January/February 2016 â€˘ $5
Smarter Buildings = Smarter Companies Your Organizationâ€™s Future Depends on Better Workplace Intelligence
Reducing Energy Costs
Windows on California
Features California Leads the Way I am pleased to say that California Buildings News is attracting quite a few readers from beyond our state line. Some of them see our technological leadership and commitment to sustainable buildings as useful examples to follow. They are curious about what our architects, facility engineers, developers, contractors and building managers are doing. And they are particularly interested in our products and services and our experiments in workplace behavior. Many of our buildings association chapters are often honored as leaders within international associations. Other states and nations also have progressive building practices, but as California is the eighth largest economy in the world, we get noticed. Our magazine will continue to try to reflect what’s happening in our state’s buildings climate. California’s economy is booming and, according to a couple of our contributing editors who are experts in the field, it promises to continue to grow throughout 2016.
The Most Important Association Value: EDUCATION In our hyper-changing economy, traditional educational institutions are too often left either teaching old ways of doing things or not teaching them at all. At the same time, veteran buildings industry professionals (from asset managers to carpenters and vendors of vital products) are retiring faster than we can enlist and efficiently train younger employees. Add to this the fact that buildings (particularly new “smart” buildings) are getting much more complicated to operate and you have a recipe for poor performance. The fastest and most cost-effective way to train people to design and operate commercial buildings is through the trade unions and associations that represent the many facets of the industry — from lighting professionals to contractors to property and facility managers. And associations—using experts currently performing in the field — train new workers in real-world, real-time methods. Would you prefer studying MEP (mechanical, electrical and plumbing) from a textbook written in the early 1990s or from someone who is currently overseeing an MEP project at Apple Computer’s new HQ? There are dozens of associations and union locals out there. (See page 26). Join some and make sure your co-workers take advantage of their programs.
CRE Forecast is Rosy
Flooring Trends from TISE
Windows: What’s New?
Association Events 2016
Slashing Energy Costs
Hotels’ Bright Future
Cover images and image at left: Getty Images
California Buildings News Team Henry Eason, Editor and Publisher firstname.lastname@example.org Ellen Eason, Co-Publisher email@example.com Contributing Editors Zachary Brown, CBRE Bob Eaton, Eaton Hotel Investments Jessica Handy, CodeGreen Solutions Rich Lerner, Construction Consultant Katherine A. Mattes, Real Estate Consultant Larry Morgan, Facilities, SAP Steven Ring, Ajax Real Estate Advisors Carlos Santamaria, CEES-Advisors
Advertising Information Ellen Eason, firstname.lastname@example.org 415.596.9466 © Copyright 2016 Eason Communications LLC PO Box 225234 San Francisco, CA 94122-5234
www.cabuildingsnews.com Copyright © 2016 by Eason Communications LLC, publisher of California Buildings News. The publisher assumes no liability for opinions expressed in editorial contributions to the magazine or third-party quotations within articles. The publication is not responsible for claims in advertisements. Printed in the U.S.A.
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4 California Buildings News • January/February 2016
2016 Commercial Real Estate California Forecast... Mighty Fine! By Steven Ring So here is my prediction: 2016 will be different than 2015. Wait, wait. Before you move onto the next article, let me qualify that statement. Every year is different than the last and as we move through this real estate cycle, we are on a constant lookout for signs or signals that triggered the last trough. Moving into 2016, some concerning signs are beginning to appear. On a macro level, Wall Street started off the year in the red while oil prices continue to drop and manufacturing and retail numbers are a mixed bag. The Federal Reserve’s decision to increase interest rates was not a surprise, despite the lack of true wage growth over the past decade. Overseas, China has sent out shockwaves to the markets while ISIS continues to disrupt the general economy in the Middle East. Now, the good news. In terms of California’s economy, the state still leads the nation in job creation. Despite the recent news of layoffs at firms such as Yahoo and Macy’s, overall unemployment rate hovering is around 6%. So strong is job growth that it is predicated that this continuing trend will lead to a shortage of quality office space in regions such as Los Angeles and Orange County. Did you hear that developers? California real estate has outpaced most of the country in the past six years. Commercial cap rates have been compressing to unbelievable rates while residential is regaining most of their losses. While the Bay Area has been driven primarily by tech, the balance of California has had a mix of tech, manufacturing, health care and professional services that have been the primary drivers for space. Enough demand that cranes are coming out of the ground again. As they say, it’s been a good run. So what inning of this ballgame are we in? Last year, the common answer was the 7th inning. Interest rates were low and stable, oil was over $70 a barrel and the pent-up demand to chase a yield made real estate a great investment. Flash forward to today. Short-term rates
bumped up a bit, oil is half and continued demand is still chasing a decent yield. Commercial real estate investors are still coming in from traditional institutional sources but newer sources, like China, have increased their investments abroad. Seen as a safe haven for money, the United States is still popular amongst foreign investors, and they are willing to purchase at lower cap rates and hold their assets for longer periods of time. California is especially attractive to Asian funds that are willing to take a higher risk and lower return in an effort to move funds out of their countries. In terms of office leasing, San Francisco Class A CBD office rates hit the $70 mark, whereas Los Angeles is just over the $40 mark. Not too far off from the bust of 2000. Looking at retail, it is all across the board. Niche high-end markets like Union Square in San Francisco and Rodeo Drive in Beverly Hills experienced record purchase prices, while Amazon continues to take a major bite out of the Best Buys of the world. This will be challenging in the near future as owners of older centers need to get creative to compete with newer shopping “experiences.” If you cannot reposition, then scrape and re-purpose. The industrial sector is hotter than ever. Whereas, rents have risen 10% year over year in markets with tremendous transportation logistics. Furthermore, new “micro-hubs” are being developed for firms to be able to offer same-day delivery service. This is a great sector of the market to watch re-invent itself. So what is different about this cycle than the last? Cranes. Developers have pushed their chips onto the table with more cranes in the sky than in the past 20 years. Whereas San Francisco is on the $500 poker table, the Inland Empire and Sacramento are moving from the $10 to the $20 tables. New product is coming to market, and this will have an impact on existing product. The question is will tenants be able to afford the rents required of the developers and underlying lenders? Until the Twitters of the world start making profits, $80 rents will be scrutinized by the stockholders and boards. Flight for quality has taken place in most markets and now it is a flight towards value that is driving many tenant (Continued on page 14)
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6 California Buildings News • January/February 2016
Smarter Buildings = Smarter Companies Smart Buildings Save Power, Empower Employees, Boost Tenant Value
Image: EtolieArk Getty Images.
In the very near future, your “smart” workplace experience may well begin before you even leave your kitchen table. While breakfasting say in Palo Alto, you may use an app to reserve a “hot desk” from 10 AM to noon at a building in San Diego (your morning flight destination), then reserve a conference room there complete with pasta and a buttery Chardonnay brought in from a caterer for a meal with associates and clients from noon to 1:30 PM. You know that your clients need to be impressed, so you arrange for a bay view meeting room which you use as a thematic prop to curtain-raise an expansive marketing plan for them. You also remember that particular room can get too hot at noon, so you set the thermostat in advance to create a 68 degree-environment for two hours. These clients will be driving down from Orange County, so you use the same app to reserve a garage space for them. That app will simultaneously text the exact number to your clients and will notify the garage attendant that they can use the space. The same app will find a small quiet workspace for you at 4 PM when (back in Sunnyvale) you will need to concentrate on a complex memo. Exhausted, but not yet ready to leave at 6 PM, you head up to your company’s rooftop garden, where some of your favorite associates often gather for an informal gab session while waiting out rush hour. One of your associates, returning from the gym downstairs where she just caught one of the business shows during her workout, tells you about a great business opportunity at a conference starting that week in Los Angeles. You and everyone else on the roof grab your smartphones and begin thumbing into apps. On the way out the door to the bike room, you almost trip over the cleaning robot that’s scooting over the carpet.
7 California Buildings News • January/February 2016
On another floor in the same building, a facility engineer opens an email announcing that he has just received an astonishingly large bonus and a letter of commendation from the company CEO (no less!) for his ideas that led to installation of solar panels and windows that capture energy while reflecting sunlight away from interiors—saving the company hundreds of thousands in energy costs. He was also credited with the decision to build a huge basin on the roof that collects rainwater used to flush toilets. And the CEO was especially pleased that all the sensors he’d installed tell the company exactly how much energy it is using and where savings might occur. San Francisco-based Cushman & Wakefield Director Blake Peterson says, “The built environment has evolved beyond basic thermostats and timeclocks in the management of building systems. Buildings can now predict, respond, and adjust instantaneously to climate, elevator traffic patterns, lighting levels and even security needs. We can also make building services more customized to meet the needs of specific users— stock brokers and tech tenants tend to use space differently in terms of business hours, visitor requirements, density and security needs. Smart buildings allow us to adjust the user experience on a tenant-by-tenant and day-by-day basis without disrupting or changing conditions for other tenants in the building. “Building services in a multi-tenant environment are no longer a generic one-size-fits-all commodity. Smart buildings are changing the way we provide even the most basic building services. I recently heard about restroom paper dispensers that can send alerts when product levels get low. When a day porter gets an automatic notice that the 3rd restroom stall in the south side men’s restroom on the 20th floor is about to run out of toilet tissue, we’ve clearly come a long way.”
