglund (Cassidy Turley BT Commercial Oakland)
Invesco Real Estate, TX/Jeff Starkovich & Jay Hagglund (Cassidy Turley BT Commercial Oakland)
Renewal, 36M Term, Warehouse Lease Transaction
1999 Harrison St
Oakland
14,218
Lombardi, Loper & Conant, LLP/UGL Equis
Beacon Capital Partners/Ken Meyersieck (Colliers International Oakland)
Renewal, 27M
44931 Industrial Dr
Fremont
14,000
Excellence Flooring/Joe Kelly (CB Richard Ellis)
Investment Building Group/Rob Shannon (CB Richard Ellis)
New Lease
Doolittle Distribution Center, 1501 Doolittle Dr
San Leandro
13,833
Sloat Brothers, Ltd./Cornish & Carey Commercial Newmark Knight Frank Hayward
AMB/Jeff Starkovich & Tom Damaschino (Cassidy Turley BT Commercial Oakland)
30M Term, Warehouse Lease Transaction
2201 John Glen, 2201 John Glenn Dr
Concord
50,000
Ashley Furniture/Todd Oliver (Terranomics)
R & B Heritage Investors LP/Todd Oliver (Terranomics)
60M Term, Retail Lease Transaction
1255 Treat Blvd
Walnut Creek
16,363
YCMNET Advisors, Inc./Phillip D. Bright
Equity Office Partners/Tim Hogan & Whiff Collins (MCC Realty Group, Inc.)
Full Service, 84 Months
2067-2085 San Ramon Valley Blvd
San Ramon
16,238
Diablo Motors/Michael Copeland (Cassidy Turley BT Commercial)
Cartan Family LLP/Betsy Zimmermann & Whiff Collins (MCC Realty Group, Inc.)
NNN, 63 Months
San Francisco
21,831
Alliant Insurance/Kristin Liening (CB Richard Ellis)
Unico Properties/Phil Tippett (CB Richard Ellis)
Renewal/Expansion
Address Alameda County
Contra Costa County
San Francisco County 100 Pine St
J U ly/A u g ust 2 0 1 1
theregistrysf.com 37
commercial LEASES CONTINUED Address
City
Lease Size Sq. Ft.
Name of Tenant/Rep (Brokerage)
Name of Landlord/Rep (Brokerage)
Notes (ie. Lease type and/or lease longevity)
One Embarcadero Center, 1 Embarcadero Ctr
San Francisco
20,178
Trucker-Huss/Frank Fudem (Cassidy Turley BT Commercial San Francisco)
Boston Properties, SF/Rod Diehl (Boston Properties San Francisco)
124M Term, Office Lease Transaction
743-765 Harrison, 743-765 Harrison St
San Francisco
18,000
Waterfront Container Leasing Co/ Tim Garlick (Cassidy Turley BT Commercial San Francisco)
Larry Barrett/HC&M Commercial San Francisco
60M Term, Warehouse Lease Transaction
123 Mission, 123 Mission St
San Francisco
13,882
Affiliated Engineers/Frank Fudem (Cassidy Turley BT Commercial San Francisco)
Sumitomo Corp./Karl Baldauf & Nick Slonek (Cornish & Carey Commercial Newmark Knight Frank San Francisco)
120M Term, Office Lease Transaction
353 Sacramento , 353 Sacramento St
San Francisco
11,428
Working Equity/Sean McCallum (Cassidy Turley BT Commercial San Francisco)
Pacific Eagle Holdings Corp, SF/Zach Siegel (Cushman & Wakefield San Francisco)
84M Term, Office Lease Transaction
Adam Grant Building, 114 Sansome St
San Francisco
11,263
Game Theory/James Chesler & Jason Burch (Cassidy Turley BT Commercial San Francisco)
Seagate Properties, SF/Patrick Hubbard & Robert Dumas (Sansome Street Advisors, Inc.)
