Californiabuildingsnewsso2016

September/October 2016 • $5

Renewing Older Buildings...

More Sustainable...

Aesthetic...and Economical

Is Multifamily Supply Meeting Demand?

AIA Chief Sees Changing Landscape

Office Furniture Innovations

Features Preserving Wonderful Buildings I spent my formative years in two cities: Savannah and Jacksonville. The latter is a much more substantial city with great natural beauty surrounding it, but when I mention those two towns to people, they always get enthusiastic about the smaller, humbler of them. The reason is Savannah’s extraordinary leadership in historic preservation. Because its citizens prized and protected its wonderful architecture and cityscape from demolition and “modernization,” the city has become a veritable urban jewel box that has attracted billions in revenue as a tourist mecca. Numerous movies, TV programs and commercials are made there. People dream of living in its colonial, Federalist and Victorian neighborhoods. It has preserved what is special.

California architecture is comparatively more recent than Georgia’s, but boasts thousands of structures from the Del in San Diego to San Francisco’s Russ Building to elegant Gold Country hotels and Victorian mansions that preserve its glorious historic past. And California has innumerable less exalted buildings that can be repositioned and renovated at less environmental and financial cost than tearing them down and erecting new structures of currently popular designs. Our cover story delves into this issue with some interesting conclusions.

“Wherever” Workspaces

Recently, I asked a young venture capitalist where she offices. She cocked her head and looked at me as if I had asked her a strange question. Sometimes in Menlo Park, sometimes at home and sometimes at her firm’s San Francisco facility, she said. I shouldn’t have been surprised, since you hear that sort of answer a lot these days. People work wherever, tethered of course to their laptops and smartphones. What does this mean for the future of brick-and-mortar workspaces?

Well, the one thing even highly mobile workers have in common is that they are usually working under some sort of roof— though the roofs might change from offices to hotels to apartments to houses.

There is a major shift going on that commercial real estate, multifamily and hospitality thinkers are moving to accommodate. We touch on it in articles in this issue about new styles of furniture that facilitate constantly morphing workstyles— as well as an article that describes how various types of hotels are shaping their services and designs to meet the need to use their spaces for the increasing number of small business meetings that occur outside the office. And in our November/December issue, we will focus on challenges faced by tenants and the designers they hire to craft their new spaces.

— Henry Eason

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Q&A: AIA California President

Renewing Older Buildings: Greener, But Less Costly

14

Building Materials Revolution

Furnishings Evolve for New Styles of Working

20

23

Elections Impact on CRE

Hotels’ New Meeting Spaces

34

16

Multifamily: Is Supply Finally Meeting Demand?

Building Pros Share Tips

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6

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Industry News

Cover images: Building exterior and interior inset photo courtesy of the Bently Reserve.

Others: Getty Images.

California Buildings News Team Henry Eason, Editor and Publisher henry@easoncom.com Ellen Eason, Co-Publisher ellen@easoncom.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, Fulcrum Real Estate Development Carlos Santamaria, CEES-Advisors

Advertising Information Ellen Eason, ellen@easoncom.com 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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5 California Buildings News • September/October 2016

California Architects: Keeping Up with a Shifting Landscape

Q&A

with Michael F. Malinowski

President of American Institute of Architects, California Council and President of Applied Architecture Inc., Sacramento

Q

What are the biggest public affairs challenges architects face from proposed and existing state and federal laws, regulations and recent court rulings? How does AIACC propose they be resolved?

A

Keeping up with the ever shifting landscape of regulation and legislation is a challenge for California architects.

We are fortunate at the AIACC to have a very experienced staff in Paul Welsh, our exec director and Mark Christian and Kurt Cooknick Assoc. AIA, bolstered by our consultants. They work in concert to keep AIACC leadership in the loop. This year there have been a few “shooting comets” that got a lot of attention only to have since dropped to the background—one example was the proposed sales tax on services. This was a proposal which would have had major negative impacts on the competitiveness and service model for all

California architects, and major fallout for citizens and institutions statewide as a result. We are quick to move when new proposals come to light; we take a “big picture” view in analyzing the impacts not just for our profession, but on citizens, the environment, on business and on sustainability. We use that lens to craft positions that we believe in most cases become the prudent course that prevails. We consider this work part of our calling to be “stewards” of the built environment.

One area that has been of interest to me for several decades is Permit Streamlining. I was leader of an entity in Sacramento called the Development Oversight Commission, and in that volunteer role got to see first-hand what it took to move a building department from dead last in “customer service” surveys to number one. Since the recession, the challenges for both building departments and design professionals is that we all have to find ways to do “more with less.”

Having founded a local program over a decade ago called “code conversations” has helped build an environment of trust and communication with regional code officials. That open channel

brought some serious dividends for both sides of the counter, to focus on common ground: a shared interest in high-performing buildings that comply with modern design standards, life safety codes, energy-efficiency goals, and sustainability objectives.

For a small task force of local architects and code officials, the “win win” result after rolling up our sleeves for about six months: the PASS Program (Prequalified Architectural Submittal System). PASS increases efficiency and effectiveness of the plan review process, with minimal change to normal business practices of design professionals, with the result that citizens enjoy high performing modern buildings quicker, with lower cost, and increased public safety and code conformance.

PASS boosts economic development, at little to no cost. It’s not surprising given the win-win foundation of PASS as an innovative approach to the regulatory process that is already in use by 16 jurisdictions including the City of Sacramento, Folsom, Elk Grove, the County of Sacramento and more — the first such regionally consistent program in the country. A companion program “One and Done,” which eliminates wasteful and costly excessive plan review cycles, is in beta test now.

(Continued on page 40)

6 California Buildings News • September/October 2016

Renewing Older Buildings Greener…But Less Costly?

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epurposing older buildings via design and construction retrofits can be much greener and less costly. Making the right calculation is complicated, it must be assessed on a project-by-project basis, and there is disagreement about the entire process.

But, given the fact that the overwhelming majority of all commercial stock already exists and comparatively few new buildings are erected each year, repositioning or retrofitting makes sense if the structure fits the tenant’s needs.

72 Townsend , a new high-rise residential project, preserves an important piece of San Francisco’s architectural heritage. The contemporary structure sits on top of a single-story warehouse indicative of the city’s South End Historic District. Photo credit: Chelsea Olson, SB Architects.

In planning and budgeting, owners should ask if energy and environmental upgrades are financially feasible, compared to those planned in new construction. What are the government codes considerations? How long will it take to gain government approvals for a new facility, raze it and construct it — and how much money will be lost in the meantime when less time-consuming retrofits can be achieved?

Retrofitting can significantly reduce costs, but is the older building’s structure sound and appropriate for longer-term uses?

7 California Buildings News • September/October 2016

Repurposing Older Buildings is Greener

buildings to net zero energy and seen substantial customer demand. These buildings aren’t old, aren’t Class A and aren’t in dense urban cores, but can still benefit from a retrofit.”

According to the Intergovernmental Panel on Climate Change (IPCC), the largest portion of carbon savings by 2030 over the country’s entire building inventory is in retrofitting existing buildings and replacing energy-using

A groundbreaking study, published a few years ago, concluded, “Building reuse almost always offers environmental savings over demolition and new construction.

Moreover, it can take between 10 and 80 years for a new, energy-efficient building to overcome, through more efficient operations, the negative climate change impacts that were created during the construction process.

However, care must be taken in the selection of construction materials in order to minimize environmental impacts; the benefits of reuse can be reduced or negated based on the type and quantity of materials selected for a reuse project.”

The study, The Greenest Building: Quantifying the Environmental Value of Building Reuse, said “Utilizing a Life Cycle Analysis (LCA) methodology, the study compares the relative environmental impacts of building reuse and renovation versus Rendering of The MET Costa Mesa, a fifteen-acre commercial campus. Credit: McCarthy Cook. new construction over the equipment. Energy savings for 50-75% can be achieved course of a 75-year life span. LCA is an internationally in commercial buildings that make smart use of energyrecognized approach to evaluating the potential environefficiency measures, says IPCC. mental and human health impacts associated with products and services throughout their respective life cycles.” The But is Retrofitting a Good Investment? study was published by the National Trust for Historic McCarthy Cook SVP Brian Harnetiaux, this year’s Preservation and The Summit Foundation, with the supchairman of BOMA International, says his company is port of companies like the Skanska Group. “currently is repositioning a fifteen-acre campus in Costa Brenden McEneaney, director of the U.S. Green Mesa that will be rebranded The MET Costa Mesa. (See Building Council Northern California, says, “A lot of rendering above.) New commercial buildings are being energy and embodied carbon goes into building materials. constructed in this market, but rather than tear down As new buildings use energy more efficiently, an increasthree perfectly good office buildings, we decided to update ing part of a building’s environmental impact is embedded the campus and add new amenities in order to remain in all the materials required to build it. To reduce that competitive and attract the best tenants. impact, retrofitting old inefficient buildings can make a “This decision makes good business sense: in our lot of sense. The Empire State Building avoided the cost market, new construction costs almost 70% more per of a new chiller by investing in efficiency. Older buildings square foot than the cost of our refresh. This cost savings often were designed with sustainability, using natural daywill allow us to achieve a return on our investment much light and ventilation, and are often located near transit. In more quickly. Simply by announcing this campus refresh, Silicon Valley, Sharp Development has retrofitted office (Continued on page 8)

