How is the Bay Area office market? Mostly hot, some areas red-hot, but there are areas where the oven is barely warm. San Francisco is on fire, especially multimedia and big blocks of prime view space. The Peninsula is hot with space leasing as fast as it becomes available. Santa Clara is semi-hot, with rising vacancy rates due to new construction. Pleasanton and San Ramon are semi-hot, with new construction keeping rental rates in check. Oakland is also semi-hot, with minimal Class A large blocks of available inventory. Emeryville is very hot, with almost nothing available and advance pre-leasing. If you want more specifics just give me a call ...

According to a recent article on Multimedia Gulch in the SF Examiner - 10/31/99, between 1994 and 1998, the South of Market area grew 52 percent and added 6,000 jobs. San Francisco currently has 35,000 people working in the multi-media industry, which is a 24-hour, 7-day-a-week economy. There are 500 digital media companies producing for the Internet. Since the mid-1990’s San Francisco’s economy has added 33,000 total jobs.

In a 1997 study by the San Francisco Partnership, San Francisco’s multimedia industry had an annual economic impact of $4 billion. “Key factors in place which helped accommodate the growth in Multimedia Gulch: skilled workers and entrepreneurs, world-class research universities, the availability of suitable and affordable commercial space, an existing technology infrastructure and favorable quality of life amenities.” Along with this, according to a recent article in the Contra Costa Times - 10/28/99, Internet-related revenue (hardware for Internet infrastructure; networked applications; Net intermediaries; Internet commerce businesses) is growing 20 times faster than the projected growth rate of the US economy as a whole.

Shaklee’s new $75 million campus at Pleasanton’s Hacienda Business Park represents the new kind of “green eco-friendly development which has been sprouting up around the country. All wood surfaces are unpainted, oak trees were relocated rather than destroyed, ceiling ducts and pipes remain uncovered, wood is from “sustainably managed sources, and cubicles and floors are lined with recycled cloth and carpets which can later also be recycled,” said Kay M. Childs, vice president of human resources. “Shaklee anticipated that some workers might decide to leave the company after the move across the bridge from San Francisco. But, the Pleasanton campus has served as a perk for recruiting. Unlike the San Francisco office, it has airy offices, a rose garden and a basketball court.”

Today’s Facility Manager 8/99 stated the following on office amenities, “Over half of office workers would like on-site services in their facilities, according to survey information. Day care was ranked first at 27%, followed by fitness centers (10%), concierge or other on-site services like banking and dry cleaners (8%), on-site medical care (6%), and coffee bars (2%) in their facilities. These findings come from a national survey conducted by Opinion Research Corporation ... The top three problems that office workers would like to see eliminated in the future are gossip, difficult bosses, and dirty rest rooms. Other pet peeves that employees would like to see less of are: too hot or cold offices, noise, speakerphones, and odors.”

Call center design, according to Office & Industrial Properties, September 1999 ... The basic paradigm for a call center is a single-story structure with floor plates between 30,000 and 50,000 square feet ... bay sizes of 30 feet by 30 feet or greater ... 100 to 110 square foot per employee in new construction is average ... technological innovations can often ease density tightness. For example, flat panel monitors cut down on workstation space while reducing electrical and HVAC requirements ... integrated access floors or raised floors with 12 to 18 inch plenums house modular data cabling, HVAC distribution and power systems ... with modular HVAC systems, air only needs to be cooled to 65 degrees since it rises from the floor as opposed to 55 degrees for overhead systems where cold air is required to descend ... call center owners have invested heavily in day care centers, employee break rooms, fully-equipped health facilities, cyber cafes, libraries and game rooms ... call centers have enhanced infrastructure requirements such as parking ratios of seven spaces per 1,000 square feet, and extensive data and phone connectivity requirements.

