According to Hugh Kelly in a recent article titled “Defying the Speculation Bubble Theorists” in the Society of Industrial & Office Realtors (Spring 2006), the United States has a Gross Domestic Product of more than $12 trillion, a workforce of 150 million, more than 4 billion square feet of Class A and B office space and more than 12 billion square feet of industrial space.  Now you are ready for playing the next game of Trivial Pursuit, commercial real estate edition …

Contradicting reports on offshoring abound:  In the same newspaper, East Bay Business Times (4/7/06), one headline reads “Higher costs, old woes erode offshoring savings … Higher wages and staffing competition has hit India’s outsourcing centers.  These problems, added to the difficulties of moving vital business functions halfway around the globe, are making other locations  around the world increasingly attractive.”  Then on the very next page, different story, “Apple Computer Inc. is setting up a technical support center in Bangalore, India … Apple will hire 1,500 people to staff the technical center by the end of the year, and have 3,000 staff at the end of next year.”  And the next article: “U.S. security software maker McAfee Inc. has announced plans to invest $80 million in India and hire 400 people by 2008 in a bid to expand operation in the world’s outsourcing hub.”  What, don’t they read the papers?

Interesting San Francisco Bay Area office market, with large blocks of space coming onto the marketplace like Oracle’s rumored 800,000 sf of prime office space in San Mateo or Sun’s 1.2 million square foot Newark office campus coming available, and yet when large office opportunities like these have hit the market, more often than not we have had multiple users vying for the same space.  I remember a few months ago as I was driving to tour a client through a 75,000 sf sublease that had just hit the market, the listing agent paged me and told me that even though the space had only been on the market for a few days, they had a subtenant prospect far enough along to cancel my tour.  The 370,000 sf PeopleSoft Pleasanton office campus was rumored to have more than 25 bidders competing, so many of us in the business aren’t too worried about these upcoming large office availabilities.

Mobile office redefined (for the executive on the road with an unlimited budget) – Becker Automotive Design provides a customized private office with a 32 inch PC screen, soundproofing, window curtains, wireless internet, and lots of other bells and whistles in this $250,000 Ford Excursion conversion … and if you have to ask what the gas mileage is, this office is not for you …

“Job Market ‘best in years’ … the Bay Area job market is strong enough that employers are poised to hire more people than at any time in the past five years, and some companies have begun to wrestle with shortages of qualified workers.  Of the roughly 500 chief executives and top executives surveyed, 43 percent said they plan to increase their Bay Area work force in the next six months.  Just 8 percent plan job cuts, and 48 percent intend to maintain current staffing levels.”  Contra Costa Times (5/18/06)  And of course, this will translate into increased demand for additional office space …

Offshoring update:  “For many years, the outsourcing favorites were in Asia.  India, China, the Philippines, Singapore and Malaysia still top the list.  But Eastern European countries such as Bulgaria, Romania, Slovakia and the Czech Republic are quickly gaining steam by playing up a newer twist – “nearshoring,” which essentially shifts work from the United States and Western Europe to countries with less expensive labor that are closer than Asia.”  San Francisco Chronicle (5/16/06)

“After three straight years of dropping vacancy rates and rising rents, developers are quietly lining up to join San Francisco’s next wave of office construction … Charles Malet, director of leasing for Shorenstein said the office market “is getting pretty close” to justifying new spec construction.  He said the company has not made a decision yet on whether to proceed without an anchor tenant.”  San Francisco Business Times (4/7/06)  There are also several East Bay office developers blowing dust off development plans that were shelved after the 2001 dotcom crash.  New construction costs have escalated dramatically during the past 18 months, both for the building shell as well as tenant improvement costs in general.  Price escalations of 20 to 30 percent in just the past year are blamed on demand in China, India, the Katrina rebuilding, the spiraling cost of gas and even the industry-specific frenzy currently going on with the health care new construction and hospital earthquake retrofit.  Timing is everything … the developer who picks the prefect starting date to be completed when rents have escalated into profit stratosphere looks like the genius, while the ones who build too early or too late get caught in the wrong part of the curve …

According to Expansion Management (January/February 2006), the top “Knowledge Competitive” economies in the world are as follows:  #1 San Jose, Calif.; #2 Boston; #3 San Francisco; #4 Hartford, Conn.; #5 Seattle; #6 Grand Rapids, Mich.; #7 San Diego; #8 Stockholm, Sweden; #9 Rochester, Minn.; #10 Los Angeles.  The World Knowledge Competitiveness Index (WKCI) is a benchmark of the knowledge capacity, capability and sustainability of 125 regions around the world, and the extent to which the knowledge is translated into economic value and transferred into the wealth of the citizens of these regions.  It utilizes 19 knowledge economy benchmarks, including employment levels in the knowledge economy, patent registrations, research and development investment by the private and public sectors, education expenditures, information and communication technology infrastructure, and access to private equity.”

A recent article on security in Buildings, February 2006, “Security:  A Blueprint for Reducing Risk,” “Building owners are not expected to guarantee the safety of their tenants, visitors, and guests, but they are required to exercise reasonable care to protect them from foreseeable events.  Courts are imposing increasingly higher duties on building owners and managers to protect tenants,” notes Stephen G. Bushnell, product director, real estate, for Fireman’s Fund Insurance Company.  Here are the key elements:   #1 Physical Systems:  What systems do you have in place?  #2 Operations:  How are you applying the systems to effectively provide security?  #3 Education and Training:  Are you explaining security systems and procedures correctly to employees and tenants?  Geoff Craighead, vice president Securitas Security, stated that in the last four out of five years 1,000 security directors listed workplace violence as the number 1 threat, ranking it higher than terrorism.  “Look at your program and your building,” he says.  “Assess potential threats in building and perimeter control, tenant and visitor access, package acceptance and mail delivery, security staffing and training, and tenant security awareness.”