8 California Buildings News • September/October 2016

Renewing Buildings (Continued from page 7)

our occupancy level increased from 68% to 78% — and that was before we even lifted a shovel! While the updates to the campus are driving interest with potential new tenants, we also are working with our current tenants to make sure their businesses are not interrupted during the construction. New amenities will include modernized lobbies and common areas, conference center, a new fitness

“...retrofitting older buildings with energy and lighting upgrades is invariably a good investment. ENERGY STAR-certified buildings have 13.5% greater value.”

loop, food truck runway and outdoor recreational areas complete with free WIFI.” Some developers and building owners are unsure about the value of greenfield versus retrofit buildings. There are numerous considerations. A comprehensive McGraw-Hill study in 2011 showed mixed results: z Operating cost improvements for new green buildings was 13.6% against 8.5% for retrofitted green buildings z Building value increased 6.8% for greened renovated buildings compared with 10.9% for green projects in new buildings z AND YET…the return on investment was higher for retro versus new buildings: $19.2% versus 9.9% z That said, new buildings experienced higher occupancy (6.4% versus 2.5%) and higher rents (6.1% versus 1%).

There is, however, no question that retrofitting older buildings with energy and lighting upgrades is invariably a good investment. For instance, ENERGY STAR-certified buildings have 13.5% greater value than those whose owners have not taken the same steps to upgrade their facilities. Their utility use is 10% less, they get 4.8% higher rents and 1% greater occupancy, to cite a few advantages. For instance, retrofitting the aging iconic Empire State Building reportedly received a payback from its energy retrofits in less than four years —and can count on substantial net savings in the future. Government grants and other financial incentives take a lot of the pain out of funding the energy upgrades of older buildings.

Tarrah Beebe of Killefer Flammang Architects, says, “With KFA’s long history of working on 40+ adaptive reuse projects in Southern California, we have paid homage to the historic construction methods and elegant designs by infusing today’s culture into the durable and distinctive structures. These classic buildings that were left vacant throughout Los Angeles during the recession of the 90s, have become bustling, and even iconic trademarks of this constantly evolving city. The level of coordination and C

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(Continued on page 10) Top photo: Roosevelt Lofts’ roof deck in Los Angeles. Constructed in 1925, the building now houses lofts carved while keeping the original corridors intact.

The roof, once a mechanical penthouse, now has multilevel penthouses, private patios and common outdoor spaces. A lounge with glass walls opens onto the exterior lounge, which has a fireplace, fountain, pool and spa. Lower photo: Chapman Lofts in Los Angeles houses modern flats in a 1912 building. Photos courtesy of KFA Architects.

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Renewing Buildings (Continued from page 8)

consideration required to develop these projects and add modern building systems is far more detailed and laborious than that of a new project, but carries the reward of a product that is transformative, beautiful, and holds the story of the city. We seek to reveal, and in many cases uncover, the original grandeur of these storied buildings by giving them a more current presence in the urban landscape.”

Retrofitted Buildings’ Historic, Aesthetic Value Preserving the past is both architecturally and emotionally satisfying to people. Eclectic cityscapes are valued for their cultural significance.

One of California’s most dramatic examples of repurposing a traditional building, is the old San Francisco Federal Reserve, designed by George W. Kelham, a facility whose doors opened in 1924. A grand structure in the heart of the Financial District, it features a prominent beaux-arts ionic colonnade paired with an art-deco style that serves as one of the early incantations of the fashionable streamline moderne style of “We find that older buildings are usually the late 1920s and better designed and detailed than most early 30’s. Inside, the Banking Hall structures built in the last 50 years. Our was designed in job as preservation architects is to polish a temple them up, make sensitive upgrades, and get style, and them back into service,” — David Marshall, features murals Heritage Architecture & Planning

by Jules Guerin, the artist who created the palette for the 1915 Panama-Pacific International Exhibition. The building itself is a work of art. (Photos featured on the cover of this issue.)

The Federal Reserve did business in it for nearly six decades before it outgrew the building and moved to its Market Street facility. After a brief stint as a law firm, the old SF Fed was acquired by Bently Holdings, which converted its upper floors to LEED Platinum office space. Its lower floors are rented for elegant special events, business meetings and conferences.

These spaces represent one of San Francisco’s greenest special event venues, as well as some of the West Coast’s most acclaimed spaces. The building is

The historic Western Metal Supply Building incorporated into the design of Petco Park in San Diego (front and back views). Photos courtesy of Heritage Architecture & Planning.

Right: The Headquarters is a former 1930s police facility that was transformed into retail and restaurants in downtown San Diego. Photo courtesy of Heritage Architecture & Planning.

11 California Buildings News • September/October 2016

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also included in the National Register of Historic Places,and is and one of San Francisco’s significant cultural landmarks.

Other such historic conversions abound throughout California.

“We find that older buildings are usually better designed and detailed than most structures built in the last 50 years. Our job as preservation architects is to polish them up, make sensitive upgrades, and get them back into service. Oftentimes, the only way to save a building from demolition is to find a new use for it. Some buildings are easy to adaptively reuse—like hotels into apartments or warehouses into open office spaces. The biggest challenge is finding a compatible new use for unique building types, like the 1930s police facility called The Headquarters that we helped transform into retail and restaurants in downtown San Diego,” says David Marshall, president of Heritage Architecture & Planning.

SB Architects Principal Bruce Wright says, “At 72 Townsend, we were able to create an exciting new high-rise residential project for San Francisco, while preserving an important piece of San Francisco’s architectural heritage. Our contemporary structure sits on top of a single-story warehouse indicative of the city’s South End Historic District, rich in maritime history. By setting the new structures back from the building’s original footprint, we were able to maintain the street’s single-story character, and also create deep terraces. The modulated structure steps back away from the main thoroughfare, further reducing the scale and giving the architecture a sense of rhythm and movement.”

(See photos on page 6 and at right.)

72 Townsend in San Francisco makes use of a former single-story warehouse. Photo credit: Chelsea Olson, SB Architects.

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California Buildings News • September/October 2016

Who Reads CALIFORNIA BUILDINGS News?

More than 23,000 people who design, construct, operate or provide services and products to office buildings, apartment complexes, hotels, hospitals and other types of commmercial facilities in the sixth largest and one of the fastest growing economies in the world ­— California.

Reach decision-makers like those shown below.

Building Engineer

Asset Manager

Architect

General Contractor

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Buildings Services Provider

Boost your sales by including California Buildings in your ad budget.

To learn more about how you can reach our targeted audience, contact our co-publisher, Ellen Eason, at ellen@easoncom.com or 415.596.9466.

14 California Buildings News • September/October 2016

On the Brink of a Building Materials Revolution Retrofit and New Building Construction Can Both Benefit from New Information — By Anjanette Green

In the wake of the environmental movement a

paradigm shift is beginning to reveal itself, a heightened awareness of the health of building occupants.

Thanks to media coverage, increasing awareness of toxic chemicals Image: Getty Images. and research stemming from renowned universities, these seemingly unrelated events are culminating in a “materials revolution.”

A recent study, conducted by the Harvard T.H. Chan School of Public Health and the Syracuse Center of Excellence, found that occupants working in an indoor environment with increased ventilation, higher volumes of outdoor air and low-emitting materials had higher cognitive function scores across nine different domains; 101% higher as compared to a conventional building environment.

Remarkably, the largest effects were seen for Crisis Response, Information Usage and Strategy, illustrating the impact indoor environmental quality has on occupant performance and health.

The documentary “Toxic Hot Seat,” based on the investigative report “Playing With Fire,” blew the whistle on toxic flame retardants used in furniture foam and further shocked the public when it was revealed that these retardants were ineffective against the prevention of fire, but also probable carcinogens.

When the houses destroyed by Hurricane Katrina were repaired with contaminated drywall, headlines exclaimed

residents were experiencing difficulty breathing and recurrent headaches. Swiftly, several class action lawsuits were filed in 2009, culminating in a multiple district litigation case in Louisiana.

Perhaps one of the most remarkable events occurred just two months ago, when President Obama signed into law the Frank R. Lautenberg Chemical Safety Act. For the first time in 40 years the U.S. has updated its chemical safety control act and begins the arduous task of reviewing over 85,000 chemicals openly used in commerce in our country.

Few people realize the magnitude of this act but the U.S. Environmental Protection Agency has been ineffectual for years, having no authority to control the use of chemicals in products—not even asbestos, arsenic or formaldehyde.

These highly publicized examples express a unified theme and when a cross-section including government agencies, NGOs, academia and industry associations show alignment, it warrants attention. Not surprisingly, the design and construction community is being called to action to answer the resounding need for healthier materials made from healthier ingredients.

