Kudos to Outstanding Buildings and Other Award Winners Holiday Merrymaking
BOMA members and guests joyfully celebrated at the annual holiday party. (See page 11.)
Congratulations to Members to the Year!
Principal Member Cortney Shadel and Associate Member Karen Cowan were honored as Members of the Year, along with Engineer Member of the Year Albert Cedillo. (See pages 6-7 for more Gala scenes.)
BOMA Member Profiles Get to know principal member Andy Chang and associate member, Melissa Wood. (See pages 8 and 9.)
Bay Area commercial real estate movers and shakers celebrated the winners of the TOBYs and other awards at the 2016 BOMA Bay Area Annual Awards Gala. Held at the elegant ballroom at Marines’ Memorial Club on February 11, this was the second year that BOMA Oakland/East Bay and BOMA San Francisco joined together to recognize prestigious BOMA member buildings and reward building excellence. After winning a TOBY (“The Outstanding Building Best Office Building Over 1 million square feet of the Year” Award), buildings move One Market Plaza on to the Pacific Southwest Region to San Francisco compete against other buildings for the Paramount Group, Inc. honor of moving on to international (owned & managed) competition. “We were delighted with the increased number of buildings that entered the competition and were impressed with their creativity in making their properties truly outstanding,” said Karen Cowan, who led the organization of the awards competition. San Francisco’s One Best Suburban Office Market Plaza, which is Park • Stoneridge owned and managed by Corporate Plaza • Paramount Group, Inc., earned the TOBY in Pleasanton the category for buildings of more than one NPC Holdings (owner) million square feet. And Cushman & WakefieldNext Play Consulting managed 201 Spear took home the TOBY for the (manager) best office building in the 250,000-499,000 squarefoot category. In the Suburban Office Park, Low-Rise category, the East Bay’s Stoneridge Corporate Plaza in Pleasanton was honored. The property is managed by Next Play Consulting. (Continued on page 6)
2 President’s Corner
Q&A with Anne Sparks Tell us a little about your CRE career and how you got involved in the profession and BOMA? My CRE career started in 2000 with a temp job at 100 Pine Street (San Francisco). Growing up on a farm, I had no idea buildings had to be managed. After about a year I accepted a full-time appointment and the rest is history! I spend 4.5 years at 100 Pine with a great mentor, Margot Crosman, working my way from receptionist to property manager. I then took a job with Hines as property manager of 301 and 405 Howard Street. After bouncing from San Francisco to Pleasanton Corporate Commons and back to San Francisco at 101 California, I decided to move into an asset management role with the ownership of Stoneridge Corporate Plaza (Pleasanton). In July 2015, the owner ceased operations in California and moved out of state. I created Next Play Consulting to manage Stoneridge Corporate Plaza and its employees, as well as four other properties. My introduction to BOMA was more of a push out the door to fill in for those who could not attend committee meetings. I started attending Environment Committee meetings at BOMA San Francisco, and when I joined BOMA OEB I chaired the Environment Committee. While attending the BOMA International Conference in Washington, D.C. five years ago, I talked to several people about “my next BOMA move” and soon found myself on the board of directors and now president.
Congratulations on your company’s recent TOBY Award for best suburban/low-rise building. Can you share some of the secrets to your team’s success with other BOMA principal and associate members? I love competition! While at Hines’ Pleasanton Corporate Commons, I won several local civic and Hines awards. I decided to go after the TOBY and won at the International level in 2010. We had a great team, Hines (corporate) gave us great resources and the application was easy. The local TOBY that we just won for Stoneridge Corporate Plaza (SCP) is a different story. After completing the application for PCC as well as judging at the local, regional and international levels, I understood what was required from the application. When taking over the management of SCP, I took the TOBY and BOMA 360 applications and modeled the management of the campus around the application requirements. The applications were simply our roadmap for a successful, all-inclusive operation. Once the roadmap was completed, we were ready to actually apply.