60M Term, Office Lease Transaction
99 S Hill Dr
Brisbane
80,100
DHL/David Black (CB Richard Ellis Foster City) & Greig Lagomarsino, SIOR (Colliers International Oakland)
Russel Sigler/Jason Cranston (Cassidy Turley BT Commercial Burlingame)
Sublease, 80M
Willow Park, 1200-1240 Hamilton Court
Menlo Park
49,406
On Trac Inc/John Kovaleski (Colliers International San Jose)
AMB Property Corporation/Randy Arrillaga/Cassidy Turley BT Commercial Palo Alto)
48M Term, Warehouse Lease Transaction
1800 Bridge Pky
Redwood City
48,384
Model N, Inc./John Held (CB Richard Ellis Foster City)
Harvest Properties/Randy Keller (Cassidy Turley BT Commercial Burlingame)
Renewal, 36M
Pacific Shores Center, 1600 Seaport Blvd, Bldg 6
Redwood City
34,210
Wildfire Interactive, Inc/Mike Courson & Mike Connor (Cassidy Turley BT Commercial Palo Alto)
Starwood Capital Group/Mike Moran & Ben Paul (Cassidy Turley BT, Burlingame
39M Term, Office Lease Transaction
1850 Gateway Dr
San Mateo
23,177
Sprint/Brian Beswick (CB Richard Ellis Foster City)
Legacy Partners
Renewal, 38M
2600 Bridge Pky
Redwood City
22,159
Axway, Inc./John Held (CB Richard Ellis Foster City)
Harvest Properties/Randy Keller (Cassidy Turley BT Commercial Burlingame)
Direct, 60M
1400 Fashion Island Blvd
San Mateo
18,102
RingCentral/Damon Schor (CB Richard Ellis Palo Alto)
Fisher Investments/David Wright (CB Richard Ellis Foster City)
Direct, 63M
San Mateo Bay Center, 901 Mariners Island Blvd
San Mateo
17,452
Sares Regis Group/Ben Paul/Mike Moran (Cassidy Turley BT Commercial Burlingame)
Equity Office, Peninsula/Equity Office, Peninsula
Renewal, 60M Term, Office Lease Transaction
555 Twin Dolphin, 555 Twin Dolphin Dr
Redwood Shores
16,027
Icontrol/Dan Persyn/Cassidy Turley BT Commercial Palo Alto
Equity Office, Peninsula/Jon Mackey & Craig Kalinowski (Cornish & Carey Commercial Newmark Knight Frank San Mateo)
60M Term, Office Lease Transaction
66 Willow, 66 Willow Pl
Menlo Park
14,000
Stanford Hospital & Clinics/Cornish & Carey Commercial Newmark Knight Frank Palo Alto
Frykberg Associates/David Hiebert (Cassidy Turley BT Commercial Palo Alto)
85M Term, Office Lease Transaction
333 Twin Dolphin Dr
Redwood City
12,693
Kasowitz, Benson, Torres & Friedman LLP/ Ken Gilbert (CB Richard Ellis Palo Alto)
Equity Office/Jon Mackey (Cornish & Carey Commercial Newmark Knight Frank San Mateo)
N/A
Northill Business Plaza, 150 Hill Dr. N.