To address this, there have been notable changes and additions to our industry’s building certification portfolio.

One of the most anticipated centered around this country’s most recognized building certification, the USGBC’s LEED program and within it, the overhaul of the materials and resources credits. For credit compliance, teams must specify a minimum of products having HPDs, Declare, C2C, C2C Material Health, or Green Screen analysis in order to be considered. Despite initial grumblings that the credits were too ambitious, a ripple effect has shot through the industry, pressing manufacturers for information on chemical ingredients at an unprecedented rate.

The Living Building Challenge has also played a significant role. Widely regarded as the world’s most rigorous building certification, the Materials Petal prohibits the use of any LBC red list chemicals. Unsurprisingly, the Declare Product (Continued on page 41)

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Furnishings Evolve To Match Entrepreneurial Environments The corporate cube farms of yesteryear, in which people were organized like chickens in cages, doesn’t quite work in modern, asymmetrical environments that stress high levels of interaction, creativity and the ability to change the workplace on an hourly basis— if needed. Many companies that provide workplace furnishings are innovating to better facilitate new office realities.

We’re highlight a few of them in this article.

Photo credit: turnstone

17 California Buildings News • September/October 2016

Inspired by the insights resulting from several months of on-site research with leading entrepreneurs and intrapreneurs, turnstone, a Steelcase brand, has recently debuted new products designed to inject personality and personalization into the office.

“At the heart of startup culture is the increasing desire for organizations emerging or large, young or experienced, to work in inspiring spaces that reflect a sense of their passion, personality, authenticity and agility, in order to accelerate results.

“We live in a time when people want freedom to express themselves and to stand out in a post-sameness world. They want to put their thumbprint on something and say, ‘This is mine. I helped design this.’

We are opening the door for our entrepreneurial and intrapreneurial clients, as well as the design community, to put their desires and personalities on display with furniture that they help bring into being,” said Brian Shapland, turnstone general manager.

Such products include Bassline Tables. Just as the musical bassline drives and outlines the harmonic structure of a song, indicating a specific style or genre and enabling unique accent voices, instruments, and notes, the Bassline collection of tables does the same for space. Signaling a level “We live in a time when people want of personality and personalization, the extensive and near limitless Bassline Tables collection exudes freedom to express themselves and to style and value while enabling the expression of a person or brand’s personality, so that they may stand out in a post-sameness world,” kickstart creativity. says turnstone general manager.

“Inspired by a sense of fashion and a “DIY” world, clients and designers can create unique solutions, tailored to fit their personality, taste and values by specifying their own material, such as wood, glass, or stone—and make it in almost any size or shape. It’s all about facilitating one-of-a-kind pieces that allow people to demonstrate who they are and what they value,” said Mark McKenna, turnstone design director.

(Continued on page 18)

18 California Buildings News • September/October 2016

Furnishings (Continued from page 17) In addition to Bassline, turnstone is premiering three other insight-led products that help create authentic, agile environments that encourage personalization and creativity: Bivi Dual Height, Shortcut X Base and Campfire Personal Table.

Health and Well-Being Stressed Desks are evolving, too. The research is clear: a sedentary lifestyle that includes excessive sitting is detrimental to your health. VARIDESK, a leading heightadjustable standing desk company, created a line of products designed for companies and individuals to easily and affordably add standing desks and related accessories to their office space. “We built the VARIDESK to ship fully assembled, sit on top of an existing desk or workspace, and raise and lower in seconds because we knew that simplicity was the key to getting people to move more

s Professional at work at her adjustable desk by VARIDESK. Photo credit: VARIDESK.

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Automated green wall brings nature into the workplace. Photo credit: Biome.

19 California Buildings News • September/October 2016

at the office,” said Jason McCann, CEO of VARIDESK. “By reimagining the workspace, we’ve found that the hundreds of thousands of individual VARIDESK users across the globe love the freedom to sit and stand at will. We constantly hear that VARIDESK users feel happier and more productive as a result of using our products, and we’re excited to continue to build career-long relationships with our fans.”

Green Walls Bring Nature to Workplace How about plants that grow out of walls—and help cleanse the office?

Taupe: Defining Color in 2017 Sherwin-Williams doesn’t usually like to play color favorites, but in this case we can’t resist. The color we anticipate defining 2017 is Poised Taupe. Here’s why: This timeless neutral is modern, classic and a beautiful balance of warm and cool.

The 2016 industry shows revealed a surprising transition from grey to taupe.

Both contract and consumer color/ products have been focused on grey as THE key neutral—although grey is still important, we have seen a significant shift in materials and finish color to warmer, taupe-ier expressions of neutral.

(Photo and description courtesy of Sherwin-Williams.)

“Biome makes nature for the modern world, says Collin Cavote, founder of Biome. Its automated green walls are soil free, hang like art, and water themselves. “With no messy installation and virtually zero maintenance, Biome is the easiest way to make nature accessible to those that matter. Biome’s technology also tracks and shares its room’s real time air pollution levels while simultaneously using NASA technology to naturally eliminate air pollution.

The next frontier of luxury amenities for all classes of real estate development is here.” n

20 California Buildings News • September/October 2016

Multifamily News

Is Multifamily Supply Finally Meeting the Demand? By Steve Ring

M

ultifamily supply is finally coming online in California. That was the message heard by more than 200 real estate professionals gathered recently for the IREM Asset & Property Management Symposium to hear the biggest challenges that are now facing multifamily housing in the Bay Area.

A panel of experts led by Darren Merritt, CEO of Boardwalk Investments, delivered the overwhelming message that the supply is starting to make a dent in the demand for multifamily housing and, for the first time in years, rental concessions are being given out to try and attract multifamily tenants. Referring to the portfolio owned and managed by TruAmerica, Lynn Owen, its Chief Operating Officer, indicated that too much credence is being given to “pre-preparing” for the downturn everyone is predicting.

However, TruAmerica is making adjustments for what is a “normalizing” of the marketplace. Silicon Valley, in particular, is still absorbing the supply of new product, whereas San Francisco is slowing down.

Heather Wallace, SVP for the Saris Regis Group, agreed with the temperament within the marketplace and believes that “price is king” in terms of committing tenants to their buildings vs. the competitors. An amenity-rich product is a must-have standard for attracting tenants, and the best concessions are winning right now.

Billie LaBelle, Regional VP for Alliance Residential indicated that Alliance is also giving out concessions such as free rent to attract tenants. However, she felt this was a normalization of a hyper market. Referring to what they called the “generation now,” these young tech-oriented professionals are looking for more than your typical amenities like

on-site laundry, parking and gyms. For them, amenities need to meet the lifestyles that many of these tenants choose, including independent workers who are working out of shared workspace or their homes. All of the panelists indicated that they are spending more money than before on tenant-oriented parties and gatherings.

Furthermore, creating a shared workspace within the apartment complex is a big plus in terms of amenities.

In terms of new development and construction costs, Tom Stubbs, a Partner with TMG Partners, said that he has seen these cycles many times over the years within the Bay Area and most of the downward turns have “ended in a crash versus a slow normalization.” TMG is being very choosy on new projects. “Nothing pencils out with the cost of construction,” according to Stubbs.

However, TMG is feeling a bit bullish on Oakland and has been acquiring existing sites due to the “favorable administration compared to years past and the lease rates are very competitive compared to San Francisco rates,” according to Stubbs.

Commenting on construction costs was Craig Jones of

“A panel of experts delivered the message that the supply is starting to make a dent in the demand for multifamily housing.”

(Continued on next page)

21 California Buildings News • September/October 2016

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Skyline Construction. Jones agreed that construction costs are not coming down anytime soon, and all contractors are challenged right now by the limited number of sub-contractors and available trades and specific materials. Furthermore, Jones indicated that due to labor and supply constraints, all contractors are having challenges in delivering their product on time. Suppliers are backordered on certain supplies and the labor force is fleeing to the larger jobs. Owens agreed, saying, “Trying to get a contractor to do a simple apartment turnover is getting tough.”

Jones didn’t see construction costs coming down until mid2018 and indicated that Title 24 revisions will continue to keep pricing higher than years past. Beginning January 1, Cal-Green will be adopting LEED version 4. This has the possibility of driving construction costs even higher, according to Jones.

Overall, the general feeling expressed by speakers was that multifamily projects with a high level of amenities and located close to mass transit will continue to draw from the new generation of tech workers, but it will be more competitive than the past, due to increased supply and the technology tools that these tenants have in the palm of their hands when visiting their apartment buildings. As more independent workers are working from their homes, having a space within the common area to meet clients or fellow co-workers is an amenity that is drawing new residents. Affordable housing is and will continue to be the biggest challenge that multifamily housing is facing. With the legislative changes that are occurring in San Francisco this could effectively shut down this type of building due to the high cost of construction, according to Stubbs. n

Ring is Senior Executive Vice President of Fulcrum Real Estate Development and a Bay Area real estate industry leader. He can be reached at steve@fulcrumredev.com

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23 California Buildings News • September/October 2016

Removing Mold: If you or anyone on your team is handling mold remediation, you need to wear proper personal protective equipment (PPE) which includes Tyvek suit, gloves and a respirator. You need to be fit tested for the respirator and go through a medical surveillance program. It is also imperative that you setup a proper containment to not cross-contaminate unaffected areas of your building. If you have a mold problem, you inevitably need to solve your water problem first. — Ryan Rusler, HARBRO

Budgeting Strategy: Try to avoid averaging or annualizing. Taking an average or annualized amount and budgeting it equally for each month of the year makes expense-line items especially messy. …”Take the blinders off before budgeting capital.” Operators who have spent any length of time on a property may be so used to seeing an issue that needs repairing that it becomes invisible to them. — Christine Bright in Property Management Insider.

