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Office vacancy rates continue to decline in
almost all parts of the United States.
In the Bay Area, San Francisco is down to 12
to 16 percent depending upon whom you ask,
subregions like Walnut Creek are below 10
percent, and for the first time since the
dotbomb era, there is even speculation on
when new office construction will begin …
For the latest vacancy and rental rate
information, please go to
www.officetimes.com.
In a recent article titled “Study:
Businesses not driven from state,”
Tri-Valley Herald (10/26/05),
“Contrary to dire warnings of recent years,
the cost of doing business in California
isn’t driving large numbers of companies out
of state and business relocation is not a
major factor in job loss. The Public Policy
Institute of California said it looked at
business statistics over a 10-year period
from 1992 to 2002, and found that
out-of-state moving constituted less than 4
percent of the movement of businesses. When
businesses did move, most stayed within the
state, the study found. The job loss caused
by businesses moving was never more than
one-tenth of 1 percent of the total number
of jobs during that period … More than 98
percent of job losses were due to businesses
closing or downsizing rather than companies
leaving California.”
If
you’re interested in a facility survey
showing staffing levels for departments, the
International Facilities Managers
Association
(www.ifma.org)
has a publication entitled Benchmarks
IV: Research Report #25 that lists
facility management costs for a variety of
industry and facility types, provided on a
per-employee basis and per-square-foot
basis. While we’re on surveys and reports,
if you want to compare your average
operating expenses against the marketplace,
check out the BOMA 2005 Experience Exchange
Report at www.boma.org.
“Smarter Ways to Reduce
Space … Corporate real estate executives
today face conflicting pressures. On the
one hand,
they are being charged with
finding new ways to lower occupancy costs.
At the same time, the drumbeat to develop
comfortable offices that help retain
employees and improve productivity has grown
louder. Increasingly the solution to all
the requirements has come in an emerging
concept known as alternative workspace
strategies (AWS). The typical approach
saves on space by eliminating large private
offices. Most employees sit
at workstations located in open-floors. To
improve productivity, workstations are
outfitted with the latest in technology,
including laptop computers, which allow
employees to be more mobile. Seeking to
save space, Capital One, the credit card
provider … was able to accommodate 1,200
employees in an office building designed for
650 employees. Under the new system, some
Capital One business units only utilize one
workstation for every three employees.
Workers who need a desk take one on a
first-come, first-serve basis. The approach
works because many employees spend time in
meeting rooms or outside the building.
Capital One spent about $2,000 per employee
outfitting everyone with laptops and
Blackberry wireless devices. But the
savings are almost immediate … it costs
about $10,000 a year to maintain a
workstation …. The cost cutting is slowing
demand for office buildings,” confirms
Raymond Torto, chief strategist of Torto
Wheaton Research. “With the economy
growing, there will be more demand for
office space, but we will not see the
stellar performance that appeared in earlier
decades,” Torto predicts. National Real
Estate Investor (October 2005)
Mark
Greiner, senior vice president of Steelcase,
shared his vision of the office of the
future – Immersive interfaces: “You will be
able to view many documents at once on a
wraparound screen that is three times the
width of a 17-inch monitor; these are called
‘Haptic’ devices. Ambient technology will
use the physical environment to convey
digital information, such as an LED that
blinks when a co-worker you need to speak
with is off the phone. Smart furniture
that will allow images and textto be
displayed on its surface. RFID tags that
will be in your phone, PDA, and allow
locating co-workers – Ubitags will light up
when co-workers become available.”
National Association of Industrial & Office
Parks (Fall 2005). Somehow this seems
to conflict with several of the trends
mentioned earlier, like no more private
workstations, and mobility with PDA’s versus
set offices or cubes …
Just in
case you’ve had this on your mind, in India
the Indian equivalent to Feng Shui is Vastu
and there are numerous books out that define
how this affects the interior planning of
office space. Mark Taylor, who heads up the
London Colliers International office,
suggests Vastu’s Guide by Dharnidhar Sharma
…
“India expects to have 20
million call center-related jobs by 2008
filling 81,000 call centers all across
India. India-based call center
operations are already moving some
operations out of India into lower cost
areas such as Pakistan, Thailand and
elsewhere” …
East Bay Business Times (10/28/05). One
silver lining to all these jobs going
offshore is this has freed up tens of
millions of feet of U.S. office space,
keeping rental rates low for U.S. tenants
and allowing expansion room for
growing U.S.
firms. See, it is not necessarily all bad
news …
“When it comes to measuring
space efficiency, a growing number of
corporations are moving away from
standardized metrics. Welcome to the new
world of corporate real estate
benchmarking. Its defining characteristic?