Innovative Companies Create Myriad Smart Buildings Features
Stem Chief Commercial Officer Karen Butterfield, says, “Intelligent energy storage is a critical technology for the next generation of smart buildings. Not having to purchase or generate electricity at the exact moment it is needed provides an exciting array of opportunities for building owners and operators, allowing them to protect against rising costs, utilize more renewable energy, enable disruption-free demand response participation, and automatically adjust their consumption of grid power based on real-time costs.” Pictured: Stem’s Power Scope software. Courtesy of Stem.
Commercial and industrial customers want more control over peak power. What they haven’t had is a broad spectrum of products and services that let them manage it effectively or participate in demand response programs. They’ve been stuck,” said Pete Malcolm, CEO and president of Encycle. “Encycle and Ayla remove the roadblocks in a way that will benefit end-users, manufacturers, communities and even utilities. Soon, every piece of equipment you own will contribute to your energy strategy.” “Peak power is a particularly urgent problem: over 20 percent to 50 percent of an industrial customer’s utility bill can come from peak power use. Electrical loads inaccessible today to remote control and monitoring will become increasingly accessible over the next five years. Navigant Research estimates that the number of commercial and industrial sites capable of linking to demand response programs worldwide will grow from 92,000 to more than one million by 2023 while available capacity will grow from 26.8 GW to 132.3 GW.” (Continued on page 8)
8 California Buildings News • January/February 2016
Smarter Buildings (Continued from page 7)
Fielder Hiss, vice president of marketing and product management at EnerNOC says, “When commercial real estate firms use energy intelligence software to gain visibility into realtime energy usage and cost data, tenants benefit from the assurance that their space is operating at peak efficiency and occupant comfort. In part because of this enhanced monitoring, intelligent buildings are more likely to achieve environmental marks of distinction, such as higher ENERGY STAR scores or LEED certification. More efficient and environmentally friendly spaces benefit tenant bottom lines and brand equity, including tenants’ ability to attract employees to desirable work spaces.”
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Eric Lind, vice president, global specifications at Lutron Electronics Co., Inc., says, “Wireless lighting control solutions, as part of a lighting retrofit, help ensure energy-savings while accommodating personal lighting preferences. Strategies like individual fixture control, occupancy sensing, and daylight harvesting save energy and create a flexible space that easily adapts to shifting space needs. Flexibility is especially important in today’s open-office and education environments, where the physical layout is designed for easy adjustment and mobility, and the lighting should be just as obliging.” Shown above: Human-centric lighting design helps to improve occupancy comfort and productivity. Photo credit: Lutron Electronics.
Alex Alzugaray, office sector lead at Energy Solutions, says, “Modern building control technologies are expanding energy management capabilities and providing multiple benefits. Especially for properties that have complex operations, mixed use spaces, or multiple buildings, control systems can optimize efficiency and minimize demand charges every day while participating in occasional demand response events. Examples include: wireless HVAC thermostats that add zone level control to facilities at lower cost than traditional wired solution, rooftop unit controllers that coordinate the operation of packaged HVAC equipment to limit demand, and upgraded energy management systems that automatically precool the building ahead of an event. Enhancing a property’s controls and adding automation make it easier for buildings to participate in demand response while minimizing impact to occupant comfort.” That’s just some of the things smart buildings can do…now. (Continued next page)
9 California Buildings News • January/February 2016
“Smart” Building Benefits Are Much Greater Than Fuel Savings Smart buildings technology just means energy savings for many people. And the savings can be impressive. (An accompanying article on page 22 will detail some energy-savings tips from experts.) But smart buildings mean much more than energy efficiency, and, in fact, can have a much bigger financial impact on companies that are savvy enough to realize that intelligently designed and operated buildings can actually be a strategic asset to any type of business or organization— not just a real estate cost. The biggest asset for most companies today is people. The better their people, the better their company. Where and how do the best people want to work? Many companies — especially in California — are beginning to take that question seriously. Can workplaces be recruitment tools? You bet your bike rooms and cafeterias…and your employee showers and gyms and proximity to mass transit and outdoor social spaces. But it’s more than that. The great productivity squeeze that crunched hard during the Great Recession means that employees want all the tools they can get that make them more productive. They’re OK handling more work and given more creative responsibilities, if their workplace environments encourage and support their efforts. That means better building design — interior and exterior. Tom Zaban, Reliable Controls’ executive vice president, says, “Our headquarters annex is LEED Platinum certified and operates at about 57 kw/m2 per annum. It is a very comfortable and pleasant place to work. When staff enter the building their work space temperature
and lighting adjust automatically. We use the myControl app on our iOS or Android devices to adjust our space temperature, occupancy, lighting level and exterior sunshades.”
(Continued on page 10)
10 California Buildings News • January/February 2016
Smarter Buildings (Continued from page 9) “Digital buildings” are the next generation of “smart/ intelligent buildings” because they use data to transform the human experience in the built environment. Whereas smart/intelligent buildings were transformative because they made better use of data within building systems — such as lighting, heating, and cooling (HVAC) systems — digital buildings integrate building systems with user applications,” says Associate Principal David Wilts of Arup, one of the world’s leading engineering companies that designs and installs smart buildings systems. “For example, in a digital building, building systems are connected to email to help monitor alarms and notifications; to calendars for automation and scheduling signage; and to facility management systems for ticketing and asset tracking. Since data is leveraged and exchanged between building systems and individuals, digital buildings make operations more efficient, save time, increase space utilization dynamically, and remove inconveniences; not to mention saving energy.”
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“IBM offers a wide range of Internet of Things (IoT) solutions for smarter buildings, including TRIRIGA real estate and facilities management and IBM Building Management Center,” says Pete Karns, vice president, IBM Watson Internet of Things. “Using the IBM Watson IoT Cloud Platform, the platform and other IBM solutions ingest data from a wide variety of sources inside a building, including sensors, meters and lighting, and also new sources such as weather and people presence, to help building managers act on data to enable smarter buildings. With IBM cognitive analytics and presence detection, an organization could determine the actual usage of permanent and reserved space, identify the most- and least-used space and implement facilities planning projects to increase space utilization and reduce space and energy cost per person.” The Internet of Things (IoT) is used to improve facility value in numerous ways, says Peter Dickinson, CTO of BuildingIQ. “Facility value is inextricably linked to high levels of occupancy within a well maintained asset. A range of IoT solutions are now beginning to actively address these two key areas. Engaging with occupants to provide additional services, feedback and control will lead to enhanced comfort and productivity. Invariably this can lead to extensions of leases within the building and subsequent increases in facility value.
“Buildings that continue to build their IQ through smart building technologies will have tenants that are comfortable, engaged and focused on their goals. The value of this cannot be understated.” — Peter Dickinson, BuildingIQ, LLC
“With regard to the facility’s many assets, IoT solutions will provide enhanced visibility and manageability so as to ensure those assets perform at maximum value. Whether the IoT solutions ensure maximum efficiency, lifespan, uptime, security or combinations thereof, the value of the overall asset will be increased. “It is also important to note that simply streamlining the operation of a facility so that it ‘just works’ and is therefore transparent to the core operation of the businesses within a facility can have tremendous positive impact on value. (Continued on page 36)
12 California Buildings News • January/February 2016
TISE Showcases Innovative Flooring, Surfaces Products Innovative flooring products and those used for other building surfaces were abundant at this year’s The International Surface Event (TISE) in Las Vegas. They included new and natural materials, designs, cleaning systems, installation and management software, equipment and many other products and services required for building surfaces. For instance, architects and interior decorators will have an expanded design palette thanks to Kolay Flooring International’s highly adaptable vinyl and other materials on which you can project any image you choose, simulating wood, stone, natural scenes or any artistic inspiration on walls, floors or ceilings. “Kolay’s Dura-Wear decorative wall protection system is the newest and most innovative product in the market today. Dura-Wear is the only seamless interlocking system that coordinates the flooring, walls, and ceiling tiles. Dura-Wear is the durable alternative to traditional wallpaper with unlimited design options,” says Kolay Vice President Delia Chamberlain at the City of Industry-based firm. Correct flooring maintenance is challenging, requiring the most skilled professionals using the latest methods, products and equipment when cleaning all forms of
flooring, including high-end materials. “From retail to corporate facilities, the use of timeless materials like concrete, natural stone, and porcelain tile has become an increasingly popular choice across all market segments. However, one of the biggest mistakes facility managers make is the assumption that hard surfaces are low maintenance. The truth is, some of the most durable surfaces on earth still need regular maintenance and occasional restoration to preserve permanently. That’s where SOLID comes in,” says CFS Director of Sales & Marketing Tim O’Sullivan. CFS’ SOLID has over 35 years of experience in stone, metal, and wood maintenance and restoration. It uses innovative processes for concrete polishing and maintenance and has developed the most sophisticated processes for expertly managing accounts from local to global.”