Building Efficiency Software: Watch for the next issue of California Buildings News to learn what new software is on the market that will help you cut costs and upgrade your building’s experience.

(See page 24 for more tips.)

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24 California Buildings News • September/October 2016

Buildings Tips (Continued from page 23) Outsource building services? According to an industry leader, ABM, outsourcing your facility services comes with a number of benefits— with saved time and money being among the most impactful. Here are six compelling ways outsourcing benefits your business: (1) Grow your business. Focus on your core business and let someone else worry about keeping your facility running.

(2) Reduce costs. The employees, tools, and equipment needed to maintain your facility can be rather costly. Move those costs to a facility service provider—and bundle your services— and you’ll keep your spending under control.

(3) Use scalability to your advantage.

Outsourcing makes it easy to adjust staffing levels when you need to. Your provider will deal with recruiting, training, and hiring personnel, and you can keep control of your operating costs.

(4) Harness expertise for improved quality.

Facility maintenance providers do specialized work, and you can take advantage of their expertise to keep your buildings in their best shape.

(5) Create a better environment. Speaking of expertise, you’ll need plenty of it to make your facility more sustainable. From green cleaning to energy savings, outsourcing makes it easier to go green.

(6) Enhance your peace of mind. Reputable facility service companies care about keeping customers happy. Through reporting, consolidated billing, and open communication, it’s their goal to make outsourcing painless for you.

Latest HVAC Ideas: Make plans to attend AHR Expo 2017, which is in nearby Las Vegas this year, Jan. 30-Feb. 1. http://ahrexpo.com/ …and say hello to California Buildings News staffers while you are there. We’ll be there covering the latest trends and reporting them to you in the following edition.

Tenant Improvements Strategies: Check out the November-December issue of California Buildings News to gain the perspectives architects and contractors who design and build tenants spaces—and the products that make them more comfortable and efficient.

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26 California Buildings News • September/October 2016

Association News

Is metropolitan San Diego at the top of its market? That’s the question posed to a panel of industry leaders at a recent Institute for Real Estate Management–San Diego luncheon.

At the event, entitled “Top of the Market,” Dennis Hearst (CBRE) covered the office market, Terry Moore (ACI Apartments) the apartment market, Aaron Hill (Newmark, Grubb, Knight, Frank) the retail market, and Nelson Ackerly (Kilroy Realty) gave the owner and investor perspective. Cybele Thompson of the City of San Diego was the moderator.

The panelists agreed that San Diego is at the market top, but said there is potential to grow even more. Nonetheless, they were cautious about the future outlook. As with any rise, there is bound to be a downturn. There are unique challenges in the San Diego area and they said all parties involved (politicians, environmentalists, builders and owners) need to work to find common ground and stop battling each other.

Speakers said San Diego’s wage income inequality gap has become a problem. It is quickly becoming unaffordable for middle- and lower-class families. This is a difficult problem to combat in the Downtown, North Park, Hillcrest and other trendy areas of San Diego City. Environmental and government regulations make up 40% of new housing costs. Zoning restrictions have prohibited builders from constructing high-density living. It is much easier for developers to walk away from these areas, as new construction is not good business for them, due to the restrictions. Still, appreciation for quality living in San Diego is seen as high.

Two ideas proposed to help the lower class, minimum wage increase and rent control were hot topics for all parties. Retailers are thought to battle the wage increases by cutting their labor force, because they are unable to take on the financial burden.

While rent control in theory may be a wonderful proposition, most owners would think it would have the opposite effect on new home development. College-educated tenants will benefit from rent control, but it will do nothing to help the lower-middle class or the lower class. If rent control were implemented, owners would convert their units to condos and take a profit rather than hold onto rent controlled buildings. Again, only benefiting upper-middle-class tenants or buyers.

Attendees then wondered how these theories would apply in North County and East San Diego County? Retailers are willing to do almost anything to entice a coffee shop or restaurant to open a second location in one of their centers. The boost to all other tenants would be astronomical if one shop had a line constantly out the door. In East County, there is development happening but it is not a profitable or marketable location for builders, due to low demand.

(This article was reported by Elaine Gower and Brian Murkland of The Naumann Law Firm.)

Growth Issues Aired at IREM San Diego Panel

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Authors Sharon Jaye and Trevor Anderson address the critical management tools of carbon footprinting, otherwise known as greenhouse gas (GHG) inventories. GHG inventories enable organizations to identify and manage their emission sources and can be used to establish baselines for tracking emission trends, develop mitigation strategies, and assess progress. With a detailed overview of the GHG inventory process and realworld examples, the 71-page guide offers instrumental advice for FM’s to implement comprehensive carbon footprint accounting. This guide was published for free, one of 17 in the Sustainability How-to Guide Series, and is available for download here: http://community.ifma.org/knowledge_library/m/free_fm_content/1057500 Images: Getty Images.

27 California Buildings News • September/October 2016

San Francisco Mayor Proposes Regional Solutions Tells BOMA SF Audience That Talent is Key to Thriving Economy “The secret to our city’s success is talent,” San Francisco Mayor Ed Lee told the September BOMA-SF luncheon gathering. It was an observation warmly received by BOMA members who are working to promote CREATE, a foundation developed to attract talent to commercial real estate and the professionals who serve the buildings industry.

The mayor observed that San Francisco’s many natural, business, lifestyle and cultural attractions are a magnet for workers and noted that the city’s employers have created more than 111,000 jobs in the last five years.

BOMA members were also glad to hear the mayor’s report that the city is investing hundreds of millions of dollars to ensure that its infrastructure can handle the increased growth of people and buildings. Under his administration San Francisco’s bond ratings to fund projects have remained high because of his program of fiscal discipline—resulting in the lowest deficit in 15 years and a substantial reserve fund. “We will make sure we are a resilient city,” he said.

Mayor Lee addresses BOMA audience.

The mayor also assured his audience that San Francisco “will not depend on any Photo credit: Laura Albanese. one industry,” and is working to support continued growth of the city’s big three job engines: tourism, healthcare and technology. He also noted that city government is working to encourage and enable small manufacturing, such as beer, wine and chocolate companies, as well as the city’s renowned boutique fashion industry. Although he acknowledged that homelessness is still a challenge, he outlined new strategies he believes will reduce that problem.

“We are no longer just a San Francisco economy, but a Bay Area economy,” he said. San Franciscans, he asserted, should look beyond its city limits to neighboring areas, like Oakland and San Jose, to form more regional solutions, instead of being competitive. “The Bay Area’s competition is London, Paris and Shanghai,” he said. Transportation and other challenges can only be solved via regional efforts.

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28 California Buildings News • September/October 2016

Association News

Construction Academy Offers Opportunities Without Student Debt Building Trades Provide A Head-Start on Life

counselors have said, ‘You need to go to college. You When students at the Lincoln High School Engineering need to go to college.’ I think we did many of those kids a and Construction Academy pick up a hammer, a pair of disservice. A college degree is fine snips or a welding iron, they are learnfor some, but not for everyone.” ing skills, honing a craft and creating Wright, who directs Lincoln’s a foundation for the rest of their lives. engineering and construction proThey’re not just building projects. grams, views education differently They’re building a future. from those who think the only Jeff Wright, a contractor and the path after high school should be 2001 California State Teacher of the toward a university degree and Year, just went with his gut— and a that shop class is for the kids who lot of research—when he founded the can’t pass calculus, English literacademy six years ago as an addition to ature or physics. He believes the the existing high school Stockton, Calif. building trades are for everyone.

Students learning building skills. Photo: Adobe Stock.

“We lost one or two generations of Thus, Wright does his part to push building trades workers because of the the more than 500 students — including more and more recession and the dot com era. Everyone thought they’d females —who enroll in the academy annually toward their work behind a computer,” Wright said. “For 20 years, future goals, whatever they may be.

Students get the basic training they need to have additional options after high school. According to Matt Smith, president of Smith Heating and Air Conditioning, one of the construction academy’s more than 80 benefactors, some of the students get internships post-graduation because of the contacts th they made during their time in the academy. “It’s so much more than bringing shop class back to high school,” Smith added.

By the time students graduate from the academy, they know about research and design, construction technology, mechanical construction, robotics, electronics, pneumatics, and hydraulics. These skills can help graduates obtain scholarships and work, and enter apprenticeships, junior colleges, or universities without acquiring big student loans.