In a report recently released by McKinsey & Co., the following statistics were announced: Bay Area venture capital investment in 1998 was $4.1 billion, 34% of the U.S. total ... a total of 55 Bay Area graduate school programs were ranked in the top 10 in the nation in 1998, 11 more than second-ranked Boston ... the Bay Area leads the nation in number of patents (8,280 in 1998) ... if the Bay Area were an independent country, it would constitute the world’s 21st largest economy. Also, Money magazine, in spite of our shortfalls of expensive housing and traffic, ranked San Francisco as the best big city in the country in where to live. “The magazine says that the city and environs rank in the top 5 percent for air quality, offers first-rate museums, sports, and more restaurants per resident than any other city in the country. Finally, it’s the city’s wide range recreational opportunities - great places to swim, sail, hike and ski are easy to reach - that clenched it,” Money said. You can check out how 300 metro areas ranked at www.money.com. Additionally, a number of foreign companies are opening shop in the Bay Area. As the CEO of Ironside Technologies, Bill Lipsin states, “Investors pay premiums for companies headquartered here because within 30 miles you have unparalleled technical engineering skills, the venture capital community and business decision-makers ... it’s the place to develop business relationships and find partners.”

Deals and Rumors: In Downtown Walnut Creek, Aval Communications leased 19,000 sf and Brown & Caldwell took 55,000 sf, both leases at 201 N. Civic Dr. On behalf of Levi Strauss & Co., I sublet 55,000 sf at 3000 Oak Road to Shugart Matson/Clear Ink, and also represented Homestake Mining Company in their upcoming corporate headquarters relocation to 22,000 sf at 1600 Riviera, again in Downtown Walnut Creek. Over at 1333 N. California Blvd., Shapiro & Buchman expanded to 13,000 sf, and out in Walnut Creek Shadelands, BriteSmile sublet 13,000 sf at 477 N. Wiget Lane. Up in Concord, Irv Pearlstein leased 25,000 sf at 2400 Bisso Lane. In San Ramon at the new Bedford project at Crow Canyon/Bollinger, Richmond American Homes leased 16,000 sf. In East Dublin, Sybase is reportedly eyeing a 14-acre purchase for a 400,000 sf office campus relocation out of Emeryville. In Pleasanton, at Bernal Corporate, Synopsys leased 11,000 sf for a satellite office, Knowledge Track leased 15,000 sf at the same project, and at 5731 W. Las Positas, Zantaz is relocating to 28,000 sf; Purpletie.com leased 12,000 sf at 4780 Chabot Drive, and Veritas Software is relocating from Mountain View to 28,000 sf at 6800 Koll Center Parkway. Over the hills in Richmond, QRS Corp. is expanding from 70,000 sf to 170,000 sf at 1400 Marina Way, and ActionAce.com leased a 45,000 sf office/warehouse at Regatta Business Center. At Emeryville’s EmeryTech where my client State Farm Insurance just moved last month into a gorgeous 45,000 sf new space, Leapfrog leased 20,000 sf, Colo.com took 20,000 sf; and Evolve leased 51,000 sf. In Berkeley, The Nature Company is taking 50,000 sf at Berkeley Crossings. In Oakland, CSAA is rumored to be leasing 150,000 sf at the Kaiser Center while their SF digs are retrofitted; Discover Brokerage is moving into 70,000 sf at 2101 Webster and Zhone Technologies is buying 15 acres across from the Oakland Coliseum for a potential 250,000 sf office campus. In Alameda, ReSource Phoenix.com leased 67,000 sf at 1301 Harbor Bay Parkway. Up in Fairfield, Charles Schwab is rumored to be looking at 220-400,000 sf at Green Valley Tech Plaza. Over in Marin County, Sega is taking 60,000 sf at One Thorndale in San Rafael, and Global Reservation Systems leased 12,000 sf at 770 Tamalpais Drive in Corte Madera. Down towards Santa Clara, InsWeb leased 160,000 sf and Corio took 80,000 sf, both transactions going down in San Carlos at Skyway Landing. In San Mateo, RCN Corp. took 40,000 sf at 1400 Fashion Island Blvd.; Asera is taking 88,000 sf at 600 Clipper in Belmont, McKensie & Comp are rumored to be leasing 50,000 sf at Westport in Redwood City, where Cosine and Neopost are each also taking 50,000 sf. In South San Francisco, Peeters Trans leased 21,000 sf of office space at 405 Victory.