What are some of your goals as President? My focus for 2016 will be strength through collaboration and inclusion. Over the past few years, BOMA OEB has done a good job getting the board
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CBRE, Inc. CIM Cushman & Wakefield Harvest Properties Nearon Enterprises Next Play Consulting RiverRock Real Estate Group of directors and committees connected via board liaisons who provide guidance to each committee. It is now time to get the committee chairs together for them to find event synergies. We want better events, not necessarily more events. The Membership Committee will oversee two important marketing initiatives. “Bid BOMA,” an initiative originated in Chicago, was started in OEB two years ago. This year we will be adding to the program to ensure our OEB members (Continued on page 10)
Leasing in Boom Times: Issues for Tenants & Landlords In today’s booming real estate market, both landlords and tenants must take into account key factors when negotiating new leases or renewals. “There are at least four issues to consider for commercial leases,” says Clifford Horner, Esq., of Horner & Singer, LLP. These include: Location – “Rents are at historical highs at prime locations, so the best locations will also be the most expensive. However, a desirable location can help an employer attract and retain qualified employees,” notes Horner. Cost – In the current climate, landlords may not need to provide extensive TI dollars, rent abatements, etc.— especially at prime locations. “Landlords may give more concessions in TI money and rent if a tenant is willing to sign a longer term lease,” he says. Lease Term – Horner says that “having a shorter-term lease adds to a tenant’s flexibility, but will cut down on the amount of TIs and rent abatement a landlord will typically provide. Given the tight rental market, landlords may require tenants to sign longer term leases to lock in current rates.” Liability/Downside Exposure and/or Exit Strategies – “A tenant should always consider how the lease allows for or limits its options. Tenants can minimize their exposure by ensuring that the lease is assignable, which should allow the tenant to sell its business, merge, or seek a replacement
tenant if it needs to vacate the space. Landlords can protect themselves by requiring personal guaranties or requiring that a small business owner also execute the lease personally in case of a tenant’s failure or insolvency,” Horner says. As their tenants’ leases expire or spaces become available, many BOMA principal members will be involved in lease negotiations. “In most Bay Area sub markets, office, retail and industrial rents have risen dramatically since the bottom of the market back in 2009-2011, with rents rising 5% to as much as 50% in inner suburbs and downtowns. Tenants who signed leases back then will face sticker shock and should carefully review renewal options and alternative relocations with their broker,” says Edward Del Beccaro, Managing Director, East Bay & Silicon Valley Offices, Transwestern. “Landlords facing vacancies in older suburban office buildings will face new challenges due to recent Title 24 energy code mandates and ADA and fire safety required building code enhancements, especially if buildings are older than 25 years. Amortizing the cost of the code mandates could require $.25 to $.30 per sf in higher rent per month just to pay for these mandates. Landlords should have MEP engineers and architects review with their property managers various solutions to cost effectively upgrade their buildings,” he adds.
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Mark Your Calendar! April 12 – Environment Committee Seminar April 14 – Luncheon April 25 – Spring Golf Classic May 4 – Emergency Preparedness Seminar May 12 – Luncheon
Visit www.bomaoeb.org for the latest listings!
About BOMA Horizons BOMA HORIZONS is published by Eason Communications LLC for BOMA Oakland/East Bay.