“One of our biggest hurdles is to convince parents and counselors that we’re not trying to keep th kids from going to college,” Smith said. “We promote all forms of higher education.” Indeed, the academy provides about a dozen college scholarships funded by supporters, including the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART), and other industry groups as well as businesses, contractors and more.

“The building trades are a great place for the kids to get a head start on their lives,” Wright said.

“I’m pleasantly surprised by the way the kids and their parents have responded to this program.” n

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29 California Buildings News • September/October 2016

SMPS SF Chapter Wins “Outstanding Extra-Large Chapter of the Year” The Society for Marketing Professional Services San Francisco Bay Area Chapter (SMPS SFBAC) won “Outstanding Extra-Large Chapter of the Year”at the 2016 Build Business National Conference in Philadelphia, PA. This marks the second award for the chapter in three years. In 2014, SMPS SFBAC won the Overall Chapter of the Year award at the National Build Business Conference in San Antonio, TX. “We’re proud of the hard work of our dedicated chapter volunteers and our engaged SMPS community to make this award possible—it was truly a team effort,” said Catherine Spurlock, Past President of SMPS SFBAC and Marketing Director at New SMPS SFBAC President Charles M. Salter Associates. “Winning two Striving for Excellence awards in the last Vanessa Pelletier three years is an amazing feat.”

SMPS represents a dynamic network of 6,000+ marketing and business development professionals from architectural, engineering, planning, interior design, construction, and specialty consulting firms located throughout the United States and Canada. The Society and its chapters benefit from the support of 3,700 design and building firms, encompassing 80 percent of the Engineering News–Record Top 500 Design Firms and Top 400 Contractors.

“Moving forward into the new board year, our 75+ volunteers will continue to build upon the successes of previous years by providing only the best quality programs and events possible for members and prospective members of our San Francisco Bay Area Chapter,” said Vanessa Pelletier, President of SMPS SFBAC and Marketing Manager at FME Architecture + Design.

BOMA 360 Buildings Score Higher in Kingsley Index According to new analysis by Kingsley Associates, buildings that have earned the BOMA 360 Performance Program® designation have higher tenant satisfaction scores in 53 out of 57 rating areas as compared to commercial office buildings without the BOMA 360 “designation. These results continue a longstanding trend of BOMA 360 buildings outperforming those without the designation in the Kingsley Index. In fact, the benefits of the BOMA 360 program were especially clear in this year’s findings, as the gap between BOMA 360 buildings and non-designated buildings grew in many of the categories — such as overall satisfaction and value for amount paid — since last measured.

BOMA 360 is a commercial real estate designation developed by the Building Owners and Managers Association (BOMA) International that recognizes allaround excellence in building operations and management. The program benchmarks building performance in six key areas: operations and management; security and safety; training and education; energy; environment

and sustainability; and tenant relations. Since the program’s inception in 2009, more than 1,400 BOMA 360 designations have been conferred.

“These findings confirm what the property teams at BOMA 360 buildings already know — that the BOMA 360 designation leads to more satisfied tenants, which translates into higher tenant retention and greater market value,” said BOMA International Chair Brian M. Harnetiaux, senior vice president of Asset Management at McCarthy Cook. “From the professionalism of the staff to sustainability efforts, BOMA 360 properties go above and beyond for tenants.”

Kingsley Associates, the global leader in tenant satisfaction studies, measured tenant satisfaction in dozens of quantitative rating areas, including property management, leasing, maintenance, security and property features.

For more information about the BOMA 360 Performance Program, please visit the BOMA 360 webpage.

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31 California Buildings News • September/October 2016

The 2016 Election: Impact on the Commercial Buildings Economy Business Tilts Toward Democrat Clinton, Away from Republican Trump in Historic Reversal

M

ost associations and major companies representing the design and operation of commercial buildings have shied away from offering much guidance to their members on the upcoming national election— presidential or congressional. Ask about it…and you can hear a pin drop. Maybe they shouldn’t anger their members or clients, many of whom are intensely polarized. And maybe it doesn’t matter a great deal to the overall buildings and commercial real estate industry whether Hillary Clinton or Donald Trump wins. Reason being that both are market-oriented leaders who will strive — albeit in different ways — to keep the free enterpriseeconomy humming and will, for the most part, work with like-minded members of Congress to achieve pro-growth results.

One telling measurement of business’ presidential preference is the amount of money donated by industry.

A recent Wall Street Journal analysis showed that Clinton received 250% more money from the real estate sector than Trump—in spite of the fact that he has spent his career in commercial real estate. And she has collected more than five times what Trump has garnered from the real estate-sensitive financial sector. Astonishingly, none of the Fortune 100 top American CEOs had contributed money to Republican Trump by late-September, according to the Wall Street Journal. Eighty-nine were reportedly supporting neither candidate, and 11 were backing Clinton.

And Fortune magazine reported in its Sept. 15 edition that Clinton collected a whopping $249.5 million from business sectors against Trump’s paltry $8.7 million.

California Buildings News gathered several industry groups’ recommendations on choices before voters.

Image: Adobe Stock.

The National Apartment Association has alerted its members to a number of issues that will come before the next president and Congress: Tax Reform: The apartment industry favors progrowth tax reform that does not disadvantage multifamily housing relative to other asset classes. NAA supports a comprehensive approach that does not reduce rates for corporate taxpayers at the expense of flow-through taxpayers (e.g., LLCs, partnerships and S Corporations) that remit business taxes on their individual income tax returns and dominate the apartment industry. We also strongly support maintaining the current-law tax treatment of carried interest; the full deductibility of business interest; the LowIncome Housing Tax Credit; and the estate tax compromise agreed to in the American Taxpayer Relief Act of 2012 that calls for a $5.34 million exemption (indexed for inflation) and a 40 percent top rate.

Immigration: Congressional inaction has resulted in a patchwork of immigration policies that do not adequately address national security concerns or economic and workforce needs. Moreover, this generates uncertainty for businesses, including apartment firms, who must comply with various federal, state and local laws. Some local laws would even hold apartment companies responsible for the immigration status of apartment residents. NAA supports a comprehensive approach to immigration reform including interior and border enforcement, employment eligibility verification, amply-sized guest worker programs for all (Continued on page 38)

32 California Buildings News • September/October 2016

Hotels Shape Their Meeting Spaces for Growing Small Meetings Market Industry sources report an increase in the number of companies and organizations that are holding small meetings for a variety of reasons: board retreats, training, rewards, strategy meetings, team building and even HR recruitment. Add to that the increasing number of special interest groups and hobby clubs that meet off-site and you have a real trend. Meeting insiders and surveys show that about half of all such meetings are held either in city centers or nearby resort areas, with a smaller number at designated conferences centers or airport hotels.

For instance, Monterey Peninsula properties — often at the forefront of hospitality trends — offer a wide range of small meetings experiences for many Silicon Valley companies (just an hour away) and other companies and organizations in Northern California and the Central Valley, only two to three hours’ distance. And the Monterey airport accommodates other groups from other cities throughout California and the country.

Hospitality managers from small Carmel village inns to large full-service resort hotels like the Monterey Hyatts are fashioning experiences to fit any type of small meetings event — for all budget levels.

Even value-priced and smaller properties like the Hofsas House in Carmel offered meeting opportunities for companies as big as Apple and even for small hobby groups that meet annually to enjoy their crafts. It’s a cozy European-style retreat for family reunions, business team or leadership meetings, sewing/ knitting/quilting conferences, or small wedding receptions. The poolside meeting room has a fireplace, full kitchen and can accommodate a seated dinner for 30, a stand-up reception for up to 40 or a boardroom or U-shaped setting for up to 24. The room is also ideal for private personal dining parties.

Says owner Carrie Theis, “Our boutique setting allows your meeting to take in the natural beauty of Carmel-by-the-Sea while getting some work done. We offer free WIFI, projector, screen and conference phone if needed. A continental Top photo: Private dining room at the Hyatt Carmel Highlands. Lower photo: Hyatt Carmel Highlands’ deck has seating for small groups.

33 California Buildings News • September/October 2016

breakfast is included with your room Hyatt Carmel Highlands is the go-to “The hotel’s seasonal inspired stay and can be served in the meeting location on the Central Coast for catering offerings along with the room so you can start your meeting almost any type of small meeting,” available restaurant options provide a with fresh coffee, French pastries, says Mel Bettcher, Managing Director, wide array of dining options to meet juice, fruit and yogurt.

