BOMA San Francisco Views

Q4 2019

Annual Toast: Time to Connect, Reflect and Celebrate BOMA Every year BOMA members gather in October for our annual membership meeting. We rebranded the event this year as the “Annual Toast,” a time to connect, reflect and celebrate. At the recent 108th annual meeting, we raised a glass to recognize BOMA’s achievements in 2019 and pay tribute to our dedicated corporate sponsors, committee chairs and board members.

Board of Directors Member Glenn Good presented a highlight reel of the association’s advocacy efforts. “Thanks to volunteer involvement through our committees, BOMA San Francisco is always working with policy makers on rational ways to develop and implement policy that impacts the built environment,” he noted. “And that’s real value to you and your investors!”

In 2019 committee volunteers spent time strengthening relationships with

elected officials and establishing a dialogue on climate change initiatives affecting commercial real estate.

Some advocacy highlights: w 100% Renewable Electricity Mandate for Commercial Buildings — BOMA worked vigorously to protect members with amendments that include a cost cap, a compliance exemption and other protections. w EV Charging Station Requirement —BOMA worked with city officials on a waiver process when certain conditions are met. w Tall Buildings Safety Study —BOMA is actively engaged with helping to enhance public safety that may be impacted by our member buildings following an earthquake.

BOMA Director Wes Powell gave an overview of the organization’s educational and professional development opportunities, including the Foundations of Real Estate Management series of courses, career success workshops for emerging professionals, various seminars and the Knowledge & Network programs.

Top photo: team members from Able, BOMA SF Platinum Sponsor. Lower photo: BOMA EVP Marc Intermaggio thanks outgoing president Bill Whitfield and outgoing board member Wes Powell for their service.

(Continued on page 14)

What’s Inside Views... n n n n n

Q&A: BOMA’s New President • Page 2 The Future of Flex Space • Page 5 Emergencies: Get Prepared • Page 6 Building Codes Challenges • Page 11 Members on the Move • Page 16

Left: BOMA Emerging Professionals network at the Annual Boat Bash. More about EPs on page 4.

2 Thanks to Our 2019 Corporate Sponsors Platinum Sponsor

Able Services Gold Sponsors

With Christine Mann, RPA, LEED® GA, Newly Elected BOMA SF President and Portfolio Manager, Paramount Group, Inc. Tell us a little about your career path and your current role with Paramount Group, Inc. When I “grew up” in this industry, I don’t think I ever thought this would be my chosen career nor did I think that this career path existed. My primary goal was to get my foot in the corporate world and the rest is history. What started as a temporary receptionist role for an executive suite platform (aka WeWork circa 1990s) has flourished into a successful career path in commercial real estate. I have been fortunate enough to work with prominent real estate companies such as Catellus Development, Equity Office Properties, Madison Marquette and Boston Properties before I landed my role as the General Asset Manager for One Market Plaza with Paramount Group and now as the San Francisco Portfolio Manager.

In my current role as Portfolio Manager, I oversee all operations and management for our assets in San Francisco which has now grown to about 4M SF. I encourage and grow my team by empowering them to be involved in all aspects outside of property management such as leasing and construction. Ensuring that our teams deliver top-notch tenant relations and customer service is also a primary focus. A large aspect of my role is working closely with our various teams in New York as it pertains to acquisitions, financial planning and analysis, asset management, legal, lease administration and investor relations.

Paramount’s San Francisco portfolio includes iconic properties, such as 111 Sutter and One Market Plaza, and the firm is a leader in sustainability initiatives across the portfolio. What inspires you in managing these assets, and how will this experience shape your presidency?

One word— challenges. These two iconic properties, which encompass both ends of the spectrum, come with their own challenges. Having the ability to weigh in and make decisions on solving these challenges is what inspires me to wake up in the morning and tell myself I love my job! My sense of handling challenges, problem solving, my breadth of knowledge, experience in the industry and working with my peers will allow me to be strategic during my tenure. Paramount has empowered me to be a leader in this market, and I envision that I will bring this leadership to my role as president of BOMA San Francisco.

(Continued on page 4)

ABM Paramount Group, Inc. ProGuard Security Services, Inc. ProTech Security Services, Inc. Recology San Francisco Electrical Contractors Association

Silver Sponsors Allied Universal AT&T CBRE Clearway Energy, Inc. Columbia Property Trust GSH Group Hathaway Dinwiddie Construction Hines Hudson Pacific Properties McMillan Electric Metro Electric Service by Medallion Unique Elevator Interiors LLC

Bronze Sponsors Boston Properties CBF Electric & Data Clune Construction Cushman & Wakefield GP PRO Impark JLL Kilroy Realty Corporation LAZ Parking Marble West Perfection Services Inc. RiverRock Real Estate Group Securitas Security Services, USA, Inc. Shorenstein Realty Services, LP The Swig Company

Friends of BOMA Alliance Roofing Company Inc. Ascend Talent Solutions CB2 Builders Incorporated eWaste Direct Field Construction McNevin-Bay Area Cleaning Specialists Rossi Builders The Lawson Roofing Co. Inc. Township Building Services, Inc. Wilson Meany Young Electric + Communications

Media Sponsors California Buildings News San Francisco Business Times The Registry For sponsorship opportunities, please contact Tory Brubaker at toryb@BOMA.com

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BOMA

SAN FRANCISCO

EMERGING PROFESSIONALS

Emerging Professionals Corner

Fall was a busy season for BOMA SF Emerging Professionals.