Now we’ll highlight almost 2.2 million square feet of office deals and rumors in San Francisco accumulated during just the past 60 days ... Aon Corp. may be taking 100,000 sf at 199 Fremont St.; Baby Center leased 24,000 sf at 552 Brannan St.; Andromedia took 27,000 sf at 611 Mission St.; Wells Fargo Bank is rumored to be leasing 200,000 sf at 550 California; Macromedia might be taking 300,000 sf of a planned office project at Mariposa and Kansas; ShopNow.com leased 50,000 sf at 111 Sutter St.; MCI WorldCom leased 125,000 sf at 360 Spear St. where AT&T may also be taking 25,000 sf; a telecom combo of Williams Communications, WinStar, NextLink and RCN might be leasing 275,000 sf at 200 Paul Street, a former Macy’s distribution center ... GTE is rumored to be leasing 115,000 sf at 466 Townsend St.; AboveNet reportedly is looking at 180,000 sf at Main and Harrison; E-Trade is rumored to be leasing 155,000 sf at 123 Townsend St.; BuzzCom.com took 30,000 sf at 300 California St.; Scient Corp. leased 65,000 sf at 444 Market St.; Looksmart is taking 135,000 sf at 625 2nd St.; InnoVentry is rumored to be leasing 60,000 sf at 680 Second St.; Del Monte reportedly signed for 101,000 sf at One Market; McCann Erickson leased 20,000 sf at 135 Main St.; Digital Fountain St. leased 11,000 sf at 600 Alabama St.; and Williams-Sonoma might be taking 70,000 sf at 2727 Mariposa St.

A new Internet start-up, www.netclerk.com , uses proprietary technology to help building, plumbing, electrical, roofing and mechanical contractors save time and money by completing the permit application process on-line. San Francisco is about to use this for a free pilot test, and it is being tested at more than 100 local Bay Area jurisdictions. In Santa Clara, Smart Permit is being used for filing simple permits on-line 24-hours a day, with on-line permit tracking, electronic drawing submittal and digital signatures. Smart Permit info can be found at www.jointventure.org.

Those poor landlords ... First, rental rates skyrocketed and office building values doubled or tripled ... second, some landlords are making more on stock warrants from e-companies than on rent ... third, they are discovering new sources of revenue-generators, such as providing high-speed internet access and charging for it, and renting rooftop space for telecom, such as one building in New York ... “The roof of the Condé Nast Building has an integrated communications tower with a capacity for 200 satellite dishes; each satellite dish generates $400 in rent per month.”

Just to clear the air, during 1988-97 on the average the following cities had these number of days pollutant levels exceeded EPA standards: Bay Area: 0; Charlotte: 20, Boston: 10: New York: 28; Houston: 45: Phoenix: 19; and Los Angeles: 153.

The effects of e-commerce on corporate real estate ... in an article in Plants Sites & Parks - Oct./Nov. 1999, “First and most important, the explosive entry of e-commerce into corporate boardrooms has generated more uncertainty regarding near-term business strategies than many decision makers have ever experienced. With more uncertainty comes greater demand for more and better information ... The timeframe for making location decisions is compressed, and will be further shortened. Corporate real estate executives hope to contribute more significantly to the formation of strategic business decisions by anticipating future information requirements and getting that information on-line. Corporate real estate executives that (1) integrate facilities and strategic business planning, (2) anticipate and capture data services for the multi-disciplinary functions now being incorporated into site selection and (3) develop analytical models consistent with changing business models will be well positioned to locate their companies for success in the Internet economy.”

Two new information sources which may be of interest ... Articles on integrated building systems and resources on system integration can be found at www.facilitiesnet.com/ibs. Also, salary information for facility professionals by region can be located at www.facilitiesnet.com/salary. And a link I’ve had on www.officetimes.com  for years which as tons of information on telecommuting is at www.gilgordon.com.

Price-Waterhouse Coopers and Lend Lease Real Estate Investments announced in their annual survey of the top U.S. real estate investment markets, and for the fourth consecutive year, respondents named San Francisco as the top major U.S. market, followed by New York City, Boston, Los Angeles and Washington, D.C.

I recently hired an executive assistant and was amazed that my small ad in the local newspaper attracted more than 110 resumes during a two-week period, in spite of our low unemployment and hot Bay Area job market. I was also approached by companies offering to take part of my workload, send it via Internet to production facilities in Eastern Europe, and have word-processing completed overnight and back on my computer by the next morning. They claim English proficiency, and boast of average wages at $109/month ... nyet ...