Hyatt Carmel Highlands. “Add the small group needs and changing time “The beach is only tables. A selection eight blocks away, so of both fixed boardyou can take in a run room and flexible or walk in the fresh customizable space on air of Carmel before campus-like grounds or after your meeting. allows for concenHow about having trated meetings and a picnic lunch and strategy sessions in going to Point Lobos addition to a variety of with a guide for a locations. The Hyatt change in setting Regency Monterey rather than a typical is adjacent to both lunch in the meeting the Del Monte Golf room? We can also Course (a Pebble suggest team building Beach Company) ideas such as creating as well as Marilyn a morning breakfast, Monroe Spa, for s’mores and a fire on-site ‘down-time’ on the beach, Range enjoyment. We like Rover Team Building to think of the Hyatt Hofsas House’s poolside meeting room is ideal for corporate retreats and board meetings, experience, olive oil Regency Monterey’s as well as crafting groups or small wedding receptions. Photo courtesy of Hofsas House. and balsamic tasting location as being the or wine tasting. Other “Hub of Heaven” nearby activities could also include spectacular views of the coast and our on the Monterey Peninsula, with golf, yoga on the beach, surf lessons, elegant décor and you have a meeting easy access to group and individual kayaking, hiking, and last but not least location that is second to none. We’ve activities including world class golf a food, historic or art tour. received tremendous feedback from courses, the dramatic scenery of the “As a long-time resident and city every group that has had a meeting Big Sur Coastline or whale watching councilwoman, I am very familiar with here. The bottom line is, why have a on Monterey Bay, outstanding the area and can help you with your meeting that is ordinary when you can wineries and tasting rooms, not to meeting needs. We love to have guests have one that is unforgettable?” mention the shopping available on come to experience this special and The other area Hyatt, the Hyatt Cannery Row and nearby Carmelmagical area of Carmel-by-the-Sea and Regency Monterey, has just undergone by-the-Sea.” we look forward to hosting you.” a renovation and offers an even bigger And even in-town properties For upscale retreats, there is nothrange of meeting opportunities. “It has like the smaller Hotel Abrego are ing more distinctive than one of the been very successful attracting smallconvenient for area businesses or Monterey Peninsula Hyatts. er, strategy and executive leadership organizations that want to take Perched above the Pacific is the meetings to the Monterey Peninsula. advantage of the hotel’s meeting glamorous Hyatt Carmel Highlands.

Our clients appreciate our ability for a room and gourmet kitchen. Hotel “With our unique combination of quick turn-around time from inquiry Abrego hosts training sessions, state-of-the-art amenities, incomparato contracting completed and detailed association meetings and all sorts of ble service staff, almost 5,000 square program,” says Director of Events civic events. It can accommodate up feet of exceptional meeting space, the Jerry Malone. to 40 people. n

34 California Buildings News • September/October 2016

Industry News

California’s Economic Boom Continues, Especially Multifamily Commercial Real Estate Accommodates World’s 5th Biggest Economy California commercial real estate continues its boom, but as U.S. economic growth slows, there are signs of this boom topping out, according to the latest Allen Matkins/ UCLA Anderson Forecast California Commercial Real Estate Survey. It signals that commercial real estate fundamentals will improve with increases in employment and income, but a slowing of the growth of these is potentially of concern. The biannual survey projects a threeyear-ahead outlook for California’s commercial real estate industry and forecasts potential opportunities and challenges affecting office, multifamily, retail and industrial sectors.

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The survey, taken by commercial real estate industry leaders in June 2016, “provides the first indication of a topping out in office and retail markets,” says Jerry Nickelsburg, adjunct professor of economics at UCLA Anderson School of Management and senior economist with the “Multifamily developer UCLA Anderson Forecast. In optimism has remained the two other strong and consistent.” markets surveyed, industrial and multi-family housing, the optimism of the past few years continued through the June survey period.

Specifically, the survey presages a new topping out of the market for office space in the future. For each of the six markets surveyed (San Francisco, the East Bay, Silicon Valley, Los Angeles, Orange County and San Diego), the trend in office developer sentiment since its peak in 2014 has declined.

For the Southern California panels, sentiment has slowly weakened, with the survey indicating that markets will remain the same three years from now. “One can say that the panels are still optimistic, but clearly that is abating,” says Nicklesberg. Moderated sentiment aside, the interest in building new office space has held steady and the expectation is for more building to occur in the 20162017 time frame than in the past 12 months.

In the Bay Area, the outlook is slightly different. The San Francisco, Silicon Valley and East Bay panels all think that by 2019 real rental rates and vacancy rates will be worse than today. Panelists were most pessimistic about the San Francisco market, in spite of propositions that limit both new building and the conversion of existing B and C office space in the city.

To clarify, the survey does not indicate construction of office space is imploding. Rather it says that it is unlikely office space construction will be more robust in 2019 than it is today.

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Multifamily developer optimism has remained strong and consistent over the previous four years it has been (Continued on page 42)

35 California Buildings News • September/October 2016

NCSA Members Vote Yes to ISSA Merger ISSA, the worldwide cleaning industry association, and the National Cleaning Suppliers Association (NCSA) are pleased to announce that NCSA members have voted to merge with ISSA. Under terms of the agreement, NCSA members will retain their NCSA memberships on a local level, but those memberships will expand to include global ISSA membership and benefits. Once the merger is finalized, NCSA members will have access to ISSA member benefits, including market exposure, networking opportunities, business tools and data, and industry information.

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Real Estate Firms: Greener, More Socially Responsible GRESB, a leading data provider for environmental, social, and governance (ESG) performance of real assets, has released the results of the 2016 GRESB Real Estate, Developer and Debt assessments. The new data shows that real estate companies and funds are improving across all aspects of ESG performance, including a 1.2% reduction in energy consumption, 2% reduction in greenhouse gas emissions, and close to 1% reduction in water use, and are putting greater focus on occupant health and well-being.

“The 2016 GRESB data demonstrates that the global real estate sector is working to manage its carbon footprint, build resilience in the face of climate change, and respond to more stringent environmental regulations,” said Nils Kok, CEO of GRESB. “In 2016, 90 percent of property companies and funds reporting to GRESB are integrating carbon management strategies into their investments. These actions have contributed to a 2% annual decrease in carbon emissions, the equivalent of taking 704,464 passenger cars off the road.”— From the Institute for Real Estate Management (IREM)

36 California Buildings News • September/October 2016

Industry News

Los Angeles Better Buildings Challenge With technology changing Gittleman stated in his so rapidly, it can be difficult keynote address. to decide where and when The program continued to make investments. Hosted with 16 fast-pitch presentain August at The California tions from leading energy and Endowment, the Los Angeles water efficiency technology Better Buildings Challenge companies. With only three (LABBC) 4th Annual Building minutes to speak, each comTechnology Showcase featured pany gave a quick download fast-pitch presentations from on its technology includleading technology companies ing: technology application, selected for inclusion in the features and benefits, case LABBC SoCal Edge initiative studies, ROI, demonstration based on rigorous third-party opportunities, and contact testing in government and information. commercial buildings.

Nominations for the With over 120 in attenLABBC’s 3rd Annual dance, the audience spanned Innovation Awards, which a diverse mix of professionals will be held on February 28, including property owners 2017, are due by December Marc Gittleman, Senior Vice President of Third Party Services and managers, technology 31, 2016 to info@la-bbc.com.

Management for Rising Realty Partners. Photo credit: Sounds Fishy. companies, utilities, city staff, and sustainability professionals.

The event began with networking and a building technology expo, featuring over 20 exhibit tables.

The program opened with remarks from LABBC Director Jeff Gould, who described the shared goals of the city, the utilities, the LABBC and LABBC Partners to achieve 20 percent energy and water savings by 2020.

In order to help meet those goals, the LABBC Building Technology Showcase provides an opportunity for building owners, managers and engineers to quickly get up to speed on third-party-vetted technologies that could benefit their buildings.

Keynote speaker Marc Gittleman, Senior Vice President – Third Party Services at Rising Realty Partners, discussed his experience with building technologies from the owner’s perspective. “We have an opportunity to tell a phenomenal story here in LA… We need to be more aggressive in how STARLINE® Track Busway’s overhead, scalable, we’re going to be using technology when underwriting “add-as-needed” system can expand quickly, with buildings.” no down time and no routine maintenance. To learn A noted expert in real estate innovation, Gittleman’s more or to find a representative near you, visit creative leadership in implementing advanced technologies www.StarlinePower.com or call +1-724-597-7800. has garnered national attention for Rising and is recognized as one of the most innovative developers in Los Angeles.

“As decision makers and influencers, we need to advocate for technologies to innovate and move forward— technology needs to be a tool to get us to our goals,”

Flexible power solutions in minutes.

Not weeks.

37 California Buildings News • September/October 2016

Sinking San Francisco Tower Poses Risk, Massive Transit Project Stalled What began as a structural engineering choice of what kind of foundation should be used for the 58-floor Millennium Tower in San Francisco has evolved for disputed reasons into a major disruption of one of the largest urban projects in California history—because the residential building is now sinking three times more than anticipated and tilting slightly into the heart of the Financial District.

At issue is the safety and property value of the people who have purchased the 400-plus luxury condominiums in the tower as well as the security of people neighboring high-rises in the center of one of the densest urban corridors in the country.

Also, at least stalled if not imperiled is the nearby development of the new multi-billiondollar Transbay Transit Center terminal linking San Francisco with the East Bay, South Bay and even Southern California.