Brisbane
12,414
ADT Security Services Inc/CB Richard Ellis Foster City
Northill Associates (LLC)/John Barsocchini & Marc Pope (Cassidy Turley BT Commercial Burlingame)
60M Term, Office Lease Transaction
Willow Park, 1100-1190 Hamilton Ct
Menlo Park
11,160
Pacific Biosciences/Kristoph Lodge (Cornish & Carey Commercial Newmark Knight Frank Palo Alto)
AMB Property Corporation/Randy Arrillaga (Cassidy Turley BT Commercial Palo Alto)
48M Term, Warehouse Lease Transaction
Junction Industrial Park, 1705 Junction Ct
San Jose
136,088
NSG Technology, Inc./Tenny Tsai (Cassidy Turley BT Commercial San Jose)
AMB Property Corporation/Jim Kovaleski & Craig Kovaleski (Cassidy Turley BT Commercial San Jose)
Renewal, 36M Term, Warehouse Lease Transaction
1315 & 1325 Chesapeake Terr
Sunnyvale
110,217
Cepheid/Cassidy Turley BT Commercial
I & G Caribbean Inc./Jeff Houston &Vincent Scott (CB Richard Ellis)
New Lease
411 E Plumeria Dr
San Jose
86,602
NXP/Rick Ingwers & Brad Rogers (Cushman & Wakefield)
Lasalle Montague, Inc./Jeff Houston & Vincent Scott (CB Richard Ellis)
New Lease
Oakmead Business Park, 432 Lakeside Dr
Sunnyvale
63,379
Dolby Laboratories/David Hiebert (Cassidy Turley BT Commercial Palo Alto)
AMB Property Corporation/Craig Fordyce, SIOR, CCIM & Michael Rosendin, SIOR, CCIM (Colliers International San Jose)
84M Term, R&D Lease Transaction
Caribbean Corporate Ctr, 1315 Chesapeake Terr
Sunnyvale
54,317
Cepheid/Mike Connor/Mike Courson (Cassidy Turley BT Commercial Palo Alto)
I&G Caribbean, Inc./Jeff Houston & Vincent Scott (CB Richard Ellis San Jose)
84M Term, R&D Lease Transaction
3174 Porter Dr
Palo Alto
48,384
FX Global, Inc./Matt Von der Ahe (CB Richard Ellis Palo Alto)
Wheatley Properties/Kirk Syme (Woodstock Development)
Sublease, 121M
746-876 Milpitas, 746-876 Milpitas Blvd
Milpitas
36,288
Bintang Badminton/Mark Dowling (Cassidy Turley BT Commercial Pleasanton)
SJ South Milpitas Corporation/Jim Kovaleski & Craig Kovaleski (Cassidy Turley BT Commercial San Jose)
120M Term, Warehouse Lease Transaction
Ames Industrial Park, 1000-1210 Ames / 1053 Sinclair Frontage
Milpitas
30,200
Global Packing Solutions, Inc.
Ames Industrial Park/Fred Ede (Cassidy Turley BT Commercial San Jose)
3M Term, Industrial Lease Transaction
2424 Walsh Ave
Santa Clara
30,131
Hanwha Solar America LLC/Walt Stephenson (Cushman & Wakefield)
RREEF/Joe Kelly & Rob Shannon (CB Richard Ellis) and Dave Schmidt & Craig Fordyce (Colliers International)
New Lease
Caribbean Corporate Center, 1325-1327 Chesapeake Terr
Sunnyvale
28,629
Cepheid/Mike Connor/Mike Courson (Cassidy Turley BT Commercial Palo Alto)
I&G Caribbean, Inc. (La Salle)
Renewal, 34M Term, R&D Lease Transaction
Caribbean Corporate Center, 1325-1327 Chesapeake Terr
Sunnyvale
27,271
Cepheid/Mike Connor/Mike Courson (Cassidy Turley BT Commercial Palo Alto)
I&G Caribbean, Inc. (La Salle)
Renewal, 36M Term, R&D Lease Transaction
1828 Bering Dr
San Jose
25,300
OpNext/Michael Filice (CB Richard Ellis)
AMB/Eric Hallgrimson, Alan Gutterman & Jon Decoite (Cassidy Turley CPS)
New Lease
San Mateo County
Santa Clara County
38 theregistrysf.com
J U ly/A u g ust 2 0 1 1
commercial LEASES CONTINUED Address
City
Lease Size Sq. Ft.