Shown above: Terrace features Stone Attache Consulate product line from Daltile. Photo courtesy of Daltile.
13 California Buildings News • January/February 2016
Product Gallery from TISE DuChâteau unveiled 13 engineered hardwood floors from The Atelier Series. “These new editions offer a variety of surface treatments that include hand-distressed techniques that give a new depth to a hardwood floor that designers and architects desire in a design space,” says Tianna Thomason, social brand strategist. “Keeping with the long-standing European tradition, these editions are finished by hand with hard-wax-oil for a lasting protection and unparalleled elegance. Each edition varies with finish, texture and treatment to deliver a series that brings a sense of nature to an interior.” (Atelier Series installation at right. Photo courtesy of DuChâteau.)
MoldingsOnline has created a line of moldings that effortlessly finishes the many thicknesses of wall paneling on the market. This new line offers solutions for your chair rails, inside and outside corners and two wall base height options—everything you need to put the finishing touches on all of your wall paneling projects. Also, finding a stair nose that fits your flooring can sometimes be a daunting task. This design was originally created for LVT/LVP but is now available in a mini adjustable stair nose wrapped in cork. Available in classic, rustic and lineal, it can be adjusted to accommodate your client’s project for a flush look. (Shown at left: the company’s cork mini nose stair. Photo courtesy of MoldingsOnline.)
“Brick-look tile collections were introduced for all three of our brands—American Olean, Marazzi and Daltile—exhibiting at TISE. From floor to wall, the variety of hues, textures and patterns makes it possible to create a unique and realistic urban industrial, historic, or contemporary look for any setting,” says April Wilson, Director, Brand Marketing, Dal-Tile Corporation. (Shown at right: Daltile Stone Attache Consulate collection installed in an office interior. Photo courtesy of Daltile.) (Continued on page 34)
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California CRE Forecast (Continued from page 4) business models. Whereas tenants that signed a lease five years ago are seeing a 50% increase in their new rate, the search for space is leading to either more in less space or looking to the outlying markets such as Oakland, Walnut Creek and Sacramento. As interest rates are concerned, a minimal upward bump shouldn’t have a huge impact on the market, in that the institutional minded investors have built in higher rates into their exit strategies. Cap rates should stay low as long as money is available to lend at a reasonable rate. What I do see changing in 2016 is more creativity of existing real estate uses. With the transportation challenges,
re-purposing real estate can help meet some of the supply and demand challenges for multi-family or health care use. So back to my original question, what inning are we in? I’m hearing a similar feeling on the street that nothing too dramatic will occur in 2016. Top office rents may flatten a bit and some retailers may be closing their shops. But, demand for commercial real estate will continue with cap rate adjustments based on tenant creditworthiness and their modified business plans. All this is predicated on the greater macro world not imploding upon itself. That said, I’m going to say that we are in the top of the 9th inning…with possible extra innings. Happy New Year!
Ring is a commercial real estate veteran who has led many industry organizations, such as the Building Owners and Managers Association of San Francisco and the Institute for Real Estate Management-San Francisco in California. He can be reached at email@example.com
16 California Buildings News • January/February 2016
Windows & Glass Innovations Offer New Options R&D Breakthroughs Create An Array of New Offerings Recent breakthroughs in windows and glass technology have given architects, contractors, building engineers and others new tools to make buildings more sustainable as well as more aesthetically appealing. Here are a few examples.
Above: Interior of ARTIC project. Photo credit: Bess Adler, Thornton Tomasetti. Top photo credit: Goettingen/ Getty Images.
“There are dozens of window films to choose from that each offer different appearance, energy performance and price. Films must be carefully matched to the type of glass involved and most often the customers’ final selection is based on a balance of energy performance and aesthetics. We have been successful with a patent-protected film that delivers year-round benefits because it can reduce cooling energy in the summer, and heating energy in the colder months,” says Richard M. Almini, president and CEO of Legacy Mechanical & Energy Services, Inc. Windows are responsible for more than 25% of the heat transfer in structures. That astonishing fact— thanks to Camille El-Chidiac, CEO of DryWired—raises a number of questions and some interesting answers.
17 California Buildings News • January/February 2016
DryWired’s Liquid Nanotint presents a non-invasive and cost-effective alternative to the installation of new windows capable of delivering year-round energy savings in any type of climate. With a lifespan of more than 10 years, the coating provides total protection from the sun’s harmful UV rays and greatly reduces infrared heat transfer without compromising visible light transmission—effectively keeping indoor environments cooler in summer and preventing heat loss in the winter. Nanotint provides 100% protection from UV, up to 95% protection from IR while allowing approximately 70% VLT. Nanotint Clear provides 100% protection from UV, 80-85% protection from IR while maintaining approximately 90% VLT. Applied like a paint, Liquid Nanotint provides a non-invasive and cost-effective alternative to costly double-pane windows while providing the same type of energy savings. The roll-on application makes it the practical choice for retrofitting existing inefficient glass without having to spend money on new energy-efficient windows. This nanotechnology-based window insulation that delivers year-round energy savings in any type of climate is an example of how windows can play a major role in better buildings operation. There are many others, thanks to the innovations of numerous companies. Designed for today’s stringent energy codes, Tubelite Inc. has introduced a high-performance thermal curtainwall system for medium- and lowrise commercial buildings. Combining aluminum framing, dual thermal strut and high-performance insulated glass, its 400TU Series dual-glazed achieves industry-leading U-Factors of 0.30 for thermal transmittance and a frame condensation resistance factor (CRFf) of 81. Thoroughly tested by an independent laboratory, Tubelite’s curtainwall demonstrated that it meets or exceeds ASTM and AAMA industry standards
for air, water, structural, thermal, acoustical and seismic performance. The 400TU Series curtainwall’s enhanced thermal break is located in the tongue area of the back member, and the insulated glass is positioned to
(ARTIC), a 67,000-square-foot, $185 million transit hub recently opened features Wausau Window and Wall Systems’ SuperWall™ systems that support the award-winning project’s goals for connectivity and transparen-
the system’s exterior for enhanced resistance to rainwater. In addition to thermal performance, this curtainwall system is tested to meet acoustical performance ratings for Sound Transmission Class (STC) 38 and Outdoor-Indoor Transmission Class (OITC) 32. Assembled using screw spline or clip joinery, 400TU Series can be specified with either an aluminum or polyamide pressure plate, and as a stick-built system or shop-assembled into “ladders” for field glazing. Verticals can be steel-reinforced for strong windloads. The system’s 6-, 7.5- and 10-inch system depths can accommodate glass or panels of 1- to 1.75-inches thick, and easily integrates with Tubelite’s Therml=Block® entrance systems. The new Anaheim Regional Transportation Intermodal Center
cy, while meeting seismic performance requirements and contributing to the project’s LEED® Platinum certification. Owned and built by the City of Anaheim, HOK envisioned ARTIC as a three-story structure with a unique parabolic form to give the long-span, gridshell structure a welcoming space with open circulation and a light-filled atrium. Wausau’s high-performance SuperWall systems can support LEED criteria in multiple categories such as indoor environmental quality, materials and resources, and energy and atmosphere. Its insulating glass with spectrally selective, low-e coatings provides solar heat gain control in conjunction with color-neutral reflection and transmission. Bendheim has introduced its Glamir™ architectural glass collection, providing design professionals several original mirror colors to brilliantly
Above: Exterior of ARTIC project. Photo credit: Bess Adler, Thornton Tomasetti.
(Continued on page 37)
18 California Buildings News • January/February 2016
Mark Your Calendar for These 2016 Events Networking and Educational Events Attract California Industry Leaders
Ever get that sinking feeling that you just discovered an industry event that’s important to your business occurred yesterday…and you either didn’t know about it or forgot about it? We’ve all been there, so we decided to curtain-raise some of the many significant events occurring in California this year that are useful to people who design and operate buildings— or sell goods and services to those who do. International Events There are several world-class buildings-topic conferences happening this year in California. The National Apartment Association’s Education Conference and Exposition will be in San Francisco June 15-18. The International Facility Management Association’s “World Workplace” conference will be in San Diego Oct. 5-7. It is chock full of useful educational seminars, an always interesting expo and many networking experiences. Link: http://worldworkplace.ifma.org/ Unfortunately for many, the extensive and also very popular U.S. Green Buildings Council’s Greenbuild Conference and Expo will be in Los Angeles on the same dates, Oct. 5.7, posing a challenge for many people in the industry who would normally attend both. Larger firms may elect to staff both, since Greenbuild has become the world’s leading event about sustainable buildings practices. Link: http://www.greenbuildexpo.com/ And, in further indication that California is a magnet for buildings industry conferences, the Institute for Real Estate Management is holding its Fall Leadership Conference in San Diego Nov. 18-22. It will draw commercial real estate leaders from throughout the world. In nearby Las Vegas, other major national buildings shows will also occur: the National Fire Protection Association’s annual conference June 13-16 and Building Operating Management’s NFMT Conference on Nov. 1-2.