The center will include a tunnel that extends the terminus of the Caltrain commuter rail line from its current location at Fourth and King Streets, which serves South Bay commuters and travelers. And the terminal would be designed to accommodate the planned High Speed Rail Project to and from Los Angeles. The center has also attracted proposed development of 13 towers on sites around the new terminal, ranging from 300 feet to 1,200 feet tall, including the tallest building on the West Coast.

Dramatizing the issue was San Francisco County Transportation Authority Commission’s decision in late September to withhold its design funds for the continuation of the Transbay Transit Center for two months or longer until the Millennium Tower issue and the Transbay Center can be better understood or resolved. The developer and the tower residents are both undertaking studies of the building issue.

People who work, live or visit the Millennium Tower area in earthquake-prone San Francisco are very nervous — and area media are reporting on aspects on the story on a daily basis.

The San Francisco Examiner quoted City/County Supervisor David Campos as saying, “As we’re dealing with

our own leaning Tower of Pisa here in San Francisco, I think that we have a responsibility to make sure that we do everything we can to make sure that something like this project is handled property.”

The Working Group on California Earthquake Probabilities recently updated its earthquake forecast and determined there is a 72% probability of at least one earthquake of magnitude 6.7 or greater striking somewhere in the Bay Area before 2043. And the Millennium Tower and the Transbay Center sit on unconsolidated fill land, just a few blocks from the San Francisco Bay.

Who’s at Fault for the Sinking Tower?

Although the blame game has already begun, and the first of what is likely to be many multi-million-dollar lawsuits have been filed by attorneys for at least 160 condos owners, fixing responsibility may be very difficult.

Millennium Partners built the tower according to San Francisco’s code, although some assert that its team might have drilled deeper down into bedrock to secure the structure, a method used more recently — but not required. Pumping water from beneath the area by the Transbay authority to “de-water” its planned tunnel has raised questions that this activity may have caused the Millennium Tower to sink and tilt more than necessary. The Millennium Tower foundation is built on a city-approved “mat” design of 14-inch piles driven 60-to-91 feet deep, a commonly used method to secure skyscrapers in the area.

Millennium Partners is one of the country’s foremost developers of core, urban mix-use properties in gateway cities like San Francisco, Los Angeles, New York, Washington and Miami. Its projects are high-end and (Continued on page 39)

38 California Buildings News • September/October 2016

Elections (Continued from page 31) (NAA Recommendations) industries including construction, and a practical earned legalization process for a robust workforce and consumer base to strengthen the multifamily industry.

Housing Finance: Many factors influence the apartment industry’s health and its ability to meet the nation’s growing demand for rental housing, but the availability of consistently reliable and competitively priced capital is the most essential. The bursting of the housing bubble exposed serious flaws in our nation’s housing finance system. Yet, those shortcomings were confined to the residential home mortgage sector. The Government-Sponsored Enterprises’ (GSEs) (i.e., Fannie Mae and Freddie Mac) very successful multifamily programs were not part of the meltdown and have actually generated profits to the government since the two firms were placed into conservatorship. A reformed housing finance system should: 1. Maintain an explicit federal guarantee for multifamily-backed mortgage securities available in all markets at all times; 2. Ensure that the multifamily sector is treated in a way that recognizes the inherent differences of the multifamily business; and 3. Retain the successful components of the existing multifamily programs in whatever succeeds them.

Section 8 Housing Choice Vouchers: The Section 8 housing choice voucher program is America’s primary method of rental assistance.

Funded by the U.S. Department of Housing and Urban Development and administered by local public housing authorities, the program provides subsidized rents for qualifying low-income families in private rental housing, including apartments. This publicprivate partnership has the potential to be one of the most effective means of addressing our nation’s affordable housing needs and supporting mixedincome communities. However, the program’s potential success is limited by too many inefficient and duplicative requirements, which discourage private providers from accepting vouchers. The program has also been plagued with a flawed and volatile funding system that has undermined private sector confidence in the program.

California Issues: Propositions Affect Business and Job Opportunities “With such a high profile presidential election, it’s easy to forget our state and local races, says Bob Alvarado, Executive Officer, Northern California Carpenters Regional Council, which represents more than 35,000 carpenters, millwrights and dry wall and pile driver workers. “This election cycle many of our local communities and school districts will be sponsoring bonds and sales tax measures on the November ballot in support of local infrastructure.

“The same holds true at the state level. Of the 17 propositions on the ballot, there are two propositions that will have a direct effect on business and job opportunities and our ability to build and improve our infrastructure in California.

“Proposition 51 creates a $9 billion dollar school facilities bond fund to repair, upgrade and improve California’s K-12 public schools and community colleges and would help meet local school facility needs well into the future by providing a supplement or “state matching funds” to local school districts with bonds in place.

“Proposition 53, also known as the Cortopassi initiative, would require any revenue bond, state or local, funding construction projects over $2 billion total cost be voted on statewide, eroding local control and delaying or derailing much needed infrastructure projects, negatively impacting construction workers and business interests throughout the state.

“Locally, in the Bay Area, BART has a measure on the ballot that would fund a $3.5 billion dollar bond, which would improve BART’s infrastructure by repairing and upgrading its system allowing for increased ridership and in turn helping reduce traffic on our heavily congested roadways.

“Local governments receive money from the federal and state government by becoming ‘self-help’ counties. Usually funded by a half cent sales tax, these moneys go toward transportation improvements like the fast track lane on highway 580, and invests in renovating roads and streamlining traffic.

“Supporting these measures and bonds are an investment that not only helps business, by streamlining the delivery of goods, but also supports head of house hold jobs and provides for apprenticeship opportunities for local people.

“This election we need to support our communities by supporting the bonds and measures that keep our economic engine moving. It’s in all of our interests to keep the ball rolling and keep our state golden.”

(Continued next page)

39 California Buildings News • September/October 2016

Elections (Continued from previous page) Workforce Development Issues: California Chamber Urges Support Since educational quality drives workforce quality, it is ever more important that California students get the best grounding possible before entering the world of work as California’s economy continues booming and requires better educated workers.

The California Chamber of Commerce, a leader in human resources issues, urges its members to support passage of Proposition 58.

Its board recently voted to support the California Education for a Global Economy Initiative (Proposition 58), on the November 2016, saying “California’s economic success depends on its ability to prepare a workforce educated to compete in a global economy.”

If approved by voters, Proposition 58 would amend and repeal certain portions of Proposition 227 and add a few new provisions regarding English language instruction.

Proposition 227, the “English Language in Public Schools” initiative approved by voters in 1998, mandates that all children in California public schools be taught English by being taught in English unless parents have gone through a waiver process.

Proposition 58 would repeal existing law giving parents/ guardians standing to sue for enforcement and making public school administrators and teachers personally liable for failing to provide an English–only curriculum. This right to sue has had the effect of doing away with most bilingual programs/classes. Before the passage of Proposition 227, 30% of California’s English Learners were taught in bilingual programs. Ten years after the passage of Proposition 227, about 5% of English Learners were taught in bilingual programs. The California Department of Education reports that of the 10,393 schools currently in California, only 312 offer multilingual programs.

On other issues, the Chamber recommended that businesses: SUPPORT Proposition 51 — School Bonds Proposition 52 — State Fees on Hospitals. Federal Medi-Cal Matching Funds Proposition 54 — Legislative Transparency Proposition 58 — English Language Education OPPOSE Proposition 53 — Revenue Bonds Proposition 55 — Tax Extension on High Wealth Individuals Proposition 61 — Prescription Drug Purchases. Pricing

Millennium Tower (Continued from page 37) well-regarded in the industry. Its spokesperson P.J. Johnson says, “The building’s foundation and design are similar to many other buildings in the area. Like virtually all other large buildings in that part of the city, 301 Mission St. has its foundations in layers of geological materials within the ‘Colma Formation,’ just like 350 Mission, the Marriott, the Meridian, the St. Regis, the Intercontinental, SFMOMA, 101 California, the Embarcadero Center … and dozens of others.”

He added, “All buildings settle. The difference at 301 Mission: It exists in a location where TJPA’s (Transbay Joint Powers Authority) massive underground construction work was subsequently performed, by an agency that was obligated by law to monitor and protect existing structures, and to mitigate any impacts of its work.

“At the time of its completion in 2008, 301 Mission had settled within predicted, safe ranges. At the time TJPA began

its construction in 2010, 301 Mission had still settled within predicted, safe ranges. And by the time all units were sold in the building, 301 Mission had still settled within predicted, safe ranges. 301 Mission subsequently settled beyond the 12 inches it was predicted to settle, because it was affected by subsequent excavation, construction and more than five years of dewatering by TJPA.” Johnson said the building is “safe.” He said the developer’s top priority is “getting to a ‘fix’.” “We have now confirmed that dewatering has caused this excessive settlement; TJPA now needs to take measures to stop it. We are focused on: (1) accurately assessing what has happened and why; (2) preventing any further damage dewatering and other construction activity may be having, even now; (3) and taking appropriate remedial action to ensure that the building remains safe and secure.” n

40 California Buildings News • September/October 2016

Q&A (Continued from page 5) Together these innovations are great examples of how design professionals can bring their creative problem solving skills to the table in finding solutions that are win-win-win – without changing roles and responsibilities of the parties. The success of PASS is drawing attention around the country as these issues are not unique to California. To help further the work of PASS, we’ve set up a nonprofit entity – the Streamline Institute – which can help spread this good stuff to other communities throughout California.