In October EPs sailed with BOMA OEB EPs on the annual Boat Bash. Then in November, EPs volunteered at the SF-Marin Food Bank after a pre-event happy hour hosted by Center Hardware.

Here’s what’s coming up: the EP community will volunteer with the SF Fire Department to support its toy drive In late November.

On December 17, the committee will volunteer with Raphael House to hand out holiday gifts to families.

2020 will start off with a Kickoff Mixer on January 30, so save the date! To get involved, contact EP Chair Isabella Risucci at irisucci@hudsonppi.com.

Shown above left from the Boat Bash: Ana Duffy, Shorenstein; BOMA EP guest; Corri Uyeda, Columbia Property Trust; Samantha Hoyle, Columbia Property Trust; Matthew Caberet, Otis Elevator; and Isabella Risucci, Hudson Pacific.

Above right: EPs gather at Center Hardware for happy hour. Lower right: BOMA volunteers at the SF-Marin Food Bank.

President’s Q&A (Continued from page 2)

As it involves sustainability, Paramount is a front-runner in green building initiatives. Most of our assets in New York, D.C. and San Francisco are either LEED Platinum or Gold, and three of our assets in San Francisco are already Fitwelcertified. This reflects Paramount’s commitment to being an industry leader in social and environmental responsibility.

Describe your vision for leading BOMA San Francisco in the coming year.

I envision my leadership as continuing to support the objectives, efforts and programs that are currently in place.

I am also stepping in at a time where we will be searching for an executive director for the organization. Being a strong leader for the organization and collaborating closely with the board members on executing this plan is a top priority for me during my leadership.

What do you feel are BOMA’s strengths and key member benefits? And how can members best take advantage of BOMA’s network and benefits?

BOMA’s strengths are providing relevant education and training, creating valuable networking opportunities, key stakeholder participation, and active involvement in advocacy that protects private property rights at the local, state and federal level. Members can take advantage of

these strengths by supporting events, workshops, career success seminars, training sessions, luncheons and even social events. Participating in one of the many committees gives members direct involvement in planning and executing BOMA’s directives and activities.

You are a past chair of the BOMA SF Education Committee. How do you see BOMA helping to prepare the next generation of CRE professionals?

Education is near and dear to my heart, hence my involvement with the Education Committee. I am a huge advocate of continued learning and education, as we can always use this in our daily property management lives. BOMA’s Education Committee prepares the next generation of CRE professionals by coming up with meaningful topics for learning opportunities that provide not only market knowledge but also address current trends in our industry.

What activities do you enjoy in your leisure time?

My leisure time is usually spent watching my two boys playing basketball or baseball. I’m so used to spending my weekends at their sporting events that when we have a day or weekend with no sports or practices, I often wonder how I am going to spend my day! I do enjoy going to the gym, cooking, wine tasting and spending time with friends.

5 Coworking: the Future of Flexible Space Coworking has taken the business world by storm, providing flexible space alternatives for an evolving economy.

At a recent BOMA SF Knowledge & Network seminar, JLL International Director Wes Powell explored the impact flexible space is having on commercial real estate and property management. Powell said there are “tricks and traps” in leasing to and managing coworking tenants.

Some highlights: u Market forces are driving the growth of flexible space. These factors include: workplace design, demographics and urbanization, capital flows and technology. “We will see cycles, but it’s here to stay,” Powell emphasized.

u Some operators want to be the exclusive coworking operator in a property. Property managers need to manage their leases. Also, be careful about subleasing clauses. u What’s your property’s policy about tenants’ signage? Be sure that all signage adheres to the City’s policies. u Labor disharmony is a possibility.

The use of non-union contractors by coworking tenants could result in protests at your property. Outof-town asset managers may not be familiar with San Francisco labor laws.

Beware!

u Coworking tenants can be heavy users of trash, janitorial and utilities, Coworking spaces are proliferating. which could double operating expenses. Put language in the lease u Flex space is attractive to many tenants. Possible benestating that the tenant will bear such costs. Submeter fits are reduced cost for a move-in-ready space, flexibility spaces when possible. as companies launch new initiatives, collaboration in a u Finally, ask what coworking tenants might offer your coworking space vs. having remote workers, and attracting other tenants, such as use of a conference room or lounge. talent with sites near where employees live. u Flex space is extending its reach, with a growth rate of 23 times the overall tenant base. But it accounts for a small portion of the overall U.S. office inventory — only about 3 million SF of inventory in San Francisco. (New York City leads the nation with more than 16 million SF of inventory). Corporate adoption levels remain modest.