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6 Awards Gala
(Continued from front page)
Harsch Investment Properties’ team at the art deco-style 450 Sutter building won a TOBY for best medical office building for the second year in a row. The TOBY for Renovated Building excellence went to the Kilroy Realty Corporation-owned and managed 360 Third Street property in San Francisco’s SOMA district. And in The City’s Jackson Square area, One Jackson Place at 633 Battery Street garnered a TOBY in the Historical Building category. The building is managed by Brannan Management Company. TOBY winners showed creativity with community outreach, as well as strong emergency preparedness programs. Technology was at the forefront, enabling buildings to deliver a high level of services to tenants and owners. The Outstanding Building of the Year “TOBY” Awards were developed in 1985 by BOMA International to honor and recognize the quality in office building operations and award excellence in buildings management. The TOBY mission is: “recognizing operational efficiency, tenant The ballroom at the Marines’ Memorial Club set for the gala. retention, emergency planning and committee impact.” Also honored at the Awards Gala were: RPA designees, BOMA 360 performance program buildings, Innovative EARTH Award Winners, and the outstanding members of the year for BOMA San Francisco and BOMA Oakland/East Bay and engineers of the year. A special thanks to our Premier Spotlight Sponsors, Able Services and R.N. Field Construction, and other sponsors. ®
BOMA OEB 2015 Outstanding Members of the Year
Congratulations BOMA Oakland/Eastbay & BOMA San Francisco TOBY winners!
Congratulations Engineer of the Year Tim Danz of 345 California!
From top left: Principal Member of the Year, Cortney Shadel, RPA, CIM Group; Associate Member of the Year, Karen Cowan, Restoration Management Company, with John Combs, BOMA San Francisco President; and Engineer Member of the Year Albert Cedillo, CIM Group, with Combs.
7 Scenes from the Awards Gala
Clockwise from top right: Tucker Morris, Jenna Hattersley, and Rishika Das, Harvest Properties. Don Rogers, CIM Group; Mark Buckingham, Hines; and Arnel Salonga. Emmy So, R.N. Field Construction and Lucinda Alipio, CIM Group. Dave Brummett, Kimberly-Clark Professional and Julia Grinberg, PG&E. Michael Oddo, Michaela Morgan, and Larry Garibaldi, Metro Services Group; and Lynn Linhares, CBRE. Group at Bakerâ€™s Floor & Surface table makes a toast.
Photo credit: Olivia Smartt Photography.
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Andy M. Chang, Director of Management Services, Sunset Development Company
Leading a team of property managers keeps Andy Chang on the go as Director of Management Services at Bishop Ranch, a project of Sunset Development Company. The 10 million square-foot community in San Ramon includes BR2600, a 100-acre 1.8 million square-foot campus, and the Roundhouse Market and Conference Center. “Our company’s next project at Bishop Ranch is the 300,000 square-foot City Center that will include retail, restaurants, movie theaters and residences,” he shares. The project is led by Sunset Development Company’s President and COO Alex Mehran Jr. and designed by the renowned architectural firm, Renzo Piano Building Workshop. “Office environments are now very dynamic and oftentimes extend beyond the traditional Monday-Friday, 9-5 work week,” says Chang. This project “reinforces our focus to constantly innovate and provide offerings and amenities to support this trend. The City Center, along with Andy Chang residences, will allow us to provide a unique community to work and live in.” Chang believes that “relationships are critical in all industries, but in my opinion they are especially important in our business.” That’s one of the reasons he recently joined the board of BOMA OEB. “My involvement on the board is an opportunity to help others enhance their network. As the board liaison for the Emerging Professionals Committee, I’ll have the opportunity to guide and learn from a group of professionals who will become the future leaders of our industry.” Another reason he’s active in BOMA is service. “Service strengthens the vitality of a community, promotes an environment of collaboration and fosters growth. This is a strength of BOMA OEB, and I simply want to continue the tireless work of those who have served before me.” After hours, you might find Chang enjoying a basketball or baseball game. “These days, I play mostly with my three and fiveyear olds.” Cooking is also a passion: “There’s a sign on my kitchen wall that reads, ‘Good Food, Good Wine, Good Company.’ When I have all three of these things going on at the same time, life is pretty perfect.”
Melissa Wood, Director of Business Development and Client Relations, All Seasons Roofing & Waterproofing Inc.