Name of Tenant/Rep (Brokerage)
Name of Landlord/Rep (Brokerage)
Notes (ie. Lease type and/or lease longevity)
Oakmead West, 488-492 DeGuigne
Sunnyvale
25,258
UMC/Danny Yu/Tenny Tsai (Cassidy Turley BT Commercial San Jose)
Equity Office Properties
Renewal, 60M Term, R&D Lease Transaction
@ First Shopping Center, First St., N @ Hwy 237
San Jose
23,043
Fresh & Easy/SRS Real Estate Partners San Francisco
Hunter Storm Properties/Todd Oliver & James Chung (Terranomics)
120M Term, Retail Lease Transaction
1732 N First St
San Jose
22,519
Springsoft USA, Inc./Mike Benevento & Matt Wersel (CB Richard Ellis)
RNM Properties/Shane McNulty, Mark Christierson & Mike Grado (CB Richard Ellis)
New Lease
Augustine Technology Park, 2505 Augustine Dr
Santa Clara
21,921
UC Santa Cruz/Steve Levere (Jones Lang Lasalle Palo Alto)
PSAI/Mike Connor & Kalil Jenab (Cassidy Turley BT Commercial Palo Alto)
96M Term, R&D Lease Transaction
1250 Borregas, 1250 Borregas Ave
Sunnyvale
21,900
Adesto Technologies/Sushma Malhotra (Cresa Partners San Jose)
Dollinger Properties/Kalil Jenab & Randy Arrillaga (Cassidy Turley BT Commercial Palo Alto
48M Term, R&D Lease Transaction
1250 Borregas, 1250 Borregas Ave
Sunnyvale
20,640
EGain Communications Corp./David Hiebert & Boyd Smith (Cassidy Turley BT Commercial Palo Alto)
Dollinger Properties/Kalil Jenab & Randy Arrillaga (Cassidy Turley BT Commercial Palo Alto)
60M Term, R&D Lease Transaction
1920-1930 Zanker, 1920-1930 Zanker Rd
San Jose
12,810
Hitachi Metals America, Ltd./David Yamamoto (Cassidy Turley BT Commercial San Jose)
RREEF/Colin Feichtmeir & Gregory M. Davies (Cassidy Turley CPS)
84M Term, R&D Lease Transaction
commercial SALES Address
City
Property Size
Buyer
Seller
Sale Price
Price/Sq. Ft.
Project Type
Brokers
Berkeley
457,000
LBA Realty Fund
Wells Fargo Bank
N/A
N/A
Office
Kevin Van Voorhis, CCIM; James Kaye, Greig Lagomarsino, SIOR, Jay Gomez; & Ken Meyersieck (Colliers International Walnut Creek, San Jose, Oakland)
Kobe Precision
Whse/Dist
Buyer: John Steinbuch, SIOR (Colliers International Pleasanton); Seller: Sean Sabarese & Greig Lagomarsino, SIOR (Colliers International Oakland), Kenneth Tsukahara (Colliers International San Jose)
Alameda County 6701-6713 San Pablo Ave
1510 Zephyr Ave
Hayward
50,400
Impax Laboratories
1190 Zephyr Ave
Hayward
48,552
Mike Chu
White Family Trust
$3,250,000
$66.94
Industrial
Buyer & Seller: Bob Ferraro (CB Richard Ellis Oakland)
3393 W Warren Ave
Fremont
46,756
Swagelok
Dollinger
5M
$109.00
R&D/Flex
Tom Taylor & Dave Fukuda (CB Richard Ellis); Dollinger
30580 San Antonio St
Hayward
44,000
Amiri Holdings, LLC
San Antonio Capital, LLC
N/A
N/A
Warehouse/ Distribution
Rick Keely & Greig Lagomarsino, SIOR (Colliers International Oakland); Cornish & Carey Commercial Newmark Knight Frank
4550 San Pablo Ave
Berkeley
27,000
EBI
Sterling Bank
N/A
N/A
Office/Flex
Aileen Dolby (Colliers International Oakland); Cassidy Turley BT Commercial
2371 Polvorosa Dr
San Leandro
23,100
LBA RIV Company V, LLC
1950 Associates
N/A
N/A
Warehouse/ Distribution
Greig Lagomarsino, SIOR (Colliers International Oakland)
2371 Polvorosa Dr
San Leandro
23,100
LBA Realty
1950 Associates
Confidential
Confidential
Warehouse/ Distribution
Greig Lagomarsino, SIOR (Colliers International Oakland)
33288 Central Ave
Union City
12,579
OEC Graphics, Inc.