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u The majority of existing flex space is the tenant model in which there is a traditional lease with a third-party operator, such as Regus, WeWork or Knotel. Other emerging models are the operator/management agreement model in which third-party operators build and manage spaces and the self-perform/owner-operator model. u Property managers must be cognizant of a slew of issues with coworking tenants. One is access procedures and security. Security must be in line with your property standards, but as the landlord you don’t want to manage the access cards. Be sure that the lease provides that any cost increase to security capacity is borne by the tenant. u Consider density/base building conditions. Issues like restroom usage, HVAC capacity and ASHRAE fresh air standards may come into play. Know your property’s limits before signing a lease with a coworking tenant. u Stay on top of tenants’ use provisions. What is your property’s pet policy? Ask how a will space be used. One coworking operator used spaces for a gym and school.

Andrea Upwood Director, Real Estate Sales 312.505.2156 www.captivate.com

6 Preparing for the Inevitable: Emergency Readiness Wildfires, power outages, several earthquakes and a w Have an emergency plan, allocate resources and gas explosion shook up the Bay Area this fall. Plus, this practice. Identify weaknesses and make adjustments. year marked the 30th anniversary of the Loma Prieta After every emergency, ask what you could do better.

Earthquake. Thus, attendees of BOMA San Francisco’s w Preventive maintenance (PM) is a way of life. Without annual Emergency Preparedness Seminar were riveted to a good PM program, and execution you may not be able presentations at the standing-room-only event, entitled to sustain operations in an emergency. Make sure your “Preparing for the Inevitable.” equipment is in good repair.

“The need for emergency planw The mechanical world is subject ning isn’t going away,” said Bonnie to failure. Your building is new Kalbrosky, Chair of the BOMA SF for one day. After that, it’s aging.

Emergency Preparedness Committee You’re going to have a failure, and (EPC), which organized the recent you’re going to have to respond. event. “EPC is a strong resource Keep current as your buildings age. for BOMA members, providing As seasoned engineers retire, information and training. EPC also newer employees aren’t as funccollaborates with the public sector” tional for a number of years. (police, fire and the mayor’s office).

Today’s engineers also have differEPC Chair Bonnie Kalbrosky welcomes seminar At the seminar San Francisco ent skillsets. “It was a mechanical attendees to annual seminar on preparedness.

Chief of Police Bill Scott thanked world, now it’s all technical,” BOMA for participating in a PSPS (public safety power Murtagh said. “Train your people about mechanical, too. shut-off) exercise. He added that “the time to build relaOtherwise you are completely dependent on your mechantionships is not during an emergency. In an emergency, ical contractor.” relationships mean everything. I believe the city is very “We stay valuable because we take care of core busiresilient and can survive everything if we work together.” ness,” Murtagh adds. Personal preparation is also key: Michael Cochrane, Assistant Deputy Chief of Homemake sure you have a flashlight (don’t count on your land Security, San Francisco Fire Department, thanked phone’s app), lanterns, a screwdriver and hammer. Talk BOMA for providing buildings for active shooter and to your tenants about their preparations. And sign up for other emergency training. He emphasized that “the more alertsf.org to get notifications. you do disaster planning, the easier recovery will be.”

Preparedness from the Engineer’s Perspective Danny Murtagh, Vice President of Engineering, Boston Properties, delivered the keynote address, focusing on emergency preparedness from a building engineer’s perspective. He said the 1989 quake, which did not result in much damage in commercial buildings, helped galvanize the need to respond to buildings in an internal way.

BOMA SF was instrumental in helping the City develop BORP (Building Occupancy Resumption Program), which allows San Francisco building owners to pre-certify private post-earthquake inspection of their buildings by qualified engineers and specialty contractors upon Department of Building Inspection’s acceptance of a written inspection program. (See https://sfdbi.org/borp.)

Some key takeaways from Murtagh: w You can only effectively prepare for emergencies with persistent efforts over the life of a facility. It’s a thousand little things that matter.

Dark Sky Danger: What to Do

Jeff Ellis, Assistant Director of Security, Allied Universal, presented on the subject of a dark or black sky event. A black sky hazard is defined by the EIS (Electric Infrastructure Security) Council as “a catastrophic event that severely disrupts the normal functioning of our critical infrastructures in multiple regions for long durations.”

An event may be caused by a cyber-attack or extreme weather. “Our power system is more fragile than we realize,” Ellis said. For an exercise on a sub-catastrophic event, he recommended visiting www.eiscouncil.org.

Earthquakes or PG&E could also cause short- or longer-term power shut-offs. If there is a medium earthquake, power will shut off in San Francisco, which presents problems for property management and communications. If your building has a generator, at some point the diesel will run out. Have a plan in place for such an event.

“Even if your plan is imperfect, you’ll do better at surviving the issue,” he advised. (Continued on next page)

7 San Francisco Election Round-Up

SF ELECTION RESULTS

In the November 5 election, BOMA members endorsed candidates for elected office and took positions on a number of propositions that affect our industry. Here’s a wrap-up of results and how they measured up to BOMA– SF–PAC’s recommendations.

Proposition A, the Affordable Housing Bond, passed (supported by BOMA–SF–PAC). The ordinance will allow the City to borrow up to $600 million by issuing general obligation bonds. Money will be used to build, buy and rehabilitate affordable housing.

Proposition D, Traffic Congestion Mitigation Tax, passed (supported by BOMA–SF–PAC). Starting Jan. 1, 2020, Proposition D will impose a business tax on commercial rideshare companies for fares generated by rides that start in San Francisco.