Statewide/Regional Events The California Apartment Association’s CAA Connect Rental Housing Conference & Expo will be held in Santa Clara April 5. It is the go-to event for apartment professionals and companies providing products and services to that important high-growth sector. Link: http://caanet.org/2016-connect-expo-attendee-information/ The Pacific Coast Builders Conference will be held in San Francisco June 22-23. Link: http://www.pcbc.com/register-plan/ answers. It features an extensive array of products and services needed by the AEC industry.
Local Area Events Three notable conferences and expos that attract facility engineers and buildings product and service vendors are the three Facilities Expos: March 16-17 in Modesto, May 18-19 in Anaheim and Sept. 21-22 in Santa Clara. They are particularly valuable to building operators who work in the unique California environment, with its special laws and regulations. BOMA San Francisco’s TOBY Awards—held in concert with BOMA Oakland/East Bay—highlights best building operational practices for some of the world’s most iconic structures at its Feb. 11 event in San Francisco. Click: www.bomasf.org BOMA SF—along with many other buildings organizations like BOMA Oakland/East Bay, IREM San Francisco Bay Area and NAIOP San Francisco—will host its CREATE event whose focus is to expand and strengthen the commercial real estate workforce. That will be held May 19 in San Francisco. Click: www.bomasf.org The Building Owners and Managers Association of Silicon Valley annually holds one of the better attended trade shows in Northern California in Santa Clara April 7. Link: Associates Night Trade Show. BOMA Silicon Valley also hosts its popular
19 California Buildings News • January/February 2016
The Outstanding Building of the Year (TOBY) luncheon Oct. 21. And speaking of TOBY Awards ceremonies, BOMA Greater Los Angeles will host one Oct. 6, and it’s usually almost as glamorous as the Academy Awards, with women and men dressed formally, great entertainment and recognition of its world-class buildings. Also mark your calendar for BOMA/GLA’s widely attended and substantive Real Assets program March 11, and its Spring Fling, May 19, a networking must. Click: www.bomagla.org IFMA-Silicon Valley rarely hosts huge events, but instead produces more than a dozen substantive and popular smaller programs on various industry issues, mostly in the evenings. Check its calendar occasionally at www. ifmasv.org. IREM Orange County produces one Southern California’s most widely appreciated annual conferences and trade shows: “Invest in Success” May 11. Click: http://iremocconference.org/ One of of California’s best attended architectural events is the American Institute of Architects San Francisco’s Design Awards Ceremony & Gala April 20. USGBC-Los Angeles’ Municipal Green Building Conference and Expo returns on April 21, attracting Southern California sustainability leaders. Click: www. usgbc-la-org. And USGBC Northern California draws top sustainability people from the area for its successful Greener Building Conference in San Leandro June 16. Both events also draw some national attention. Northern California’s CoreNet’s signature event each year is its 575-person-plus Corporate Real Estate Awards Dinner that usually takes place in November. For updates, click: http://nocal.corenetglobal.org/ The very active Association for Facilities Engineers Silicon Valley chapter is for its 54th year holding its Day With A Facilities Professional” event March 4 in Santa Clara in which it will host local engineering students for a day of job shadowing. More information will be posted on its website: http://www.afe39.org/ The Society for Marketing Professional Services San Francisco chapter (along with many other buildings’ groups) annually hosts the very popular “Make the Connection” event in San Francisco July 21. It brings together professionals from the architectural, construction, engineering, facility management, green building, interior design and marketing communities in Northern California for an evening of conversation and cocktails. And, if marketing is important to your AEC firm, plan on attending SMPS’s annual Marketing Bootcamp on April 15 in San Francisco. For both of the above SMPS events, click: http://smpssf.org/index.php
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20 California Buildings News • January/February 2016
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22 California Buildings News • January/February 2016
Want To Slash Building Energy Costs? Sustainability Experts, Manufacturers, With buildings using more than 40% of global energy, even minor conservation measures can produce major results in costs—both financial and to the planet. California building owners and operators are at the forefront in achieving fuel conservation. And the results are rewarding. Here are some useful suggestions for how you can better conserve energy.
ara Neff, vice president, sustainability, at green leader Kilroy Realty Corporation, says, “Giving building operators high-level, actionable data on their buildings, and then rewarding measured improvements in energy performance, is one of the best ways to increase building energy efficiency. Capital projects, such as lighting retrofits and HVAC upgrades, are important, but empowering operators both with appropriate technology and then also organizational support makes the most dramatic changes. We have had success providing operators with easy-to-read load profile information, which can be provided via cloud-based software that doesn’t require an onsite install. This software is cost effective and easy to deploy from a legal/insurance standpoint, and makes a big impact.” Image: Getty Images.
23 California Buildings News • January/February 2016
Utility Execs & Others Have Solutions Demand response “deserves another look by property teams throughout the state,” says Fred Yoo, automated DR program manager at PG&E. “As California increases the amount of renewable energy, the associated supply fluctuations in the electric system need to be managed. Demand response is a solution that most commercial facilities can adopt. This rationale has made demand response a focus for regulators. Changes in the building code also require equipment that can facilitate it. Once installed, building teams can make the most of their new building control systems by integrating automated demand response. Rate structures and utility programs for demand response generate potential ongoing value streams for buildings that adopt it,” Companies like Mitsubishi Electric are hard at work on R&D to achieve energy savings. “The demand for energy efficient building is higher than ever before. In terms of HVAC, there’s no better option than Variable Refrigerant Flow (VRF). VRF zoning technology is the smarter way to cool and heat buildings, consistently using 30 to 40 percent less energy than conventional HVAC systems,” says Kevin Miskewicz, senior manager, commercial marketing at Mitsubishi Electric. For instance, “Mitsubishi Electric’s INVERTER-driven compressors vary motor speed to match space load requirements, while delivering precise comfort to any particular zone. VRF technology also offers the ability to acquire points toward LEED® certification in the Energy & Atmosphere and Indoor Environmental Quality categories..” (Continued on page 24)
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24 California Buildings News • January/February 2016
Energy Costs (Continued from page 23)
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Santa Monica-based CodeGreen Solutions Director Jessica Handy says, “My favorite energy saving tip? … lead by example. We all have admirers; people who look up to us, support us, and who try to emulate us: employees, peers, friends, children, etc. If you practice energy saving measures, your admirers will too. If you recycle, your family will also. If you unplug chargers for your electronics such as cell phones and laptops once they’re charged, your staff will notice and do so too. If you turn out the lights every time you leave the room, your peers will catch on. If you realize that you make a difference, the people around you will too! “Consolidate! Plug all of your chargers into one power strip and charge everything at once: cell phone, laptop, tablet, etc. When the devices are fully charged simply turn off the power strip. This way you are not charging devices that do not need to be charged, and the chargers are not wasting power when not in use. “This may sound counter intuitive, but if you are a property manager, you want to encourage your tenants to complain. Tenants and occupants should be asked to let you know if they feel a draft, or if there is a drip from the pantry sink faucet, or if a light connected to an occupancy sensor doesn’t turn off, or if it is too hot or too cold. Consider rewarding the ‘whiners’ in a fun way to thank them for helping to save energy at the building. “Make it real! Business owners should be forthcoming with employees and show them how much the energy costs are per year for the business and how each monitor, computer and other energy using devices contributes to the cost of business. Ask employees to share energy saving tips and incentivize energy reduction by rewarding the employees with something paid for with the money saved through their efforts. And allow employees to borrow an electricity monitor for use at home so they may save energy and money at home as well,” she concludes. Schneider Electric’s Vice President Orlando Perez, says “With buildings accounting for 42 percent of the world’s energy consumption, it’s more critical than ever to modernize the way facilities and enterprises operate. We are in the early stages of a digital revolution in the way buildings are run, where IT and facilities management work in unison for maximum efficiency. At Schneider Electric, IT-OT convergence is the foundation for delivering better control over energy and facility operating costs. Schneider Electric’s building management solutions connect information and people, providing new insight into how buildings operate so facility
25 California Buildings News • January/February 2016
managers can make good decisions to correct and improve conditions. The impact is fewer occupant complaints, lower maintenance costs and reduced energy bills.” Crucial to energy savings are building automation and controls companies. That market is expected to reach $55.48 billion at an annual growth rate 9.04% by 2020. “Regulatory and governmental agency initiatives are currently on the rise as a result of the increasing cost-saving urge prevalent among the building owners. Thus, the demand for building automation has been witnessing a sharp growth. This is why HVAC control is a key market segment for our company,” says Ed Joe, North American Marketing Director for NOARK Electric, a global company headquartered in California selling power distribution and control products. According to Joe, the market is being driven by commercial, and institutional construction and retrofit projects. “The best incentive is always a quick return on investment. By upgrading equipment and systems that pay back in energy savings, and reduce costs, there is a bottom line impact. An investment in HVAC and controls is an easy investment decision at that point. Do it now!” Whole Foods Market is a sustainability leader, but with the launch of a new effort with the U.S. Department of Energy in February, they’re going to be taking energy cues from an unusual place —the hotel industry. It’s all part of a new DOE experiment called the Better Buildings Swap— two companies from different sectors swap energy teams in order to uncover new energy-efficiency strategies and further accelerate their own companies’ energy-efficiency goals. The program mirrors the goal for the DOE program the Better Buildings Challenge (now in its fourth year): help companies cut energy use and share strategies with their peers. Over a three-day period in December, the teams took the reins at each other’s properties to assess and identify energy-saving opportunities. DOE’s Better Buildings Challenge director Maria Vargas was on hand to offer advice, and the entire Swap experience was captured on video. The teams could not be more different. Grocery and hospitality industries; large and small properties; suits and jeans. Starting Feb. 10, DOE will be releasing a series of episodic and technical videos about the swap, sharing lessons learned with energy-efficiency professionals at major institutions and organizations. Topics relevant to the grocery industry include employee engagement, refrigeration, lighting and measurement. “Modularity is the wave of the future, when it comes to building heating,” says Doug MacMaster, vice president of U.S. operations, Miura America Company. “Many owners are now installing several smaller modular steam boilers, combined (Continued on page 38)