An emphasis on best practices rather than
any specific metric.” Real Estate Forum
(September 2005)
California is still on track to add another
10 million residents during the next two
decades. San Ramon Times (10/20/05)
Deals & Rumors for Office Space and
Leasing:
In San Francisco, Orphanage
Animation is rumored to be looking for
30,000 sf with expansion to 60,000 within
two years; San Francisco State leased
107,000 sf at the Westfield San Francisco
Centre at 835 Market St.; Hinshaw
&
Culbertson leased 16,000 sf at One
California St.; Stockbridge Capital Group
will be taking 22,000 sf at Four
Embarcadero; Intagio leased 10,000 sf at 22
Fourth St.; the 1.8 million sf Bank of
America Building
sold for $1.05 billion;
Barclays Global Investors is rumored to be
looking at 340,000 sf to be built at Foundry
Square I, First & Howard St.; MindJet leased
46,000 sf
at 1160 Battery St.; Texas Pacific
Group doubled in size to 70,000 sf at 345
California St.; Symphony Asset Management
leased 21,000 sf at the Bank of America
tower; and Sonnenschein, Nath and Rosenthal
took 69,000 sf at 525 Market St.;
down in
Mountain View, Google is looking at
building a 1 million sf office campus at
NASA’s Ames Research Center, and Yahoo is
reputedly also looking around the Bay Area
for a million square feet of office space.
In Redwood City, Packethop sublet
19,000 sf at 1000 Bridge Parkway, and in
San Mateo, Net Suite Inc. expanded by
30,000 sf at Peninsula Office Park.
In
Fremont, the Bay Area School for
Independent Study sublet 32,000 sf at 3300
Kearney St.; in Hayward, Paceco Corp.
leased 18,000 sf at Whitesell Business
Center; Kaiser Permanente purchased 63 acres
from Albertson’s in San Leandro; in
Oakland, Pro-Shore leased 27,000 sf
for their HQ at Pinole Business Park; and in
Berkeley, Yahoo took 10,000 sf at
1950 University Avenue. In Pleasanton,
Roche Molecular Systems will be breaking
ground next year on a 138,000 sf R&D
expansion; the 200,000 sf Hacienda West just
sold for $38.3 million; Britannia Business
Center with 467,219 sf just sold to
Triple
Net Properties; 5000 Franklin is rumored to
be in escrow; and CompuDyne leased 30,000 sf
at Pleasanton Corporate Commons. In San
Ramon, Norris Tech Center with 260,000
sf sold for $45 million; and IndyMac Bank
leased 30,000 sf
at BR 8. In Walnut
Creek, Coast Mortgage leased 10,000 sf
at 1990 N. California Blvd.; Countrywide
leased 12,000 sf at
Mt. Diablo Plaza; the
100,000 sf 575 Lennon just sold, and Morgan
Miller and Blair will be moving to 20,000 sf
at 1331
N. California Blvd.; in Concord,
Vodafone 10,000 sf, and DR Horton 24,000 sf,
both transactions at 2300 Clayton Rd.
A recent article,
“Outsourcing Outrage” discussed how some
abusive Americans are having tantrums when
they connect
with an India call center. “An
anti-outsourcing movement has drawn wide
support as layoffs continue to mount at such
U.S. companies as IBM, which is cutting
13,000 jobs in Europe and the United States
and adding 14,000 jobs in India, according
to the Washington Alliance of Technology
Workers … These humiliations, say
observers, are tolerated by a labor force
that savors the opportunity to join India’s
growing middle class. With monthly incomes
of about $200, call-center employees live
well in a country where many are
poverty-stricken … In a recent 16-country
Pew poll, India had the highest percentage
of citizens with a favorable opinion of the
United States, 71 percent.” (So maybe all
is not as bleak as this article tried to
make it but I’m not sure about a survey
named “Pew”… however, their link is
www.pewglobal.org.)
San Francisco Chronicle (11/17/05)
San Francisco Magazine
ranked the best
towns for families to live in the Bay Area,
based on the percentage of households with
at least one person under the age of 18, the
local school district’s Academic Performance
Index and the number of
crimes per year per
1,000 people in the area in towns under
100,000. The rankings were as follows:
Piedmont, # 1;
Monte Sereno, # 2; Cupertino,
# 3; San Ramon, # 4; Danville, # 5;
Pleasanton, # 6.