The following candidates who were supported by the BOMA–SF–PAC were victorious: London Breed – Mayor, Dennis Herrera – City Attorney, and Jose Cisneros – City Treasurer.

Two candidates supported by the BOMA–SF–PAC lost in very close races: Suzy Loftus, candidate for District Attorney, lost to progressive candidate Chesa Boudin.

District 5 incumbent Supervisor Vallie Brown was narrowly defeated by challenger Dean Preston.

“It’s important for BOMA members to stay engaged and advocate for candidates and issues that impact commercial real estate,” said John Bozeman, BOMA SF Director, Government and Industry Affairs.

“Stay tuned as we gear up for the 2020 election.”

Learn more at: http://bomasanfrancisco.blogspot.com or contact John Bozeman, BOMA SF Director, Government and Industry Affairs, at johnb@boma.com

Tall Buildings Safety Issues Naomi Kelly, San Francisco City Administrator, discussed the City’s Tall Buildings Study, which resulted in 16 recommendations. The tall buildings strategy involves amending building codes collaboratively and successfully and keeping people and business from being displaced.

Geotechnical best practices are being considered, and the Department of Building Inspection has added more geotechnical review. A state safety assessment program will be implemented and a disaster recovery task established.

Mary Ellen Carroll, Executive Director, SF Department of Emergency Management (DEM), whose department oversees all response plans, said DEM is focused on safety assessment and identifying buildings at risk of collapse.

The next level is planning for recovery, partnering with city and non-city leaders.

When asked about challenges BOMA members could face in working with initiatives, Marc Gille, Senior Vice President for Rockhill Management, said that there was a fear about invasive retrofits following a New York Times article on tall buildings, especially for older buildings. He noted concerns after a major event: getting tagged buildings inspected by the City will be difficult, as well as TIs. “Our teams need to have dialogue,” he says. “We need to talk to our tenants about their plans.”

Have you heard about the new BOMA Java program?

These informal gatherings are for Principal members to meet for coffee and conversation. Watch the calendar of events for upcoming gatherings.

BOMA members network at a recent BOMA Java.

8 Principal Member Profile

Lani Volz, LEED GA, Property Manager Boston Properties/Salesforce Tower

A star has rapidly risen in the San Francisco commercial real estate world! In just six years, Lani Volz has gone from a temporary coordinator position at Boston Properties to Property Manager at Salesforce Tower, San Francisco’s new icon and tallest building. “During my first few months with the company, I witnessed a level of professionalism and dedication to excellence that I knew I wanted to be a part of,” says Volz. “Boston Properties believes in developing talent within, so from a temp coordinator position I moved to work at our SOMA properties, then back to work on One and Two Embarcadero Center, and then was selected to be a part of the opening team for Salesforce Tower as Assistant Property Manager.” A little after two years later, she was promoted to Property Manager.

Lani Volz “Managing a new asset is a unique experience in itself, but adding the size and scale of Salesforce Tower takes it to another level. Every day is filled with excitement, challenge and growth,” Volz observes. “I have been very fortunate to be a part of the property management team from the building’s inception and have gained incredible experience as the project transitioned from development and construction to full operation. The most exciting part about my role is being able to partake in the formation of a building community. From security and engineering to our tenants and their employee base—we are all a part of the building’s initial life period and get to experience the process.”

Throughout her career, Volz has been an active member of the BOMA SF Energy and Environment Committee, as she has a strong interest in sustainability and environmental cognizance. She adds that committee work has connected her with knowledgeable industry leaders and professionals who are a valuable resource.

When she’s not in the office, Volz enjoys being outdoors and exploring nature. “Transitioning from Hawai’i to California was an adjustment, but also an incredible change as the scenery here is just as amazing,” she says. “The golden coast has so much to offer, and I really love taking it all in. When the sun is out, you can find me at the beach (although I have not gotten used to the water temperatures just yet) or hiking around the Bay Area.”

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Kelly Youngblood, Account Manager HARBRO Emergency Services & Restoration

Ensuring a positive relationship between the HARBRO Emergency Services & Restoration team and its clients is all in a day’s work for Account Manager Kelly Youngblood. “In addition, I pursue new partnerships with building owners, facilities managers, chief engineers and property managers,” she says. “I love meeting new people on a regular basis and the variety in my schedule.”

HARBRO offers emergency response and restoration after fires, floods, water damage, biohazards, mold, vehicle collisions and asbestos contamination. “Every property can benefit from our services because we ensure commitment and security in a time of chaos. We promise to get our clients back on their feet in the most timely way possible,” Youngblood adds.

A graduate of the San Francisco State/CREATE (Commercial Real Estate Alliance for Youngblood enjoys hiking Tomorrow’s Employees) Fellows Program, Youngblood launched her CRE career by connectand other outdoor pursuits. ing with BOMA members. “I benefited from informational interviews with the program’s lecturers, especially Nicole DuBee. I met Ryan Rusler through Nicole, who offered me a position at HARBRO.” A former language analyst with the Marines, Youngblood enrolled in the business degree program at SF State and interned with a real estate office. “I became interested in the world of residential and commercial real estate. I later applied and was accepted into the SF State CREATE Fellows Program,” Youngblood says.