Q

Are California architects becoming more sensitive to the need to design workplaces and housing that promote wellness?

A

Architects are the natural stewards of the environment, and they share a passion for creation of spaces that promote a 360-degree vision of wellness. The toolkits of architects ranges from the simple — provide attractive and convenient stairs and walkable alternatives–to the design of places for people to grow their own food, How can architects play a to exercise, to share stories and bigger role in designing multiexperiences and to gather for fun.

Top California AIA leader says family dwellings that can help At my own Warehouse Artist Loft alleviate the housing shortage?

“Product vendors that are project in Sacramento, the formerly empty rooftop now has tenant Housing choice and affordsavvy... have found ways to gardens, a children’s play area and ability is a challenge throughout a community BBQ and seating. move far past the pitch.”

California, and multifamily housThis makes it one of the hearts of ing is one of the elements that “place” that has led to a four-year has to be part of a comprehensive tenant waiting list.

That line of people wanting “in” may approach to addressing it. With the loss of redevelopment be a comfort for the developer, but it’s also an indication as a financing tool in California, we are now left with housthat there is great demand for the amenities that enrich ing bonds and federal housing tax credits and a short list of health and that boost wellness on all levels. Wellness is not other more exotic paths that developers can turn to. All of just about safety and sanitation. Today the concept goes the available resources are incredibly oversubscribed. To get much further. Wellness includes the stress reduction which projects launched developers in many cases have to cobble accompanies a supportive network of neighbors and friends; together many sources, each of which brings its own stakeit touches resilience when weather or seismic events create holders, regulations and design requirements. California havoc and there is a place of refuge; it’s about having opporarchitects in this environment have become very savvy in tunities to get exercise conveniently; a place to share the joy finding creative means to navigate an increasingly complex of growing a tomato with a child and sharing a fresh ripe mix of community and financing stakeholders while also one; and having a place to relax, share a meal and a story. addressing community design guidelines, sustainability This is how buildings build community. I believe that when goals, carbon sequestration, net zero energy goals, specialty architects are given the latitude to “push the boundary” standards such as historic review, coastal commission, transamazing things result, and that rising tide lifts all boats. portation choice and live/work geographic balance. In sum,

Q A

myriad other considerations that have to be balanced by the design professional, on what is usually a very tight timeline.

Of course we add to our own desire that our new buildings be not only attractive but inspirational and aspirational, while also being low in construction cost.

With so many competing factors, you can imagine the size of the challenge for housing architects. In this complex landscape it is not surprising that the costs of the required design process have been increasing, while fees have not budged—which presents a challenge to the business side of architecture. New tools and design approaches have promise to increase our efficiency; but they come with their own costs and constraints. This is the tightrope that we walk on every project as architects, so when a project really sings — all the more reason to celebrate the architect behind it.

Q

Architects are quite influential in proposing various types buildings products, and this was done traditionally with the help of librarians. How has this process evolved with the more extensive access to web-based product offerings? Any suggestions as to how product vendors can sell more effectively to architects?

A

In the fast-paced environment we are all immersed in, having current information at my fingertips is essential. The Internet is the tool that allows that magic to happen. The volume of on-line information in fact is now so huge and so readily available that the biggest challenge that is emerging is not lack of information: it’s the means to curate that information. How can architects separate the critical knowledge needed right now from the vast amount of background noise? Product vendors that are savvy to this dilemma have found ways to move far past the “pitch.”

41 California Buildings News • September/October2016

Materials Revolution (Continued from page 14) database, a resource that houses compliant products, is growing rapidly as more manufacturers realize the benefits of having compliant products; particularly if their competition does not.

The WELL Building Standard, launched in late 2014, the most recent building certification to enter the design community, is wholly focused on the health of building occupants. The seven concepts are each ascribed to a specific human body system intended to benefit from its implementation. Among the criteria are overlaps of LEEDv4 such as Green Screen, C2C Health Certification and the LBC’s Material Petal.

Design professionals are diving deeper into the materials and finishes they specify every day. The evaluation criteria now being employed is more sophisticated and detailed. As improbable as it sounds, it’s not unheard of for designers to review Chemical Abstracts Service Registration Numbers (CAS RN®) or toxicology reports in order to evaluate a material. Manufacturers who disclose their chemical ingredients, will find themselves in a position of priority while those lacking this information risk being passed over for more transparent options.

Entrepreneurs are advancing product development as well, utilizing green chemistry, biomimicry and design for disassembly. Early-adaptors are using mycelium and bacteria to grow products, replacing energy-consuming methods with more efficient options. By looking to nature, products are being created with humble ingredients, eliminating the need for toxic chemical additives. Others are tapping into the vast waste and by-product stockpiles of our consumer-driven society turning them into high-value goods exemplifying the cradle to cradle philosophy. They are honoring the role materials play in design and cognizant of their true value.

We are evolving from fledging environmentalists to sophisticated professionals exploring new methodologies to protect and improve our health and for those willing to actively participate. Opportunities exist for the advancement of science, technology and boundless creativity to apply artistic acumen to meet our materials challenges. n Green is a material analyst at stok in San Francisco and can be reached at www.stok.com

These days, to really get the attention of busy design professionals vendors and their representatives must become trusted advisors, who can reliably and honestly sort through the vast information and get to the needed answers—complete, consistent and comprehensive. The best vendors are ready to talk about far more than “selling.” They know about all the offerings in the marketplace, their advantages and weaknesses. Those that are trusted advisors help the team get to success, even if it means steering them toward a competitor on occasion. I have found that the vendors that can find the courage to move to this cat-bird seat will get the attention.

Trust and respect will follow, and that lays the foundation for channels of connection that transcend advertising, marketing and sales. Of course the product data, examples of applications, cost information on both installation and materials and more—those facts have to be there as well — but that’s just a starting point in today’s incredibly competitive landscape.

Q Building management and operations people sometimes feel buildings are designed and given components that are less functional than O&M people desire. Should there be more front-end collaboration between architects and facilities operations people in new buildings and retrofits?

A

As we move aggressively toward net zero energy throughout California, the operation of buildings and how design supports maximum efficiency over time becomes a key part of the equation that defines success. Architects are eager and ready partners with O&M folks; and in fact as a rule designers relish the opportunity to get into the details of shaping a long-term vision for the buildings they create.

Success for a building is not defined on the day ribbons are cut and speeches are made. Success in shaping the built environment extends decades down the road. What will it take to keep our buildings at top efficiency—both functionally, mechanically and aesthetically? This is an important question every architect today is asking as they explore and research design options. On the client side the resources need to be allocated to allow for design phase modeling, analysis, and the thoughtfulness that can provide the full measure of success for the long haul. We also believe there should be added incentives to both the development and design community to take the long view--incentives built into the entitlement and permitting processes, and also in property taxation. With a few more “carrots” we could do much more to move toward net zero energy more quickly. n Malinowski can be reached at http://www.aiacc.org/ or at www.appliedarchitecture.net

42 California Buildings News • September/October 2016

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included in the survey. The demand for multifamily housing tends to follow job growth in the more densely populated regions of California. Hence, one would expect the Silicon Valley, San Diego and San Francisco markets to tighten over the coming three years, relative to Orange County.

The Los Angeles market is different with survey panelists in that region expecting vacancy rates to increase over the next three years even as real rental rates continue to rise.

The building of new apartments in Los Angeles is therefore expected to ease some of the shortfall in housing units, even while higher rental rates permit lessees to tolerate somewhat higher vacancies.

The current economic expansion reflects a shift in tastes from primarily single-family housing to a balanced mix between single-family and multifamily housing. Though overall residential construction has remained at depressed levels in the state, multi-family construction has rebounded sharply. The survey anticipates a 25-year high in multifamily construction during the next three years. There is no evidence of a slowdown in new multi-family development.

Retail Sentiment Remains Positive, But Hints at a Topping Out Retail is undergoing a profound change from distribution conduits to experience-shopping venues. In each of the markets polled, retail space sentiment was positive, but not quite as positive as indicated in the previous six months. Retail is currently being driven by two factors: new construction of retail spaces to support the booming multifamily market, and renovations of existing high-quality malls from brick-and-mortar stores to experience venues. There are also significant headwinds as consumers shift to online purchases.

Data from both Southern California and in the Bay Area suggests that, although the retail space may be struggling in general, there remain significant opportunities in the realm of retail space construction. Allen Matkins is a premier California-based law firm specializing in real estate, litigation, labor, tax, and business law, with more than 200 attorneys in four major metropolitan areas of California: Los Angeles, Orange County, San Francisco and San Diego. n

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