26 California Buildings News • January/February 2016
Are You Investing Wisely In An Association? Many Companies Leverage Such Groups to Help Them Run Their Business One of the top executives of a leading U.S. building in the Kingsley Index. They achieve $1.04 more in revenue service company with membership in more than a dozen than the average LEED-certified building. BOMA 360 buildlocal Building Owners and Managers Associations around the ings also receive higher tenant satisfaction scores in all 54 country recently remarked to a California Buildings News Kingsley quantitative rating areas including property manageeditor, “We built our company through BOMA—but don’t ment, leasing, maintenance, security and property features. quote me.” Why not? Because he said his company further Although its rarely publicized, these industry and profesexpanded its business with its involvement in IFMA and sional groups also serve vitally important human resource CoreNet chapters. The publicity shy exec and his team can functions. They help people get jobs and form rich hiring also be seen at single-industry trade pools for companies looking for shows around the country, like ISSA/ talent. The commercial real estate INTERCLEAN’s national conference and buildings industry is constantly and NFMT, to name a few expos. in flux. Mergers and acquisitions, That same company — along growth and decline and technology with its major competitors — also disruptions keep the job market in sponsors numerous association turmoil. The person you come to events and advertises in trade know serving with on an associamagazines and local association tion committee may become your publications that circulate within next hire—or boss. the industry. And you can also see Associations are invaluable for managers from his firm at local golf market intelligence. At a cocktail tournaments, serving on association party, you could hear critical news committees, mentoring young the rest of the world won’t learn people, conducting seminars and about for weeks or months. That hobnobbing at social gatherings. knowledge could be very beneficial They fully invest in associations — to your company. You can also and have the revenue to show for it. learn best practices at some of the Wise companies invest in their many programs they sponsor BOMA SF Member Services Director Tory Brubaker industry and professional associations featuring industry leaders. describes association benefits to a new member. for three major reasons: networking “New technology combined for new business, educating their staff and protecting their with new expectations have elevated many facility managecompany from unwise government actions. ment (FM) professionals into strategic positions within their Groups like the International Facility Management organizations. These FM professionals turn to IFMA for the Association (IFMA), the Institute for Real Estate Manageinformation and resources they need to achieve their goals,” ment (IREM), the American Institute for Architects (AIA), says IFMA spokesman Jed Link. “IFMA built a powerful and the Association for Facilities Engineering (AFE) are global FM community to find solutions to shared problems invaluable to companies — especially new ones with expansive and then delivered those solutions to individual members ambitions and a growing staff they need help educating. Most with a variety of quality products. While specific needs vary associations have both local chapters and national offices that by facility and culture, the results are usually the same: help provide a multiplicity of services. The lessons members increased efficiency, productivity and well-being.” learn and the role models they follow can become blueprints The American Institute for Architects is the go-to home for growth and better operational understanding. for the design industry. “Through nearly 300 state and local chapters (including 22 chapter in California), the AIA Association Involvement Impacts Bottom Line advocates for public policies that promote economic vitality BOMA International, to cite one group, has tried to to nearly 88,000 members. The AIA provides members with quantify aspects of its value to members in a variety of ways. tools and resources to assist them in their careers and busiHere’s some results from its study of its own comprehensive ness as well as engaging civic and government leaders and building quality certification, known as “BOMA 360.” the public to find solutions to pressing issues facing our comBOMA 360 buildings, a study demonstrated, achieve $1.77 munities, institutions, nation and world,” says AIA’s Media more per square foot in revenue according to the BOMA Relations Director Matt Tinder. Experience Exchange Report (EER) than the average building Mark Paone, president of AIA Orange County, knows
27 California Buildings News • January/February 2016
IREM ORANGE COUNTY PRESENTS
MAY 11, 2016 | HYATT REGENCY ORANGE COUNTY “Invest in Success” is IREM Orange County’s annual conference and trade show that serves property managers from both residential and commercial sectors. The conference offers timely and interactive forums on leadership, trends and issues targeted specifically for today’s dynamic market. The popular trade show provides the opportunity to stay current with new products and services while networking with current and potential clients. Keynote speaker Carey Lohrenz, the Navy’s first female F-14 fighter pilot, will share her top lessons in leadership by equipping leaders of all kinds with the tools to bring a team to peak performance.
To purchase a booth or learn about our sponsorship opportunities, please visit www.IREMOCconference.org, or contact the IREM OC Chapter office at (714) 258-8377.
from personal experience how valuable AIA can be. “The most common question we get from people contemplating joining the AIA is what can the AIA do for me? The AIA operates at three levels: national, state and local. The AIA benefits its members both directly and indirectly. The AIA benefits architects directly through the sharing of information and providing access to the largest body of information on the practice of architecture to its members. The AIA benefits architects indirectly through advocating at both the state and national levels on issues of vital importance to the profession. This advocacy is responsible for the passage of bills that benefit and protect architects. In addition, the AIA lobbies against the passage of bills that would damage the profession.” Property management executive Anne M. Sparks, with NextPlay LLC in Pleasanton, is president of the Building Owners and Managers Association of Oakland/East Bay. She regularly takes time from her corporate responsibilities because she sees her involvement in BOMA to be directly related to her business’ success. “I have found value in BOMA both as a large company employee and a small business owner. There is only so much knowledge a person can derive from books. I have found that personal and professional growth is best achieved through collaboration and networking which is why I encourage everyone at Next Play to be involved with BOMA. “While BOMA takes time away from the office and daily routines, it more importantly opens the door to more efficient ways to do business, save money and be ahead of the curve. I recently chatted with a The Outstanding Buildings of the
Year (TOBY) judge who said she is planning to adopt many ideas she saw during her tours of other principal buildings. Managers need to be trained by their company to provide their company’s style of business. However, to be relevant you need to look beyond the inner workings of your company and adapt things that other companies are doing.” Product and service-centric groups are also valuable associations that complement membership in more general industry organizations. For instance, the National Fire Protection Association provides invaluable services to every type of structure. “NFPA is the leading information and knowledge resource on fire, electrical and related hazards with 60,000+ members globally. Approximately 30% of our 4,500 California members have been members for 10+ years and 50% have been members for 5+ years,” says NFPA’s Lorraine Carli, Vice President of Outreach and Advocacy. “An NFPA membership provides members with one-onone help with their technical standards questions on our 300+ codes and standards; a subscription to NFPA Journal® and bi-monthly newsletters; voting privileges; and special access to the ‘Members Only’ section on NFPA’s new online community, NFPA XchangeTM.”
Not All Benefit From Association Memberships You often hear companies complain that they joined a local association, but it didn’t produce sales, so they dropped out—usually after one year. In most cases, they failed to (Continued on page 28)
28 California Buildings News • January/February 2016
LA “BETTER BUILDINGS CHALLENGE” Winners Named The Los Angeles Better Buildings Challenge (LABBC) 2nd Annual Innovation Awards, held on January 27, 2016 at The California Endowment, recognized property owners for their outstanding work toward the program’s goal to reduce energy and water consumption 20 percent by 2020. Over 150 real estate, energy, and water professionals attended the event, where Keynote Speaker and Chief Sustainability Officer for the City Los Angeles, Matt Petersen, discussed the work of the LABBC and the nominated Partners in the context of the objectives outlined in Mayor Garcetti’s Sustainable City Pln. Honored the achievements of LABBC Partners in four categories: • Energy Efficiency Project of the Year: Presented by Dan Rendler of SoCalGas to the Intercontinental Hotel, Century City, which achieved annual energy savings of 22 percent, and installed informational kiosks in the lobby to educate hotel guests on the hotel's sustainability efforts. • Water Efficiency Project of the Year: Awarded to Century Park by Bill McDonnell of the Metropolitan Water District of Southern California for a groundwater reclamation project to supply water for landscape irrigation, yielding an annual savings of 2.9 million gallons of potable water—the first project of its kind in Los Angeles. • Overall Project of the Year: The Los Angeles Department of Water and Power’s Lucia Alvelais and Gretchen Hardison presented the award to Anthem Blue Cross, Woodland Hills, where the healthcare provider converted 12.7 acres of turf to drought-resistant landscaping, saving 12 million gallons of water annually. • Portfolio of the Year: The prestigious Portfolio of the Year Award was presented to The Housing Authority of the City of Los Angeles by Carmela Ma of CCIM–Los Angeles, for reducing water consumption 27 percent in over 1,600 apartments by installing low-flow showerheads, faucets and toilets.