Since her graduation, she is furthering her industry knowledge and connections by participating in the activities of the BOMA SF Emerging Professionals Committee.

During her leisure time, Youngblood says she “enjoys anything and everything outdoors, but especially backpacking, hiking, running, kayaking, camping, skiing, and swimming in the ocean. I also love music and try to go to a concert once a week.”

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11 Climate Initiatives, Buildings Safety and Emergency Communications Issues Dominate Annual Codes Seminar In an effort to ensure that their buildings are up likely be required at 10% of spaces based on a review to code, a packed audience of BOMA members heard by the San Francisco Department of the Environment. updates from city officials at the Annual Codes Seminar Locations must comply by January 1, 2023. in November. This annual event is organized by BOMA Cyndy Comerford, Climate Manager, San Francisco San Francisco’s Codes & Regulations Committee to Department of the Environment, touched on the City’s inform members about issues and to continue the dialogue path to be emission-free by 2050. Although we need new our members have with city officials in shaping policy. buildings and new housing in dense urban areas, she said Presentations focused on that “the goal is to get people out of private vehicles.” climate-related ordinances Biking, walking and public and mandates, two-way transpiration are better soluSan Francisco’s 2050 communications and other tions. “We need to provide the Goal: Net Zero Emissions safety department requireinfrastructure so that this is The City will be engaging ments, and a host of building possible,” she added. the business community in inspection and compliance The City will be engagmeeting climate goals... topics. ing the business community “We are looking for and others in meeting climate City’s Climate Initiatives engagement from BOMA. goals. The Zero Emission Help us get expertise.”

“We value our relationship Building Taskforce will be — Cyndy Comerford, SF DOE with BOMA,” said Tyrone developing a roadmap. She Jue, Senior Advisor on the acknowledged that retroEnvironment from the mayor’s fitting existing buildings is a office. He said that the relationship is “important to good challenge. “We want to make sure that we are doing it government planning.” As the City puts out its intentions, in a just way,” she said. “We are looking for engagement it works with BOMA to “craft next steps.” from BOMA. Help us get expertise.”

Jue shared some good climate news: from 1990 DBI Inspection Update to 2017, the City’s population grew by 22% and the “BOMA is a good partner,” said Tom C. Hui, Director GDP increased by 166%. Yet emissions decreased by of the SF Department of Building Inspection (DBI), in his 36%. He said this shows as a city we can be sustainable opening remarks. with a growing economy.

He reported that his department continues to streamSan Francisco has a goal for net zero emissions by line its operations. In FY 2018-2019, more than 71,000 2050. By sector, commercial buildings account for 22% permits were issued, with 92% of building permits issued of emissions (transportation accounts for 46%). Legisover the counter within two days. Hui also noted that a lation from Mayor London Breed, the Commercial Green triennial code cycle update is coming up.

Energy Ordinance, requires that non-residential buildings DBI staff outlined four issues that are important to greater than 50,000 square feet utilize electricity resources BOMA members: Accessible Business Entrances (ABE), that are 100% renewable and carbon-free. The energy the Tall Buildings Safety Study, the Facade Inspection requirements are phased in from 2022-2030. The City Program, and the Vacant Storefront Program. is working with BOMA on the implementation of the The ABE program requires existing buildings with ordinance, especially for existing buildings. a place of public accommodation to have all entrances Legislation also has been introduced restricting natural accessible for people with disabilities. Compliance for gas use for new municipal projects and including “electricPhase 1 is December 1, 2019. There are certain exemppreferred” requirements for new private development. tions and a checklist compliance form.

EV charging stations are another city priority, with DBI is very involved in implementing the 16 recomrequirements for stations in commercial garages and lots mendations of the Tall Building Safety Study, which with 100+ parking spaces. Level 2 charging stations will promotes earthquake resilience. The department has (Continued on page 12)

12 Building Codes Seminar (Continued from page 11)

updated AB 082 — Guidelines and Procedures for Structural, Geotechnical and Seismic Hazard Engineering Design Review. DBI is also updating the BORP (Building Occupancy Resumption Program) Safety Assessment Program for tall buildings.

Coming soon is the Facade Inspection Program. Buildings that are five or more stories are required to have their facades inspected periodically (at a 10-year cycle), by a qualified professional. There is a table for initial inspection based on when the building was constructed.

Yet another program is the Vacant Storefront Program.

If you’re a property owner and your commercial storefront is vacant or abandoned for 30 days, you are required to register it with the DBI, even if it is actively being offered for rent or lease.

Fire & Emergency Communications Systems Rich Brown, Assistant Fire Marshall, San Francisco Fire Department, said the fire department has boosted efficiency with electronic plan review that utilizes Bluebeam Software.

He said to be aware that January 2020 begins a new code cycle. Fire and electric codes will all be affected.

Existing buildings must test emergency lighting monthly, with documentation shown to high-rise inspectors annually.

