Main concerns of high-tech space users (partial list): Flexible occupancy, recruiting and retaining high-tech employees, workplace productivity, the impact of facilities on time to market, area amenities, power, HVAC and the communications infrastructure...

80/20 Rule as it applies to corporate real estate: For many corporations, 80% of facilities (in terms of numbers) represents only 20% of the overall value, and the top 5% may represent 25% or more of total real estate value. Where does most real estate management time and energy go? Outsourcing may allow more critical time to focus on the higher-value projects.

Who is responsible for creating a safe working space for the occasional telecommuter? The company, which may be liable for injuries incurred to employees who are working at home, or the employee, who has the privilege of working at home? Companies are trying a variety of approaches to assist telecommuters, including giving employees a 33% percent discount on furniture, lending them furniture, having home inspections, or providing selected ergonomic equipment.

There may be an upswing in the sale of contaminated properties as new accounting standards might force companies to disclose potential liabilities for environmental remediation. Future toxic clean-up regulations could change, increasing companies liabilities for hard-to-predict toxic clean-up expenses. Three factors will also support this trend. First, there are remediation techniques today which were not available 10 to 15 years ago. Second, there are major investment joint-ventures specializing in purchasing contaminated properties which are then remediated and resold. Third, there are major insurers willing to guarantee remediation success, thus giving financial comfort to the original seller.

Deals and Rumors: In Oakland, Cost Plus is relocating to 60,000 sf at 430 Jackson/425 Madison, and Alameda County is rumored to be looking at the former 90,000 sf Safeway headquarters at 4th and Jackson. Prentiss Properties purchased the 1901 Harrison building in Oakland with 271,000 sf for $38.6 million, and also in Oakland, Seeker Software leased 11,000 sf and Wells Fargo took 11,000 sf, both leases at 2101 Webster. St. Paul Fire & Marine is relocating from S.F. to 11,000 sf at Oakland City Center. In Concord, John F. Kennedy University announced it will build a 120,000 sf campus next door to the Concord BART station. In Walnut Creek, TCG leased 11,000 sf at 1350 Treat, Merrill Lynch is relocating to 10,000 sf at 1333 N. California Blvd. and more than 140,000 sf in new signed leases are expected within the next 30 days in the Walnut Creek Shadelands area. In San Ramon, Kvaerner Davy Engineers is rumored to be relocating 70,000 sf from one Bishop Ranch building to Bishop Ranch 15, where Federal Express and Cellnet each supposedly committed for a 20,000 sf office suite. In Pleasanton, James River is reported to be taking 13,000 sf while Square D is committing to 11,000 sf at 6160 Stoneridge Mall Road. Fleming Foods signed 12,000 sf at 4457 Willow Road, 24-Hour Fitness just moved into 25,000 sf at 5020 Franklin, IKON is rumored to be looking at Britannia for 50 to 70,000 sf, and Gatan will be moving to 20,000 sf on Coronado Lane, all in Pleasanton. Over in San Mateo, Inktomi is taking 32,000 sf at 1900 S. Norfolk Street, and up in Marin, Cedco Publishing is leasing 28,000 sf at 100 Pelican Way in San Rafael. South San Francisco seems to be rampant with build-to-suit activity, including Fibrogen for 64,000 sf and Athena Neuroscience for 55,000 sf, both at Britannia's Biotech Park; Sugen is rumored to be looking at 100,000 sf and Metaxen, 47,000 sf, both at Point Grand Business Park. In San Francisco, the big news was Charles Schwab leasing 350,000 sf at 211 Main St., Gap taking 200,000 sf at 345 Spear St., and PG&E Energy Services leasing 80,000 sf at 45 California St., where Charles Schwab also took an additional 160,000 sf. Also in San Francisco, HIH America leased 30,000 sf at 50 Beale; Intershop Communications subleased 21,000 sf at 600 Townsend; Psygnosis took 25,000 sf at 333 Bryant; Advent Software leased 50,000 sf at 634 Second St.; CNet is expanding into 97,000 sf at One Beach St.; and Crosby, Heafy, Roach & May signed for 20,000 sf at Four Embarcadero. No wonder vacancy rates continue to fall...

One of the programs I went to at last month's NACORE Symposium had a very interesting concept presented by IA (Interior Architects) I'd like to share...set up a grid where "Value" is at the top left of the chart and "Cost" is at the bottom left. Then plot all the employees' concerns and recommendations for improving their working environment. You will end up with a host of issues, but there should be a grouping in the High Value/Low Cost quadrant that once identified, can be dealt with cost effectively. Sounds simple, but how many of us have approached problems from this direction?

In a recent study conducted by IFMA (International Facility Management Association), facilities managers of commercial buildings reported the order of their top energy costs last year: Lighting, air conditioning and heating, personal computer, and non-computer office equipment.

Hard to believe, but in a report released last month by Corporate Resources Group, only one city in the United States made the top 50 list of costliest cities in which to do business in the world - New York. Internationally speaking, Hong Kong and Moscow top the list with cost indexes 50% higher than New York. Comparing the cost of doing business in the U.S., behind New York was San Francisco at #15 and Oakland at #22.

About 11 million U.S. workers telecommute, up from 8.5 million estimated in 1995. The study by FIND/SVP, a New York-based research firm, also reported that most are only part-time telecommuters who still go into an office every week, spending about 12 hours a week outside the traditional office. According to a 1997 study by Link Resources, 7.6 million Americans telecommute three or more days a month.

ANSI Z65.1 sounds like a fuel additive, but it's actually BOMA's American National Standard on space measurement. More info at www.boma.org. Also, check out my real estate link page at www.weiloffice.com.

Within the next 12 years (2010) employment within the Tri-Valley region, including Pleasanton and San Ramon, is expected to grow by more than 65%.

Warning signs of a tight office market: dramatic rental increases, reduced tenant improvements, no or minimal free rent, fixed rental increases during the primary term (then as the market further tightens, annual cost-of-living increases) and new construction. Warning signs of a weakening office market (what goes up must come down): Developers picking up leasehold interests to induce relocation, free rent (more than one or two months), excessive moving allowances.

"Relatively inexpensive" CAD software programs include AutoCAD Lite from Autodesk (www.autodesk.com) and DesignCAD from ViaGrafix (www.viagrafix.com), including a beginners package, EconoCAD for under $50.

A corporate relocation can provide the catalyst to create larger and more encompassing change. Companies can use this opportunity to change the way they do business, the way work is processed, new management philosophies, increased usage of new technology, and even a change in the type and skill-level of the workforce. In addition to increased productivity, cost reductions might be obtained by purging unnecessary files (estimated savings by one consultant - 10% of square footage) going from hard-wall to modular, or from modular to team officing. Each square foot reduction translates to the company adding $500 in annual sales.

Corporate real estate software evolution - for years we've had separate software programs which were incompatible with various departments and functions, such as accounting, lease management, budgeting, facility management, computer-aided design, security, energy management, etc. We are now beginning to see integration of all these systems into what may soon be a seamless real estate information system. Combine this with intranet access and the power of this information should be incredible...

Every year I proudly announce how many years I've been with Grubb & Ellis, which has been easy to track because I started working on my birthday (October 11th), so here it is... next week marks the beginning of my 22nd year with Grubb & Ellis. Of course, now my proudest accomplishment is not all the sales awards or mega-transactions closed, but the health and well-being of my four-month old son, Jordan! He is doing terrific and adds more to my life with each passing day.

Sincerely,

Jeffrey S. Weil
Senior Vice President

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