Joong Ang Daily News Claifornia, Inc.
N/A
N/A
Light Industrial
Sean Sabarese & Greig Lagomarsino, SIOR (Colliers International Oakland) & Cassidy Turley BT Commercial
33288 Central Ave Bldg G
Union City
12,579
OEC Graphics, Inc.
Joong Ang Daily News California, Inc.
Confidential
Confidential
Light Industrial
Sean Sabarese & Greig Lagomarsino, SIOR (Colliers International Oakland)
Brentwood
14,907
Medinca Enterprises LLC
Pacific St Bk
$1,050,000
$70.44
Light Industrial
Bill Hillis, SIOR, Curt Scheve & Brian Slocum (Colliers International Walnut Creek)
375-399 W Trimble, 1215-1272 Borregas & 3041 Orchard Pkwy
San Jose/ Sunnyvale
539,200
Rockpoint
Capmark
$66,600,000
$124.00
R&D/Flex
Jeff Houston & Vincent Scott (CB Richard Ellis); Capmark
1376 & 1380 Bordeaux Dr
Sunnyvale
123,842
AEW Capital Management
Wrightwood Capital
$41,200,000
$333.17
General Office
Jeff Houston (CB Richard Ellis); Wrightwood Capital
535 Del Rey Ave
Sunnyvale
20,000
Gener8
RREEF
$2,800,000
$138.50
R&D/Flex
Paul Schmidt (CB Richard Ellis); RREEF
1372 N. McDowell Blvd & 5401 Old Redwood Hwy
Petaluma
93,600
Cornerstone Properties SA, LLC
CSFB 2002-CKS4 Redwood Way
$4,800,000
$51.00
Office
Listing: Tony Sarno (Keegan & Coppin Co., Inc.) & Kathy Kelleher (CB Richard Ellis)
1331 Commerce St
Petaluma
72,000
The Erika & Michael Mountanos Trust
3M Company
$3,700,000
$51.00
Industrial
Buyer: John Lee Lazaro (Coldwell Banker Mendo Realty) Seller: Shawn Johnson & James Manley (Keegan & Coppin Co., Inc. Listing Agents
1415 N. McDowell Blvd
Petaluma
31,000
Fuegogrande Properties LLC
RBP Round Two Office Investors LLC
$1,630,000
$52.00
Office
Buyer: James Manley (Keegan & Coppin Co., Inc.)
533 5th St
Santa Rosa
10,000
Howard Levy Appraisals
Exchange Bank
$865,000
$86.00
Office
Buyer: Jeff Negri (Cassidy Turley BT Commercial); Seller: Mike Flitner & Shawn Johnson (Keegan & Coppin Co., Inc.)
Costa Costa County 2150 & 2160 Elkins Wy
Santa Clara County
Sonoma County
J U ly/A u g ust 2 0 1 1
theregistrysf.com 39
FINAL OFFER
❯
JOHN CHALLENGER Chief Executive, Challenger, Gray & Christmas Inc.
Will Work for Skills By Sharon Simonson
“Skills gap” has become a new buzzword among those observing the dynamics of the labor force. It describes the distance between what employers want and what workers have to offer. At the end of May, the U.S. unemployment rate was 9.1 percent; California’s was 11.7 percent. Yet, there were three million unfilled job openings nationally at the end of April (the most recent data available), and that number had not fallen since February, according to the U.S. Bureau of Labor Statistics. The last three-month period when unfilled job openings remained this high was September through November 2008. Since 1973, the U.S. workforce has grown nearly 70 percent to 154 million. But those with a high school education or less have seen their proportion of the labor force drop from 72 percent to 41 percent, according to a February study by the Harvard Graduate School of Education. The gap has largely been filled by those with college or advanced education. Yet the U.S. has the highest college dropout rate in the industrialized world. John A. Challenger is chief executive of global outplacement consultancy Challenger, Gray & Christmas Inc., which helps displaced workers find employment. Challenger is commonly quoted in the national press and is a respected observer on American and global workplace trends. A graduate of Harvard University, Challenger served on the labor and human resource committee of The Federal Reserve Bank of Chicago for a three-year term. He spoke to The Registry about what he is seeing and hearing as he helps join worker to employer.