Sagiv Weiss-Ishai, P.E., Fire Protection Engineer with the SFFD Bureau of Fire Prevention, spoke about issues regarding two-way emergency communications systems (ECS). Some highlights: n IBC and CBC codes require that where a wired communication system is approved in lieu of an emergency responder radio coverage system, the wired fire department communication system must operate between an NFPA-compliant fire command center, elevators, elevator lobbies, emergency and standby power rooms, areas of refuge and inside interior exit stairways. n The SFFD has administrative bulletins on its website that are a good reference. (See https://sf-fire.org/2016administrative-bulletins.) Administrative Bulletin #2.01 Addendum H specifies new requirements in San Francisco for the design and installation of two-way ECS. n The CBC code changed between 2016 and 2019 for locked egress doors. Door hardware release of electric locking systems are permitted on doors in certain cases.

(See 2019 CBC Sec. 1010.1.9.10.) n There are conditions for two-way ECS for locked lobbies, including call stations, such as a stand-alone Viking two-way communication units with signage and instructions.

13 Special Sponsored Report

The Changing Skyline Are $100 Per Square Foot Rents Here to Stay and What Political Impact Does This Have on the Industry?

By Manuel Fishman, Buchalter law firm It should not be a surprise that the San Francisco and Bay Area office market has seen little “pause” during this last quarter. Base rents are crossing the $100 per square foot barrier at many Class A office buildings, enabling older and more seasoned buildings to increase rents. Pro forma rents used in underwriting acquisitions of trophy buildings are even higher. When one builds in construction costs and energy costs, and the increased legal fees attendant to documenting the allocation of costs and risks necessitated by a lease at new office buildings, the dollar numbers exceed anything that has been seen in the Bay Area.

Of course, the driving force behind these marquee leases are the economic decisions driving tech companies, where the cost of employee retention, firm culture and team building is more important to a company’s competitiveness than the rent actually paid. With billion dollar valuations for many tech companies and their appetite to gobble up entire buildings for space growth, the impact on building owners is significant. Some would argue it is not sustainable.

Building owners need to have “front burner” discussions with their lenders, investors and property managers on issues ranging from market-based capital improvements and code compliance costs, energy cost impacts (the PG&E bankruptcy reorganization is not going to be without cost to rate payers), and repositioning of building services to a whole new generation of building occupants. Most importantly, the older model of “full-service” leases, where landlords provide all services and bill tenants for increases in operating expenses and taxes over a base year is changing. Building owners and managers need to run economic models on what a down turn would do to such a model. Leasing, financing and operating buildings in such an environment requires constant vigilance as to cost controls, communications with tenants and vendors, and in ensuring that contractual documents maintain flexibility, reduce exposure to risk and have adequate remedies for enforcement. None of which are easy.

The immediate political horizon is fraught with risk to our industry. From the impact of affordable and reliable public transportation, climate change and “net-zero” energy goals, and water recycling and waste separation regulation, to electric charging vehicle requirements, traffic delivery vehicle and ride sharing

congestion charges, “tall building” seismic upgrades, social impact contributions, set asides and assessments, and the preservation of production, distribution and repair districts and neighborhood affordable housing, office buildings in the downtown South of Market and North of Market districts are easy targets.

We are viewed as both a captive base for taxes (once built, buildings stay in place and generate revenue) and incorrectly as an industry making excessive profits that are not re-invested in the communities which we serve. The “split-roll” tax movement is an obvious reaction to this, as are the gross receipts/commercial rent taxes and the various other assessments that a socially conscious Board of Supervisors seeks to impose. The City itself spends these tax dollars without industry oversight, and funds an administrative infrastructure and health and retirement program that is simply unmatched in the private industry (the City currently has a payroll in excess of $3.7 billion in total wages to over 40,000 employees (see https://www.bizjournals.com/ sanfrancisco/news/2019/10/02/san-francisco-highest-paid-cityemployees-2018.html).

We should be concerned of the risk of a dysfunctional market —a market where buildings are being loaded up with costs and taxes that, when the market turns, will be overly burdensome to retain. Buildings are not “market-proof” and the tenant make-up of buildings with traditional professional service firms presents a risk profile different from a tech-company occupied building.

As we enter an election year, all of us in this industry need to stay committed and active in communicating with our fellow citizens and our leaders that every building is a part of what makes San Francisco a world-class city and that every building owner is a contributor and does give back to the community, and that the stakeholders in our properties are generally insurance companies and retirement funds preserving the value of middle class worker savings for the long term. Any new entitlement, exaction, tax and socially-minded requirement imposed on a building needs to be viewed in the context of whether it is regressive in the long term on the competitiveness of our City when measured against other potential markets, and whether the reliance that local governments have developed on our industry to fund these socially conscious mandates may not be sustainable.

Manuel (“Manny”) Fishman is a former member of the San Francisco BOMA’s Board of Directors and former chair of the Government Affairs Committee. He serves as BOMA’s industry lead on interfacing with the City on the gross receipts and commercial rent taxes. He is a partner at the Buchalter law firm, and has an active practice in representing building owners and tenants in all aspects of real estate transactions. He may be reached at 415.227.0900 or mfishman@buchalter.com.

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Annual Toast (Continued from front page)

BOMA San Francisco Foundation Board Board Member Nicole DuBee reflected on 2019’s Chair Tawni Sullivan highlighted the successful events: a record-breaking crowd for BOMA Foundation’s accomplishments. “The at the Ballpark, the well-attended BOMA San Francisco Foundation is Elmer Johnson Golf Tournament & all about training and recruiting our Wine Tour, and the BOMA Bay Area industry’s next-generation workers,” Boat Bash for emerging professionals. said Sullivan.

