According to The Wall Street Journal (5/11/97), ten years ago the typical office employee enjoyed an average of 250 square feet of space, including a proportionate share of restrooms, lobby, and building corridors. "Professional space planners say companies moving into new offices are typically allocating 200 square feet a person - a shrinkage of 20%. Telemarketing firms and customer-service phone centers often shoehorn operators into 100 square feet or less." Another cost savings is achieved by taking space in basic, efficient, "boxy, nondescript buildings" which have replaced the 1980’s marble and glass high-rise decadence. "The new approach is especially noticeable in the suburbs of fast-growing Sun Belt cities. Suburban buildings of four floors or fewer cost less to build than towers - they require fewer elevators, and suburban land is cheaper - so developers can pass the savings along to tenants."

According to Robert Moskowitz, writing in MicroTimes 4/28/97, "By far the biggest hurdle still remaining between the present rate of growth in telecommuting and a much higher "take off" rate that will quickly bring telecommuting to the vast majority of workers in this country (and around the world), is the difficulty of many managers to find the tasks that the average person can appropriately and effectively complete from a distance." Mr. Moskowitz goes on to list the following types of work that might be suitable for telecommuting: Analyzing, auditing, planning, problem solving, computer work, contract preparation or analysis, processing forms, designing, numerical or financial calculations, project analysis or management, and sales or contract work.

According to an article in the Contra Costa Times 4/13/97, 40% of cars going through Livermore, Pleasanton, and Dublin on I-580 and 680 during commute hours are traveling between a house in east Contra Costa or San Joaquin Counties and a job in Santa Clara County or San Francisco..."A Times survey shows 112,000 homes, 11,000 apartments and condos, and at least 44 million square feet of new offices, factories, and stores are in the planning pipeline for Alameda, Contra Costa, and Solano Counties. It could take up to 30 years for all those plans to materialize, if politicians approve them." The double-edged sword of growth...

I have mentioned this next concept in speeches and in this newsletter for the past three years, but I think we are just seeing the tip of the iceberg. According to an article in the Contra Costa Times 4/27/97, "If everything goes according to plan, BofA will shift more of the responsibilities for running and maintaining its computer systems from Concord to India after the pilot program ends in October...BofA attributes its decision to hire engineers on the other side of the globe to the short supply of top-notch computer engineers in the Bay Area..." Once immediate voice translation is perfected, many call center jobs which had to formerly stay in an English-speaking location can be shifted overseas. Already, security guards sitting on the other side of the globe can watch and monitor security cameras in US factories and office buildings.

My Web page is back in action! I have articles on Office Hoteling, The Art Of Subleasing, and will be adding articles I have written on Bay Area Business Taxes, Leasing Strategies, and more. You can find it at www.weiloffice.com. Please check it out!

Deals and Rumors: In Pleasanton, Medison American leased 12,000 sf at 6616 Owens Drive, Technics is moving to 10,000 sf at 5000 Hopyard, Fireside Thrift signed for 47,000 sf at 5050 Hopyard, Federal Express is looking at Stoneridge Corporate Plaza for 20,000 sf, and there are rumors of several large, owner-user land sales in Hacienda ranging from 15 to 30 acres, which equates to 200-400,000 sf of new development per sale. In San Ramon, Cisco Systems leased 17,000 sf at 2301 Camino Ramon. Further up the I-680 in Walnut Creek, Blanding, Boyer & Rockwell took 14,000 sf at 1676 N. California, Imperial Bank is expanding to 20,000 sf at 1331/1333 N. California, and Clorox has leased 10,000 sf of lab space at 325 N. Wiget. In Concord, Calaveras Cement is relocating to 13,000 sf at 1390 Willow Pass, and Contra Costa Business Incubator will set up 14,000 sf at 1855 Gateway. In Pleasant Hill, Western Career College leased 10,000 sf on Civic Drive. Over in Oakland, ACERA signed for 14,000 sf at 475 14th Street, ICF Kaiser leased 50,000 sf at 2101 Webster, California Advantage is moving into 12,000 sf at 155 Grand Avenue, and the 235,000 sf office project at 1333 Broadway (my first address with Grubb & Ellis in 1976!) is selling to a joint venture between Koll and ENSR Consulting for about $50/sf, the low price due to asbestos remediation and tenant turnover. Avanti signed 90,000 sf of R&D space at 46871 Bayside Parkway and Regulus leased 16,000 sf at 42840 Christy Street, both buildings located in Fremont. In Alameda, Embarcadero Systems took 15,000 sf at Harbor Bay. Andronico's is expanding to 47,000 sf at 6529 Hollis Street in Emeryville, the city where Pixar bought 13 acres for a planned 400,000 sf office and studio facility. In San Francisco, Big Book took 22,000 sf at 660 Third Street, Bechtel sublet 45,000 sf from Chevron at 222 Bush Street, 911 Entertainment is taking 14,000 sf at 540 Howard Street, KDTY leased 10,000 sf at 50 Fremont Street, Times Direct Marketing is expanding into 15,000 sf at 501 Folsom Street, Towers Perrin took 46,000 sf at 525 Market Street, and C/Net leased 32,000 sf at Francisco Bay Office Park. Up in Marin, Oacis

Healthcare Systems will be relocating 76,000 sf to 1101 Fifth Avenue in San Rafael, moving from Greenbrae. Down the Peninsula, Sega sublet 12,000 sf at 225 Shoreline Drive in Redwood City and Protocol Interface leased 10,000 sf at 400 S. El Camino Real in San Mateo.