Association Investment (Continued from page 27) benefit from the association membership because they assumed that simply joining, getting their name in a directory and sending their staff to a few events would produce a gush of new business. It takes more involvement than that, says veteran Member Services Director Tory Brubaker of BOMA San Francisco. She says principal membership (building owners and managers) is pretty stable, but sees some membership churning among companies that provide services and products to buildings. “Membership in an association is an investment in your business and your employees’ professional development. It pays great dividends when properly cared for. Often people make the mistake of thinking ‘If I join, business will come to me,’ but rather they should be asking ‘How can I deepen my participation to gain greater awareness for me and my brand?’. “BOMA San Francisco is the gateway to the local commercial real estate industry, its decision makers, its up-and-comers, and the century-strong network of committed industry players. The possibility of valuable, long-term business and personal relationships is endless and far surpasses the annual dues,” says Brubaker. Of course, not every local association is created equally, often because of deficiencies in the professional level of paid staff, lack of spirited voluntary efforts or due to uniquely challenging geographic issues. California companies are lucky, however, since many of its local groups have attained national and even international recognition for the quality of their programs and member involvement. Bottom line: The value of your association membership depends entirely upon the extent of your own participation in all it has to offer. If it’s not working for you, it may be because you’re not working hard enough. n
29 California Buildings News • January/February 2016
Berkeley Balcony Tragedy: More Building Inspections Aren’t Enough By Tyler P. Berding, J.D., Ph.D. five days a week and watched them put together every In the early morning of waterproof assembly, mistakes would still occur. June 16, 2015, in Berkeley, Probably the joint where the balcony surface abutted California, the lives of the wall of the building or the flashing intended to protect six young people were the wood beams from moisture allowed water to enter the snuffed out because the assembly and rot the beams. The experts who examined balcony they were standthe building plans have said that the architect likely ing on collapsed. Building provided proper waterproofing details, so the question is failures happen all the why did it fail? time, but the press and government largely ignore It may or may not have been an issue of carelessness or them because nobody employee training or incentives to follow the drawings and died. With these six tragic build it accordingly. Many years ago the building trades deaths (and serious injury utilized an apprentice system whereby a master tradesman to seven others) the press supervised the training of new recruits until they were is now all over it. We have skilled at their craft. Craftsmanship was a source of personal daily reports of experts opining on the cause (rot caused by pride and well-trained workers were valued and given the moisture intrusion into the wood latitude to build a proper building. beams supporting the balcony.) But we are not training enough We have interviews with Berkeley “But we are not training enough craftsmen. craftsmen. The enormous demand city officials (there were numerous for housing in recent decades has The enormous demand for housing in recent outdistanced the supply of trained inspections of this eight-year old building but none of the labor and the result is buildings decades has outdistanced the supply of waterproofing.) The opinions trained labor and the result is buildings that that bristle with mistakes. Couple page trumpets that inspections that with “value engineering” bristle with mistakes. Couple that with must increase to prevent another to reduce costs by employing tragic event. Yes there should be materials that do not survive “value engineering” to reduce costs by more inspections by municipaliunless constructed in a very employing materials that do not survive ties, and building owners, but it precise manner and you have a unless constructed in a very precise manner recipe for disaster. Lawyers and won’t be enough. For 40 years I have litigated not building inspectors have and you have a recipe for disaster.” cases involving design and conbecome the quality control, struction errors. My firm has unfortunately well after the fact. represented the owners of older The forensic inspections we buildings where rotted framing is commonplace but conduct on clients’ buildings frequently reveal instances of unknown until it gets so bad it threatens building compowork done improperly and contrary to the designer’s intennents and human safety. We have represented the owners tions. If we can find these defects, why can’t the original of new buildings like the one in Berkeley where water builders? Carelessness could be one excuse, but a lack of has seeped into wall cavities and induced rot and mold training adequate to recognize poor quality construction, because the waterproofing was not installed properly, and coupled with a willingness to accept cheap and expeditious many projects where the installation of waterproofing was materials and methods to meet demand and cost controls defective but had not yet led to a catastrophic failure. The are more likely. Whatever it is, it has resulted in failures of local municipality had specifically inspected none of these building components some of which pose hazards to life instances of failed waterproofing. Why? Because even if and safety. (Continued on page 33) the inspector stood over the workmen eight hours a day,
30 California Buildings News • January/February 2016
Association News BOMA California Weekly reports: “Senator Patricia Bates’ (R-Laguna Niguel) bill to address the ‘change of ownership’ issue passed the Senate Governance and Finance Committee on a 6-0 vote. Senate Bill 259 would correct an outdated interpretation of property change of ownership that has been the long running debate around commercial property and Proposition 13. Business and taxpayer groups (including commercial real estate groups) were joined by the League of Cities in supporting the measure.
Association News From Sacramento
“SB 259 would alter the definition of ‘change of ownership’ in the California Revenue and Tax Code for determining the property tax base value of commercial property. Current law allows for a property to be reassessed if a majority of the ownership interest changes hands. SB 259 would require any property to be reassessed if 90 percent of the ownership interest changes hands within any three-year period.
California Builder News Salsbury Industries
Runs in: Jan/Feb, May/Jun, Sep/Oct
“Rex Hime, President & CEO of the California Business Properties Association stated, ‘The commercial real estate industry applauds the bi-partisan effort to fix this change of ownership issue. Our industry has sought for years to correct abuses in the system and this bill closes down the issue that we have heard so much about.’ “SB 259 now goes to the Senate Appropriations Committee for its consideration. It requires a two-thirds vote of both houses of the Legislature and Governor Brown’s approval to become law. “Although this bill is the same as the ‘deal’ worked out several years ago with then Assembly member Tom Ammiano (D-San Francisco) sought to address this issue, long time split-roll proponent Lenny Golberg opposed the bill in committee. However, the various political and public employee unions that want to see split-roll tax enacted in California have begun coalescing in opposition to the bill. “SB 259 would provide that a change in ownership occurs when 90 percent of a legal entity’s ownership interests transfer in a single transaction. Bates’ bill is supported by the Howard Jarvis Taxpayers Association, the California Chamber of Commerce, the California Business Roundtable and the California Business Properties Association. A similar bill authored by former Assemblyman Tom Ammiano (D-San Francisco) earned bipartisan support in 2014 and cleared the Assembly, only to die in the Senate.” For more information about this issue and many others affecting the buildings industry in California, visit: www. bomaca.org
31 California Buildings News • January/February 2016
A Bright Year Ahead for California Hotels and Resorts By Bob Eaton Nothing stays the same…and some things never change: Commercial buildings, hotels and resorts never stay the same. Because their guests change every day, business is different every day, every week and every year, and the buildings’ look and feel needs to reflect the ebbs and flows of consumer trends. Some things never change: As any lodging enterprise appreciates, there are two components of well-being; the general economy and how your “mousetrap” stacks up today to your competition. How popular would a hotel be today with shag carpets, rotary dial phones and 14” black & white TVs? The hospitality experience needs to reflect the ever-changing services, amenities and furnishings expected by traveling consumers. Much like a Broadway theater over time, the business of operating hotels and resorts is continually and periodically “re-staging,” updating and changing the production. 2015 was a good year for hotels and resorts. Occupancy rates hit an all-time high, hotel companies worldwide went above and beyond to meet guests' demands for wellness and technological advancements, and hotels' commitment to sustainability continued to pick up steam. The hotel sector has lagged the recovery of every other commercial property type this cycle, in part because of its unique vulnerability to these general macro-economic Image credit: Tayor Hinton/Getty Images.