BOMA sponsors events to support “We are tackling one of the most networking and business development vexing challenges—finding qualified needs — events that are fun, but fun personnel to help operate our busiwith a purpose. “That purpose is to nesses. We are doing this through the help you build and cultivate relationAndrew Junius, Reuben, Junius & Rose, Commercial Real Estate Alliance for ships that can support your company’s LLP; Wes Powell, JLL; Kathy Mattes, Tomorrow’s Employees (CREATE).” performance objectives and can lead Real Estate Consultant; Justin Zucker, Besides attending the CREATE Gala to new business,” she said. A new Reuben, Junius & Rose, LLP; and Ken Cleaveland, Consultant. which raises funds, members can help program, BOMA Java was launched for CREATE succeed by: volunteering to be a property management professionals to meet over coffee mentor, sharing knowledge by teaching a to share successes and challenges. component of the program, allowing a student to In closing, BOMA Executive Vice President Marc shadow you or your team members, hiring a partIntermaggio thanked Wes Powell for his six years serving time temporary intern, and pledging financial support on the BOMA SF board and recognized Bill Whitfield, with a corporate partnership or personal donation. the association’s outgoing president.

15

Meet us on Facebook.com/NCCRC or learn about Carpenter’s apprenticeship at CTCNC.org

16 BOMA San Francisco Members on the Move Stu Collins is the new Senior Director of Operations for Able Services, overseeing the San Francisco market. Collins relocated from the Los Angeles area, where he worked for Able as a division manager. He’s been with the company for a decade.

Originally from Scotland, he holds a masters degree in psychology from the University of Dundee.

Kimberly-Clark Professional welcomed Adam Smith to its team. As Senior Account Manager, Smith specializes in the office building and corporate campus market for the Bay Area. He brings to his position a background in sales and management, most recently working in the office furniture and interiors space.

Tishman Speyer has presented the company’s newly launched Red Tulip Award to Glenn Good, Property Manager at 333 Bush Street. The award celebrates individuals and teams at Tishman Speyer who through their creativity, teamwork and initiative, have achieved a substantial positive impact for tenants and investors.

Historically, Tishman Speyer buildings have displayed red tulips in their lobbies because they make people smile.

Congratulations to Glenn and his team!

Tawni Sullivan, Associate Managing Director for CBRE, is being honored with a Northern California Real Estate Women of Influence Award. These awards honor the contributions and achievements of women in Northern California real estate and recognize women across the commercial real estate industry. Professionals are honored at an awards luncheon and in editorial coverage in the San Francisco Business Times.

Kudos to Tawni!

The BOMA–SF–PAC has welcomed two new board members: Trey Clark is Senior Vice President of Investments for Vanke USA, leading acquisitions and investments on the West Coast, where the portfolio has grown to approximately $1.35 billion in development and value-add projects. Prior to Vanke, Clark worked in acquisitions and development at MacFarlane Partners. He brings an understanding of the entitlement and development process, specifically within the primary West Coast markets of Seattle, Los Angeles, and the San Francisco Bay area. He holds an M.B.A. from the Haas School of Business at the University of California, Berkeley where he focused on real estate and finance.

Mike Grisso is a Senior Vice President at Kilroy Realty Corporation (KRC), a developer and operator of high-quality commercial properties on the West Coast for more than 70 years. He has nearly 20 years of real estate development experience and leads KRC’s planning efforts in San Francisco. Prior to joining KRC in 2014, Grisso was a Senior Project Manager at the San Francisco Redevelopment Agency and its successor, the Office of Community Investment and Infrastructure. He earned a Master of Public Policy and Urban Planning degree from the John F. Kennedy School of Government at Harvard University.

Send personnel changes or news for Members on the Move to Tory Brubaker at toryb@BOMA.com.

17 New Leaders Elected for BOMA in 2020 A new slate of officers and a returning director are preparing to lead BOMA San Francisco in 2020, following their recent election by principal members. Join us in congratulating these BOMA SF leaders at upcoming meetings and events. Be sure to share your insights about our association with them.

Paramount Group Portfolio Manager Christine Mann was elected President. (See her Q&A and photo on page 2.)

Bill Whitfield, General Manager, Shorenstein will continue to serve on the BOMA board as Immediate Past President. He successfully led BOMA during his tenure as our President in 2019.

BOMA Board Member Kevin Whalen, JLL Vice President, Group Manager, was elected to serve as President-Elect. In 2019, he served as the association’s treasurer.

Bill Whitfield

Blake Peterson, Senior Vice President, Asset Services for Transwestern, was elected to the board. She returns to the board, having previously served on the board and as BOMA SF President.

Kevin Whalen

Glenn Good, a member of the BOMA board and General Manager at Tishman Speyer, is BOMA’s new treasurer.

Blake Peterson

Glenn Good

In Memoriam

Your BOMA Board retreated to the Wine Country for some in-depth planning and a little wine-tasting. From left to right: Mark Buckingham, Amber Brown, Colin Shinners, Nicole DuBee, Wes Powell, Marc Intermaggio, Glenn Good, Gail Ringer, Christine Mann, Marc Gille, Mark Kelly and Kevin Whalen.