As Director of Business Development and Client Relations at All Seasons Roofing & Waterproofing, Melissa Wood has the opportunity to belong to a handful of associations from the Silicon Valley to San Francisco and Oakland/East Bay. “It puts me in a great place to meet new people and communicate with my current customers,” she says. “I also set up independent and co-sponsored events for current and prospective customers to get to know their needs and understand how a service provider like myself can help them meet their goals.” This El Nino season has been “a real call to action for managers and building owners. The threat of El Nino has given us an opportunity to be looked at as a trusted advisor, not just a roofing business selling maintenance during a drought,” Wood observes. Melissa Wood and her nephew before a game of catch. The company is noticing a trend in the roofing field in which manufacturers are certifying roofing companies to install their products in order to ensure quality control of their materials. “Once installed, the manager must know the product and only use a certified roofing company from a manufacturer’s list to complete repairs and maintenance. Otherwise the warranty will void! This is a huge liability for the owner,” warns Wood. “All Seasons is certified in many roof products, so I encourage anyone with questions to contact me. You have to know your vendors’ qualifications.” You’re likely to see Wood at BOMA OEB events, as she serves on the Events Committee. “Volunteers are what keep the ball rolling in membership groups. I like being a part of making the events fun!” During her down time, she “enjoys barbecuing for my family, hanging out with my nephew Christopher and getting in as many concerts in the summertime as I can. I love me some country! I try and get away to Palm Springs for a week each summer to sit poolside with a Corona and clear my mind in the desert sun!”
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10 CRE Forecast
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(Continued from back page)
are doing smaller size stores,” she said. Amazon is cutting into sales, so stores need less space. Older centers are repositioning to provide a better shopping experience or more convenience. Some East Bay centers are adding residential near retail, so they have customers. Ring asked about new developments and challenges that loom in the industrial market. Hagglund sees modest growth for 2016, as we near the end of a cycle. In 2010, there was 9% vacancy for industrial spaces, now it’s 1.9%. The spec building in Newark, now occupied by Amazon, was leased before completion. Tenants can’t find big spaces. On the health care front, Edward Del Becarro, Transwestern’s Managing Director, East Bay/Silicon Valley noted that medical is now 12% of the workforce in the East Bay. He predicts that “clinics will be where the people are” in the post-Obamacare landscape, and he sees new construction for medical office buildings as doctors take over some functions of hospitals. There is pent-up demand for Class A construction. Another factor is that many hospitals aren’t Class A or earthquake safe. Ring’s closing question: When is the recession coming? Del Becarro said that the economy is too complicated, and the correction is unknowable. A melt-down in China could lead to a worldwide recession. In addition, he said that with the tech sector, we are now a one-horse economy. Half of all venture capital in world ends up in California and most in Northern California. “VC’s are nervous about amount of money spent on real estate.” Hagglund recommends offering carrots to tenants to get extensions on leases. Birnbaum predicts that institutions will see this as a peak. Leasing agents should try to lock in leases for 5 -7 years.
(Continued from page 2)
are networking, connecting and subsequently bidding work to other member companies. More to come mid-year. The MarCom (Marketing & Communications) Task Force will be examining various forms of communication and social-selling to promote BOMA OEB to recruit new members, promote ourselves to legislators and be the voice of CRE in the OEB. And lastly, we will be sharing BOMA OEB’s roadmap for success for the first time. The past five years have been a crazy ride and we want to show our members how far we have come, as well as where we are heading with our 2015-2018 Strategic Plan. With the committee’s and the members’ help, we can fully execute the plan to make BOMA OEB stronger.