Wireless Utility – “As the need for wireless
continues to grow, tenants will expect a 21st
century building to have a wireless utility,
just as tenants have expected
air-conditioning for years. A wireless
utility eliminates problems associated with
discrete systems, enabling building owners
and tenants to use a variety of wireless
applications and devices, including cell
phones, PDA’s, wireless building controls,
and two-way radios for property maintenance
and security staff on one unified
infrastructure.” Buildings (October
2005)
I’ve
mentioned this new technology in a previous
newsletter, but BabbleTM
is finally a reality … Sonare Technologies
offers this white noise device that is
attached to the user’s telephone, and masks
the sound of the voice to ensure the
conversation is private. Today’s Facility
Manager (September 2005).
What do those initials
behind my name mean? SIOR stands for the
Society of Industrial and Office Realtors,
made up of
2,300 of the top office and
industrial brokers across the Country.
Average industry experience is 18 years and
extensive coursework and documented
transactional background are required for
membership. It is also common for SIORs to
be
the top brokers in their company as well
as their region.
(www.sior.com) CCIM, Certified Commercial Investment
Member, requires approximately seven weeks
of intensive commercial real estate
coursework, usually done over five to seven
years,
and has 8,056 members.
(www.ccim.com) MCR.h is the Master of Corporate Real Estate
(with honors) designation from CoreNet
Global (formerly Nacore) with a number of
advanced CRE classes and either additional
schooling at MIT or an extensive thesis.
There are currently 1,100 MCR’s. I’ve been
an SIOR 20 years, CCIM 26 years and an MCR.h
five years.
Cisco
Systems announced it will spend $1.1
billion, the largest overseas investment in
the company’s history, to bolster its
booming networking operation in India. The
company first established a presence in
India 10 years ago and now plans to
triple
its workforce of 1,400 employees.
Imagine these office perks:
Car detailers come to the office, as do
massage therapists, with visits by a roving
farmer’s
market – a reality at the
San Jose BEA Systems office campus.
Electronic Arts brought in an acupuncturist
to its
Redwood City campus. Cadence Design
has a bike doctor tune up workers’
bicycles. However, in the old days the
companies might have paid for these
services, but in most cases today employees
pay for them. San Ramon Valley Times
(11/10/05)
What does this mean for the
office market? “At the end of September
2005, Google was sitting on more than $7
billion;
Yahoo had about $3.5 billion.
Microsoft remains the cash king with almost
$40 billion on hand. Combined, the Big Five
are expected to shell out $2.5 billion this
year on everything from new computers and
gear to office space and bandwidth.
Google,
for instance, is expected to spend hundreds
of millions on a private internet to connect
its data centers. The
beneficiaries of that
kind of Big Five spending will include
hundreds of vendors, from router makers
Cisco and Juniper Systems to optical gear
maker Ciena to drive manufacturers like
Maxtor and Seagate.” Business 2.0
(November 2005) We are
already beginning
to see this affect the office market, with
Yahoo and Google’s multi-million square foot
office space
shopping spree …
For the past 15 years, I
have been in an 11-piece Dixieland Jazz Band
(tenor sax), the East Bay Bear Cats. We did
a benefit
last month for the American Red
Cross hurricane victims, and it reinforced
once again why the United States is such an
awesome place to live. From children
raising money through lemonade stands to
corporate America’s generous donations,
with
all our shortcomings, no matter what the
adversity, our sense of community always
pulls us together. At last month’s
SIOR
national convention in Chicago, I took my
wife to the Science & Industry Museum. The
exhibit surrounding the U-boat
that was
captured in WWII reminded me of how many
sacrificed in so many ways so you and I
could have all the freedoms
we sometimes
take for granted. There are billions of
people who have never been on an airplane,
there are dozens of
countries where leaders
are not voted into power, cars are only for
the wealthy, and 70-hour work weeks are
standard.
As a first-generation American, I
am truly grateful!
Soccer
season is now behind us and as soon as we
can get some serious snow up at Lake Tahoe,
ski season is just around the corner.
Madison has just started riding a ‘real’
bike with training wheels, has learned her
alphabet and numbers in pre-school, and will
start taking ski lessons next month.
Jordan is enrolled in a hand chime class,
learning how to read and play music,
with
his first concert coming up in early
December. For the third year Jordan
volunteered on Thanksgiving Day to help feed
the homeless and less fortunate. His cub
scout activities has him studying American
folklore, building model cars, learning
about astronomy and science and a host of
other topics. I am amazed at how much
I have learned just helping him out!
Their recent adventures can be viewed
here.
Have a safe and wonderful
holiday season!
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