Is there in fact a gap between the kind of workers that companies want to hire and the kind of workers available to them? JC ❯ There has been a fair amount of talk about a ‘skills gap’ in the country. The government puts out some numbers that talk about job openings, the JOLTS survey (Job Openings and Labor Turnover). So, the latest one they have out is for the end of April, and they have three million job openings at the end of April. That grew earlier in the year but has been flatter lately. It’s 549,000 higher than at the end of the recession in June 2009, and it hasn’t gotten back to where it was before the recession started. I think one of the interesting things about the economy right now, and it is a little scary, is that we are producing the same amount—our GDP, which reflects goods and services, is about $13.5 trillion—as we were in 2007 before the recession, and we are doing that with seven million fewer workers. Companies have been spending money on technology and investing to upgrade things they didn’t do in the recession when they held onto cash. The new demands for productivity mean that companies only want people with the right kind of skills who are productive and work hard. So companies are being more choosy. It’s like banks saying, ‘We have money to lend, but we are not going to lend to just anyone.’ Is this a phenomenon you have seen before? JC ❯ No, I don’t think I’ve seen times like this. Usually at this point in the recovery companies are hiring a lot more people. Financial recessions strike at the core of the economy, and so that has made this a longer and slower recovery. It may be because the recession was so deep, companies are more cautious and are being very careful about adding too many workers.
40 theregistrysf.com
J U ly/A u g ust 2 0 1 1
Do you believe the slow hiring is related to companies choosing to buy technology rather than hiring because hiring is more expensive and difficult? JC ❯ I am not sure I buy that they are replacing people with technology. That always happens. Every era changes the way we do things. It may be the pace of technological change and that the workforce hasn’t kept up. It’s more that they have to take on workers who can’t use the technology well and train them on the job. That happens when the economy is expanding rapidly, and they don’t hire as carefully. They are using more temporary workers. Global companies are expanding much more quickly overseas and trying to get footholds or grow their business there, and those are probably greener fields. Sometimes they hire locally (in foreign markets) because that is the way business is. (You need workers on the ground.) Sometimes it’s more the value-gap. It’s like shopping at Walmart. You get basically the same quality product for half the cost. I think it is getting harder and harder for American workers to say our quality is much better, but we as a mature economy expect better pay. I have heard discussion that some mid-career tech workers are finding themselves unable to get re-employed because their knowledge and skills are obsolete. Do you believe that? JC ❯ There is no question that we have to improve our skills. Education is crucial—lifelong education, not just at the beginning. We are competing for jobs with others around the world. People think of their education as something that ends at age 18 or 22. Given the speed of knowledge, you could be outdated in your knowhow in mid-career. A generation ago, you were not. So people should be thinking about training and skills development, being intentional about going out and adding to skills. [In the Bay Area] you are in the center of the storm. To keep up with the knowledge in the field requires constant learning because there is constant innovation. If you are a technologist, often the technology in vogue or cutting edge three years ago is now old hat, so in the course of a career from start to mid-career 20 years later, you could quickly fall behind. We have had record long-term unemployment. What happens to workers like that? Are they dead men walking? JC ❯ No. A decade ago we all thought there would be worker shortages, and there are times when the economy really picks up and people go back to work. Some of the mismatches are occurring because people can’t make the move or the commute because it is too expensive. I think it is a real issue, and it will become more of an issue and would be an even greater issue if unemployment were not so high. Look at where the unemployment is low, far below the national average, and those are the kinds of places where mobility is an issue for employers, and they are having a hard time getting what they want. A lot of times people will migrate to where the jobs are, but among college grads, unemployment is less than half the national average. Up until this recession in my remembrance, companies that found people who they really wanted would sell people’s houses for them. But now, say someone owes $150,000 more on their home than it is worth, they can’t take the hit and the company can’t take the hit either. These are people who companies would say in the past, ‘We will move you for this job.’ n