Oakland/East Bay is a growing CRE market. What are some of the opportunities and challenges you foresee? Social Selling: There are a lot of buildings, owners and managers who are not yet BOMA OEB members. But how do we reach them? In the past we have tried personal visits, but that is not the world we live in today. We intend to focus on LinkedIn efforts to get our events out to the BOMA OEB LinkedIn Group (800+ members). To take it one step further, we will search for and invite new non-members to join the Group to learn about the educational, networking and advocacy opportunities we offer to increase membership. Time: For BOMA OEB, a growing market is a busy market and we are fighting for people’s time. Our mission needs to include good, quality events for our membership that get people involved. Short-sightedness: The economy is terrific right now. Everyone is busy with just the right amount of business or too much business! We are losing some members because they do not see the value of BOMA. As many members can attest, BOMA is not a sprint for business, it is a marathon. It is about fostering relationships and gaining trust to then be awarded business. It is during market down-cycles that these relationships are the most important and we need to keep members engaged at all times to help them build business. Sparks is President of BOMA Oakland/East Bay and Manager, Next Play Consulting’s Stoneridge Corporate Plaza.
11 Holiday Party Scenes BOMA members and their guests celebrated at the annual holiday party, while collecting toys for donation.
Clockwise from top right: Manny Moreno, BOMA OEB 2015 President and Ruby Moreno. Rick and Carol Leytum, Rossi Builders. Dwayne Triplett and Angelo Cassa; Barnum & Celillo. April Willoughby, MAI Construction; Ryan Rusler, Har-Bro Restoration; Tederal Glover, Kaiser; Caroline Grafft, RiverRock Real Estate Group; Bob Briones, Able Services; Aubrey Caton, HMS; and Salina Lee, One Kearney. Sandra Litchy, Cushman & Wakefield; Dave Bayliss, W.L. Butler Construction; and Anne Sparks, BOMA OEB 2016 President. Julia Grinberg, PG&E and Nancy Le, CBRE.
Photo credit: Olivia Smartt Photography.
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Will East Bay’s Hot CRE Market Continue in 2016? Brokers Share Insights at BOMA OEB Program Oakland is booming due to a strong economy and migration from San Francisco. As 2016 dawned, Oakland had the nation’s lowest office vacancy rate at 4% for office space and 1.9% for industrial. The outer East Bay is also absorbing space at a record-setting pace. Led by real estate veteran Steve Ring, a panel of brokers shared their insights for 2016 at a recent BOMA OEB program. “The economy is on solid ground,” said Ring. “Job numbers are strong, and hiring is at its strongest since 1999.” However, there are concerns about China and the stock market. He asked panelists where we are now, whether good times will continue and which sectors will be strong. It’s not just tech that is migrating from San Francisco to the East Bay, but companies from all over and across the spectrum—medical devices, finances and professional services, noted Jeff Birnbaum, first vice president, CBRE, when asked to give a perspective on leasing in the East Bay. As many San Francisco renewals come up, “companies are looking at critical functions and doing employee and zip code mapping,” said Birnbaum. They are asking where executives live and keeping core functions in the San Francisco. Other employees are being moved to Walnut Creek and elsewhere.
Birnbaum predicts a strong market. With no cranes in the sky and with tenant improvements so expensive due to Title 24, he does not see rents going down. “Did we time the cycle right?” Ring asked Luis A. Belmonte, principal of Seven Hills Properties, developers of retail, multifamily and industrial real estate in California, Oregon and Nevada. Previously, he was one of the founders of AMB Property Corporation, now Prologis. “The canary in the coal mine is sublet and shadow space,” said Belmonte. He says there is a lot of it and that VC’s are nervous, especially about the amount of money spent on real estate. “In addition, Prop M may kick in, halting construction in San Francisco. He predicts that ground won’t be broken for office buildings in Oakland any time soon. Jay Hagglund, executive managing director at DTZ (now Cushman & Wakefield), said the demand is still there. The quest is to get space closer to where people live and where the schools are. He predicted the commercial market will stay strong in 2016, but there may be a recession in late 2017. Retail leasing and sales expert Sandra Weck, senior vice president of Colliers International, observed that while Macy’s is closing stores, none are in California. In general, “retailers (Continued on page 10)
News about the Building Owners and Managers Association Oakland/East Bay