As reported in the SIOR Professional Report, Spring 1997, "A new measuring method for appropriating the common space for office buildings is quickly being implemented at commercial properties nationwide. The new standards, published during the recent international convention of BOMA have been approved by the American National Standards Institute and currently are being utilized by the federal GSA. The new method of measurement will impact future lease negotiations and allow property owners and managers to allocate a percentage of all ground floor common areas to each tenant and be within BOMA standards. Previously, the standard required that common areas be allocated on a floor-by-floor basis only, causing owners to lose square footage on ground floors."

We get a number of real estate publications and sources which report proposed office projects. I used one source, and for just the month of February, Bay Area office completions for the next three years were as follows: 1997 - 900,000 sf, 1998 - 3,234,000 sf, 1999 - 2,119,000 sf, totaling 6,253,000 sf for a very small slice of what is actually taking place right now in the Bay Area.

Regarding Landlords and Telecommunications, in the April 1997 Real Estate Trends newsletter published by the law firm of Arter & Hadden a number of issues and precautions are discussed. A few of the highlights: No access without a license agreement...Clearly establish the limits and pricing associated with their service...Revise lease forms...Ideally, the lease should disclaim any responsibility of landlord for furnishing such services or for guaranteeing against interruptions...Shared tenant service agreements...Preparing for new, emerging technologies.

The Associated Press reported on 5/11/97 that Corporate America is selling off their art collections in a continued effort to stay lean and more focused. "A variety of factors can spark a post-merger decision to sell out. There might be less wall space. It may be a matter of difference in taste. It may be a financial decision."

One of the most expensive golf games in the world...Tenant may look at this in recognition and astonishment, or in disregard, and landlords may look at this and if they are not already using this powerful negotiation tool say, wow, what an idea... The new breed of landlord/asset manager/institutional advisors are sending their top negotiators out to their major tenants and inviting the President or CFO/CEO out for a round of golf at the local exclusive country club. During these 18 holes, the experienced landlord is able to obtain many layers of information on various topics that can later be used during lease renewal or expansion negotiations to the landlord's benefit. This is not to say the tenant CEO does not have their own negotiating skills or information-gathering agenda as well, but don't underestimate the landlord's senior management who have honed the subtle fact-finding skill down to a science. Remember, anything you say can and will be used to the landlord's best interest at the appropriate time...

The year's greatest opportunity for real estate executives to pack in a ton of education on Benchmarking, Corporate Strategic Planning and Real Estate, Owning vs. Leasing, Off-Balance-Sheet Deal Structures, and 22 other topics, plus networking with 2,000 corporate real estate executives and 1,000 outsource providers is coming to San Francisco this September. The NACORE Annual Symposium will be September 13th to 16th at the San Francisco Marriott. Please call NACORE at (800) 726-8111 for further information. I'll see you there!

When we had a lot of empty buildings, traffic was a lot lighter, it was easier to get a parking space in your building lot or garage, and office rent was a bargain. Of course, we had millions of folks unemployed, and 37% of those "bargain" buildings were foreclosed. Now that the economy is humming, most companies are profitable, people are working, and everyone is complaining about how bad the traffic is, how hard it is to get a parking space, and how high rents are going up. You go figure...

There is a terrific article on Workplace Performance in the May 1997 issue of Building Operating Management. Basically, employee performance is linked to how well the physical office space works. If computer screens are awash in glare, if nearby telephone conversations make it difficult to concentrate, poor indoor air quality causes headaches, or a one-size fits all approach to workstations results in uncomfortable or inefficient workers, employee performance suffers. Facility executives are advised to team up with human resource and information system executives to get the job done. You might be able to get a copy of this at www.facilitiesnet.com.

Interesting comment by Royal Farros in the April 28, 1997 issue of MicroTimes. "Yes, it's true: California taxes are terrible. Rents are sky-high. And employers actually have to aggressively compete for employees. But - things get accomplished here in a way that is unduplicated anywhere else... There's a "can do" passion that blooms in this area.

Something wonderful happened to me this week which put everything in perspective. On May 26 at 6:10 p.m., my wife gave birth to my first child, Jordan Thomas Weil, who weighed in at 8 pounds and 15 ounces. After 21 years of being a workaholic broker, my goals are changing. I want to be the best office broker possible, service my clients far beyond their expectations, continue to lease and sell hundreds of thousands of square feet per year, but I also want a balance to spend time with my family, to be there for my wife and children, and in 40 or 50 years when my chapter of my life is about to close, to be able to look back without regret...

Sincerely,

Jeffrey S. Weil
Senior Vice President

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