trends and in part because hotels are one of the more complicated assets to operate. Here’s our take on several trends that we will be watching during the coming year: Dynamic pricing: Hotels and resorts have moved much closer to the airline industry and other businesses by adopting a dynamic pricing model or “real time pricing.” This is great for leisure travel. Simply stated, it is the process of determining a hotel room’s value or price at any time in a fluid manner depending on current market conditions, day of the week, seasonal fluctuations, etc. This model has been responsible for allowing travelers to choose specific dates to minimize the room rates charged. By visiting a resort destination in the off-season, visitors can realize significant price reductions. The “price” of a hotel room in Napa can vary hundreds of dollars from a fall/harvest weekend compared to a winter visit mid-day. As more of us are mobile and virtual, we can take advantage of off-season pricing for our leisure travel. Resort areas historically ran annual occupancies in the mid-60%, but now these areas are running 80%. The good news is that resorts are smart enough to price their inventory with demand, but those prices will not be going south anytime soon. Airline pricing should be stable in 2016: As the economy drives both business and leisure travel, it directly impacts the airlines and lodging. With airfare prices expected to remain relatively steady, U.S. business travel volume is predicted to reach 502.8 million person-trips in 2016. More than one-third of millennials (who account for close to $300 billion annual spending worldwide) are estimated to be planning to take more vacations in 2016. The year ahead is sure to be dynamic. Accordingly, hotels and especially resorts will try to keep things fresh and interesting and continue to promote themselves and try to impress with creative activities, programs, amenities and experiences. Impact of the “sharing economy”: Even at a time when hotel occupancy rates are soaring in many domestic markets, disruptive forces like Airbnb and the sharing economy are forcing hospitality industry leaders to rethink the way they do business. Hotels in 2016 will cater mostly to the luxury and group market, while business and leisure (Continued on page 33)
32 California Buildings News • January/February 2016
California’s Multifamily Market Surges Into 2016 And Yet…Since Demand Far Exceeds Supply, California’s Economy Could Suffer The multifamily market in Silicon Valley, in particular, and California as a whole is robust and likely to continue to be, according to a number of speakers at the California Apartment Association’s Tri-County “Outlook 2016” conference in Palo Alto. In fact, the market is too hot, with demand for housing far in excess of supply. And that’s likely to be the case for years to come. The result could imperil California’s appeal to employees. Area local government and industry speakers said NIMBYism, the way Proposition 13 discourages municipal approvals for new apartment construction, a cumbersome approval process and staggering local fees will continue to be a burden on multifamily developers—and a serious problem for the state’ economy as a whole. Silicon Valley is experiencing a “huge housing need,” said Redwood City Councilmember Jeff Gee. San Jose Vice Mayor Rose Herrera said Apple’s planned 4 million square-foot complex in her city and an influx of other employers attracting tens of thousands of tech workers and those who support them will impose added housing pressure on the Valley’s largest municipality. Ditto Mountain View, where Councilmember Mike Kasperzak said since Google “keeps figuring ways to get more people into its buildings,” it has “put pressure on housing and transportation.” He said the influx of highly paid workers is changing what had been Mountain View’s diverse population, making it less affordable for many people to afford the escalating rents. “It’s hard to govern in boom times,” he said. Gee said urban planning becomes very difficult during these days. “Boom creates a bunch of other tensions,” said Gee, adding, “If we don’t do something soon, we will have more problems in the future.” Meantime, renters’ groups are demanding rent control and other measures that will protect them from being driven out of their apartments because rents are rising much higher than their incomes. Adding to the confusion is the fact that many workers live in one municipality and work in another, contributing to traffic gridlock and its consequent drag on the economy. There is very little cooperation among the governing districts, with some meeting their housing construction quotas and others not.
In spite of the issues, Herrera said she is “very optimistic” that all the stakeholders will convene to address the challenges.
California’s Economy Remains Vibrant In spite of housing issues, said Christopher Thornberg, a principal of Beacon Economics, “We are still in a decent growth mode, and California keeps chugging along. We are far and away driving the U.S. economy.” He poked fun at doom-and-gloom forecasters, saying “We got to get off the panic bandwagon,” since China’s economy has slowed but is still growing and oil price drops are actually helping the U.S. Stock market jitters do not resonate to throughout the economy. “The real economy is in balance,” he said. “This is not 2000 by any stretch of the imagination.” Equity Residential’s First Vice President of Investments John Hyjer said, “We are in a microcosm. We are outperforming the rest of the country” economically. His company has 3,100 units coming online or in the pipeline in California. Michael Pierce, president of Prodesse Property Group, said that demand is so robust that his company is renovating its Class B facilities to life the quality of the available stock. “(Silicon Valley) is adding jobs, jobs, jobs, but not enough housing supply.” The cost of building new complexes and the delays are discouraging, said John Eudy, executive vice president of Equity Property Trust. He said development costs have doubled since 2011. Approvals take years, with city planning activities understaffed since the last recession’s cuts in government positions. On the state government front, CAA President Tom Bannon told the conference that representing the multifamily industry—or any industry—is becoming more difficult because social media is being marshalled by consumers to more easily affect legislative outcomes. He urged members to frame their positions in ways that would have consumer appeal. CAA Senior Vice President for Public Affairs Debra Carlton said CAA is representing the industry on a host of issues ranging from rent control to checking criminal backgrounds of tenants, to bed bug removal responsibilities to domestic violence among tenants. For more information on these issues and what CAA is dong on the industry’s behalf, visit: www.caanet.org n
33 California Buildings News • January/February 2016
More Inspections (Continued from page 29) Designers are also not without fault. Choosing materials without regard to where the project will be located, failing to provide adequate details to guide the contractor, creating architectural interest at the expense of building performance, can all result in a failed building. Design errors can be caught before they are incorporated into a building but only if the contractor constructing it is trained and incentivized to recognize errors and bring them to the owner’s attention. This brings us back to the lack of skill and training. Foremen and crewmembers should have enough experience and understanding of fundamental building practices to avoid obvious errors. A joint or juncture of two materials or building components does not require exotic materials or methods to be built waterproof. This is Construction 101. When an assembly in an eight-year old building allows so much water to enter that it rots major framing members in less than ten years, someone didn’t know what they were doing. If it turns out that the design was flawed, the contractor didn’t know enough to bring that flaw to the owner’s attention. There will be a lot of finger pointing and accusations back and forth over who committed the error, but the contractor or workman charged with creating a waterproof joint or transition should have been skilled enough to recognize that what they were building would not work. Technical training in construction techniques can begin in high school or community college and we have an obligation to see it does once again. Trade unions have programs
to train their members which should be encouraged and combined with public school education programs. There is a technology gap — more jobs than we have trained people to employ. That gap doesn’t just occur in Silicon Valley. It also exists in the construction trades. You won’t find a skilled carpenter who can recognize serious errors by trolling by your local convenience store. Real craftsman have pride in what they do, are properly compensated, and are trained in programs that teach construction fundamentals, how to read drawings and apply them correctly. If avoiding dangerous errors means spending more private and public funds on technical training then it is logical that we do that. Quality construction will pay for itself in lower insurance (and legal) costs, less maintenance and repair expense, and greater safety for building occupants. The tragedy in Berkeley did not have to happen, but a lot of potential tragedies are lurking in buildings that were constructed in haste or without a sufficiently skilled workforce. When the housing market is hot and you can sell anything that you can get to market, the incentive to cut corners and get labor wherever you can find it is always there. Builders, municipalities, and state legislatures now have the wakeup call it sadly took six deaths to provide. More inspections and testing of construction are absolutely called for in both new and old buildings. But without a properly trained workforce that can avoid defective construction and build quality buildings, this won’t be the last tragedy we read about.
Berding is a founding partner at Berding & Weil LLP. He can be reached at www.berding-weil.com
California Hotels & Resorts (Continued from page 31) transient travel will migrate to sharing accommodations like Airbnb. Sharing accommodation entrepreneurs present a real threat to traditional hotels. In some markets significant percentages of Airbnb accommodations already are operated by a small number of professional managers—and are earning much higher revenue than other hosts. These are sophisticated hosts using tools like yield management, just like hotel companies. Hotels can’t wish away Airbnb, yet there is denial going on among the hotel brands and their leaders. Airbnb probably won’t be as transformative for hotels as Uber has been for the taxi industry, but it may be the next big distribution channel, competing with the online travel agents like hotels.com, priceline.com, etc. Commercial hotels and suburban office parks: With the
exception of Silicon Valley and other tech-concentrated business parks, the future of suburban office parks and their select service hotels may be less clear. As the millennials seek urban environments for work and living, the prospects for these developments may be diminishing as they cannot compete with the 24/7 life seen in many major west coast cities. The hotels and their franchised restaurants that flourish today in suburban settings may see their demand wane to the extent that some change of use may be the only way to survive. It may be that starting now and over the next 10 to 20 years, the suburban limited service hotels morph into assisted living facilities to meet the needs of the boomers now entering retirement. What always stays the same is the cyclical nature of our times and the well-being of hotels and resorts.
Eaton is president and founder of Eaton Hotel Investments of Arroyo Grande and San Francisco and an industry veteran who can be reached at www.eatonhi.com.
34 California Buildings News • January/February 2016
Flooring Innovations (Continued from page 13) Merkrete’s “non-abrasive all-in-one adhesive and grout is for glass tile installations on walls and floors. Integra Color Grout was developed especially for the installation of mosaics and glass tile of all shapes and sizes with no concerns about thin set color bleed-through because the adhesive and the grout are the same color. Merkrete grouts are formulated with our exclusive Mold ShieldTM mold prevention additive,” says. Carie Yaka, Merkrete’s marketing communications manager.
MeasureSquare’s “Windows and iOS product lines offer complete mobile/ desktop flooring estimation software solutions for industry professionals looking to advance beyond traditional pen and paper methods, providing marked improvements in efficiency and presentability through consolidating time-consuming processes and providing documentation like cut sheets and quotes,” says Ariel Fu.