A longtime BOMA member, Stephen Douglas Hutcheon, General Manager for Seagate Properties, passed away in October. Stephen received his degree in economics from the University of California, Berkeley. He learned construction methods from another mentor, earned his general contractor’s license and developed a longtime interest in real estate investment. He began his career in institutional purchasing before moving into the management of sophisticated office buildings. Through his combination of technical expertise, significant relationships and attention to detail, he excelled at delivering white-glove customer service to owners and tenants alike.

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Last Word (Continued from back page)

of just ONE bad proposal coming out of ONE of these offices, not to mention citizen-driven action through the initiative process!

Budget Action Requested Because we cannot use dues to pay for our political fights, we need to adequately fund BOMA-SF-PAC for that purpose. Your BOMA leadership asks all members to contribute generously via the suggested amounts on your dues renewal invoice.

Please join your fellow members to adequately fund BOMA-SF-PAC and BOMA’s professional advocacy staff, so that we can win the political battles coming our way.

Thank you.

Marc Intermaggio, CAE, is Executive Vice President of BOMA San Francisco and Executive Director/CEO, of the BOMA San Francisco Foundation whose mission is to recruit and train the industry’s next-generation workforce.

19 Mixing & Mingling BOMA SF members enjoy networking at the 65th Annual Elmer Johnson Golf Tournament and Wine Tour.

Clockwise from top right: Chris Baker, Baker’s Floor and Surface; Patrick Murphy, Transwestern; Sean Sweeney and Andrew Gardner, Peacock Construction.

Wine-tasting group at Roche Winery. Winning foursome for best costumes: Leslie Cello, ABM; Antonio Partida, ABM; Jacqui Robinson, Madison Marquette; and Sarah MacIntyre, Ellis Partners. Sarah White and Morgan Phelps, Lucid; Erik Carlson, Able; Tory Brubaker, BOMA; and Howard Fish, Skyline Construction.

BOMA SF Hosts Delegation from BOMA Japan One of the strengths of BOMA is that we are part of an international organization. We share and learn from our global colleagues. BOMA San Francisco recently hosted a delegation from BOMA Japan. At left, BOMA SF Board Member Glenn Good of Tishman Speyer (center with a pink tie), gives the delegation a tour of 333 Bush Street, a BOMA Bay Area TOBY award-winning building.

About BOMA VIEWS Published quarterly by BOMA SF Associate Publisher: Tory Brubaker Editor: Henry Eason Managing Editor/Ad Director: Ellen Eason Eason Communications LLC For advertising information, contact Ellen Eason at 415.596.9466 or ellen@easoncom.com

BOMA San Francisco 233 Sansome Street, 8th Floor San Francisco, CA 94104-2134

415.362.8567 www.bomasf.org

Printed on recycled paper.

The Last Word: Marc Intermaggio, CAE

BOMA-SF-PAC Protects Asset Value; Please Fund Our 2020 Campaign!

Your membership renewal invitation is in your hands and with it a request for a voluntary donation to BOMA’s political action committee, BOMA-SF-PAC. I urge every principal (building) member and every associate (vendor) member to support our PAC. If you derive your livelihood from working in the commercial real estate space, the PAC is your ally, maximizing the chances for your company’s success.

Owning investment property in San Francisco can deliver a good return, but only if you protect the value of that investment. BOMA-SF-PAC protects owners’ private property rights and the ability of service firms to operate, but each election season, citizens and elected officials alike propose measures to impose more costs on the business community. And they often target commercial real estate. Buildings in particular are seen by many as the City’s ATM. Our members are an easy mark for a multitude of taxes and fees to fund an unlimited number of wants and needs.

BOMA is the only organization that is focused solely on the interests of the City’s commercial property owners and the businesses that support them. We maintain two registered political action committees that support

our advocacy efforts. BOMA-SF-PAC acts on your behalf to temper or defeat ill-conceived taxes, regulations, ballot initiatives and legislation. To ensure a well-funded PAC that is strong enough to win these battles, we raise funds from commercial property owners, investors, managers and the firms that provide products and services to them.

Membership dues alone are not enough for us to successfully wage the full range of advocacy work you require. In fact, by law membership dues may not be used to elect rational politicians whose public policy decisions shape the business climate. Nor are we legally permitted to use dues to fund political campaigns to support or oppose ballot initiatives that impact your operations and profitability.

Thankfully we have our PACs for these purposes, and we have deployed PAC resources for your benefit on many occasions. We expect to confront several tax measures next year, some directly aimed at the office building industry. With a well-funded political action committee, BOMA will be your shield in those fights.

The many legislative and regulatory challenges we expect in 2020 could alter the business landscape. In addition to the split-roll tax initiative on the statewide ballot, San Francisco voters will elect six supervisors, members of the Board of Education (a frequent stepping stone on to the Board of Supervisors), BART board members, two California Assembly members (seats currently held by David Chiu and Phil Ting), a California Senator (seat currently held by Scott Weiner), and two U.S. Representatives (seats currently held by Nancy Pelosi and Jackie Speier). Consider the potential impact (Continued on page 18)