QFloors offers flooring software that helps flooring businesses boost profitability and productivity, as it streamlines and manages their operations, including project management and progressive billing. QOrders is a useful new tool designed specifically for QFloors’ customers working in multi-family housing. QFloors President Chad Ogden explains it this way: “Your project manager is given a unique website they can visit to create or update orders, schedule and track jobs, specify materials, view payments, etc. Any information they enter is automatically shared with your QFloors system. It notifies you what is needed. Your client’s QOrders website and your QFloors system talk back and forth so that everyone is on the same page, and the project can be completed efficiently and without any communication gaps. It facilitates easier and better communication between you (the flooring company) and your multi-family housing client.” (QFloor’s software shown above. Image courtesy of QFloors.)
35 California Buildings News • January/February 2016
MP Global Products introduced Sound Buffer, a highperforming universal acoustic underlayment that offers full subfloor coverage while soothing impact sound and floor to ceiling noise. This versatility enables specifiers, contractors, and installers to use one SKU for many types of hard surface floors in residential and commercial projects. Made from 100% virgin latex rubber, Sound Buffer is approved for use under luxury vinyl tiles and planks, laminate, engineered wood, and hardwood flooring, and can be floated, nailed, stapled, or single- or double-glued. If single-glued, it can turn a double-glue installation into a floating floor. Sound Buffer has strong physical properties including a thickness of 1.2 mm, a density of 25 lb/ft3, and a compression set of 16%—a carefully engineered combination that helps minimize impressions and indentations that can occur with luxury vinyl flooring. It also has a thermal resistance of 0.205, and anti-microbial properties. (Product shown at left, courtesy of MP Global Products.)
ROCKFON® presented a broad palette of colorful ceiling solutions to inspire creativity in commercial interior design. A full spectrum of hues now is offered for stone wool acoustic ceiling panels, specialty metal ceiling panels and ceiling suspension systems. ROCKFON’s 34 exclusive Color-All™ colors have been harmonized across its stone wool acoustic panels, specialty metal panels and suspension systems. “Color plays a vital role in influencing our experiences inside buildings and enhancing the architectural form. It is an international, visual language understood by all,” says Chris Marshall, ROCKFON’s vice president of marketing and business development in North America. “The use of color is never neutral. All color conveys mood, function and atmosphere in a room. Color schemes can even be used to indicate the purpose and function of a space, to ignite creativity, to increase productivity or to make a room seem bigger or smaller.” (Ceiling solution shown above. Photo courtesy of Rockfon.)
USG Tile & Flooring Solutions “portfolio offers customers a choice for all of their installation needs, including: shower systems, backerboards and underlayments, floor prep, membranes and accessories,” said Rich Willett, Director, USG Tile & Flooring. “USG is proud to be a leading innovator and trusted expert in these categories.” USG Durock™ Brand UltraLight Foam Tile Backerboard offers customers a strong, lightweight, waterproof and vapor-retardant tile base for wet areas. USG Durock™ UltraLight Foam Tile Backerboard fastens without washers and is ideal for use with the USG Durock™ Brand Shower System.
36 California Buildings News • January/February 2016
Smarter Buildings (Continued from page 10) Dickinson continues, “A new generation of smart technologies will no doubt continue to appear over the coming years. Building upon legacy technologies across HVAC control, access control and security we will see new solutions that provide tenants with the services they need in more tailored ways. Customization capabilities will allow very dynamic service offerings to be developed and move us further away from ‘one size fits all’ technologies. Product management and customer engagement techniques from web development and other high tech consumer industries are being applied in the commercial real estate field as more occupants expect these levels of customization in their business lives."
Chris Lofaso, CEO of Envise, says data services are needed to enable new technologies. “Building owners and facilities staff are continuously challenged to run their buildings more efficiently. Simultaneously, the complexity and capabilities of building technology continues to advance rapidly. Keeping pace with this technology revolution is challenging. Envise provides an integrated, data-driven approach towards complex building systems that focus on both short- and longterm objectives. With a goal of helping commercial and industrial building owners and managers optimize their facilities’ operations and energy management, the experienced Envise team (called Envisers™) is accountable for delivering customer-driven, technology focused solutions.”
How can owners of numerous buildings with varied equipment unify their digital management? Joy Ulickey, Enovity’s director of smart building systems, says, “For an owner with multiple buildings, it’s common that they have different brands and versions of controls systems. Integrating those systems together into a single user interface really simplifies things for facilities staff. Plus, pulling all that data together allows us to run analytics that make data useful.” She adds, “Analytics empower operations and maintenance staff to be proactive. In large buildings with complex HVAC systems, we use automated fault detection and diagnostic tools to monitor performance continuously, often identifying malfunctions before they cause tenant comfort complaints. “In the quest for energy savings, it’s important not to overlook occupant comfort. Smart building applications that encourage user interaction are more likely to be used and appreciated. By keeping occupants in the loop, software applications can help to reduce the volume of comfort complaints while still saving energy.”
James Chinetti, CTO of IMG Technologies, says, “Affecting a tenant’s bottom line is a whole separate part of a true, correctly engineered smart building backbone within a commercial real estate environment. I could write 1000s of words on benefits to a building but cost savings to tenants is subjective, given my view of what many trying to build these are doing. Most companies I have seen trying to put in their version of a smart buildings backbone are focusing on how to maximize their own revenues (by selling services to the tenants) and not building a true eco-system within the building for all the different building systems to be connected, which enables future building systems and technologies of the future to be deployed more cost effectively. “It is true that a connected backbone can supply services (Internet, VoIP and other Cloud Services)
to the tenant much quicker than traditional telecom carrier circuit delivery times and methods, and that is an advantage for tenants. Many are trying to lock down access and becoming the only gateway of choice in multi-tenant environments, and that is very dangerous, ultimately stopping tenants from having choice and diversity. IMG is proud that our offering avoids all these areas of trouble.” Chinetti adds, “By deploying a correct connected building backbone, tenants can expect building ownership to invest in technologies to help deliver tenant cost savings, for example with the implementation of smart energy controls. That gives tenants immediate control over their own environments, reduces power from 100% to 95% in the tenant space and view instantly the financial savings impact on the energy bill.” n
37 California Buildings News • January/February 2016
Windows & Glass
(Continued from page 17)
enhance the look and feel of interior spaces. These rare mirrors create a sense of openness, seemingly expanding spaces as they improve the quality and quantity of interior light. Its new Glamir collection is produced with specialty low-iron glass, eliminating the typical bluish-green glass tint and allowing the pure, jewellike colors to show through. The Bendheim collection begins with the two most difficult hues to achieve: champagne and pale gold. The two mirrors, delicate and warm, lend an atmosphere of timeless elegance and a new energy to almost any space, from a private residence to a fitness center. The collection also offers mirrors in vivid gold and amber colors. Creating luminous design elements — from impressive feature walls to decorative accents — they exude warmth and sophistication, finding applications in a variety of hospitality, retail, commercial, and residential settings. “These new colors have been in development for quite some time. We chose to work with this unique range of pastel metallics, knowing they would be a challenge to achieve. By perfecting the Champagne and Pale Gold mirrors, we bring to the design community two vital hues that have never been seen before in architectural mirror. They further represent our ability to match any custom color,” said Steven Jayson, vice president of Bendheim. n
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Energy Costs (Continued from page 25) with hot water heat exchangers that only function when needed. These are replacing large boilers that must remain heated at all times in order to handle demand. These larger boilers waste energy and are very inefficient. An added benefit of modular boiler systems is they weigh less than conventional boilers and can be installed on rooftops.” Bosch Thermotechnology’s Mark Stimson says, “The U.S. Environmental Protection Agency (EPA) has stated that geothermal heat pump systems (GHPs) reduce greenhouse gas emissions by up to 40 percent over conventional HVAC systems. Several states also acknowledge the importance of GHPs and include the technology in their renewable portfolio standard. As building codes evolve to zero net energy building design to meet low carbon policy objectives, GHPs play an increasing role in delivering effective solutions. However, third-party ownership of the ground loops will provide the needed capital to overcome the first cost hurdle of GHPs. “The emergence of thermal service providers that finance the cost of the geothermal infrastructure enables developers and builders to provide renewable energy savings at the community level. Homeowners pay a one-time connection fee and then get billed a monthly utility charge (MUC) consisting of a capacity charge and a variable monthly energy charge. The MUC provides the homeowner with energy savings from day one and predictable energy costs over time without having to provide the upfront capital for the ground loop.” “It’s tremendously important for commercial building operators to understand where and when their energy is being used,” says Robert Rouse, P.E., Business Development Manager, Power & EnergyEnergy Efficiency, AECOM. “Knowing the extent and function of a building’s energy-consuming systems is a great first step toward becoming a smart consumer. And gaining that information isn’t too difficult or expensive. Whether it’s a simple energy audit or a more involved metering and analysis scheme, the effort of gathering actionable information can pay for itself quite quickly. With this information in hand, commercial building operators can become sophisticated energy consumers, ready to consider demand management strategies, conservation initiatives, and renewable energy alternatives.” n
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News about buildings and facilities management, smart buildings, energy savings, green buildings, sustainability and commercial real estate...
Published on Feb 9, 2016
News about buildings and facilities management, smart buildings, energy savings, green buildings, sustainability and commercial real estate...