San Francisco office space is at a premium, with vacancy rates hovering in the 1% range and multiple bidders vying as major blocks of space come onto the market. E-companies have been rumored to toss in stock warrants on top of full-price offers to top the bidding scales. Existing building sales are also “frothy.” As a recent example reported in the SF Business Times - 11/19/99, “San Mateo’s Wilson-Cornerstone, fending off a host of rival suitors, has Downtown San Francisco’s 100 Pine St. under contract for approximately $125 million. The price, which works out to $310-315-per-square-foot, represents an 80 percent increase from the nearly $70 million seller Walton Street Capital paid just over two years ago and underscores the on-going vitality of the city as a top priority for investors worldwide.” Rental rates in Redwood Shores, Redwood City, have increased 25% during the past 60 days, and now run at $4.00-4.25/sf NNN ($4.75-5.00/sf full-service per month). Rents in Emeryville have spiked 30% during the past year, and what used to lease for $1.55/sf NNN now goes for $2.20/sf NNN. Pleasanton and Walnut Creek, at least for now, are stable at $2.25-2.50/sf fully-serviced.

A segment of today’s workforce is requesting new-age cubicles that are movable, flexible, and as creative as their inhabitants. There is increased demand for mix-and-match tabletops, files, shelves and chairs, as well as desktops on wheels which can swing around to convert to conference tables; panel walls that can move and plug into other walls, and file drawers that slide out allowing them to be carried to other pod meetings. On the other hand, I was recently with a facility director of a start-up that went big-time who lamented that they never put a standards package into place, and now the look of uniformity has grown out of control. Also, if one considers “exit strategy,” standardization is usually much better ...

A new breed of office designers for high-tech e-commerce start-ups help clients get from contract signing to move-in in six or eight weeks, assisting in everything from space design, contractor coordination, furniture, wiring, phone systems and move coordination. Also, as reported in SF Business Times - 10/1/99, “The Bay Area’s tidal wave of new and growing Internet companies has had a ripple effect at the design firms conjuring up their offices. Instead of talking about light and lines and the moods their designs create, San Francisco architects are boasting flexibility. They feature movable walls, open meeting areas, even wheeled desks that can rise as tall as drafting tables or drop as short as foot stools.” One latest trend is designing wireless offices with cordless phones and laptops with cordless Internet hookups ...

An interesting (at least to me!) breakdown on what went into Qwest’s recent 50,000 sf Sunnyvale data center ... 1,000 tons of cooling met by scattering 20-ton units around the perimeter of the data center ... electrical loads of more than 200 watts per square foot ... multiple 2-megawatt generators that provide standby power for up to 72 hours ... a fueling farm that supports the generators with 3,000 gallon tanks ... raised floors for power/data cable distribution and air distribution ... floors leveled to 1/4-inch per 8 feet ... humidity controls ... battery systems to maintain the quality and reliability of power.

Did you know that 15 of the top 50 companies in the East Bay and 15 of the top 100 fastest-growing public firms reside in Fremont, home to 750 high-tech firms? According to the San Jose Mercury News - 9/28/99, “But what sets Fremont apart is its sizable tracts of still-vacant land. Fremont is one of the few Silicon Valley cities with large parcels left for commercial and industrial development. “It’s going to be one of the growth areas for Silicon Valley,” said Paul Fassinger, research director for the Association of Bay Area Governments ... ABAG projects that Fremont will gain 33,500 new jobs during the next 20 years, a 40-percent increase. The city ranks No. 1 in job growth potential in Alameda County and fourth in the entire Bay Area.

Grubb & Ellis has 4,400 employees, last year handled 13,222 leases and sales valued at $4.3 billion, and manages $13 billion of commercial property ... just thought you’d like to know this ...

George Avalos of the Contra Costa Times has named the Tri-Valley region, “Telecom Valley” due to the huge presence of companies such as GTE, Pacific Bell, AT&T and numerous others. “For example, since 1996, the number of East Bay telecommunications jobs has soared by 20 percent, according to EDD” ... “We call it Telecom Valley when we contact our people back East,” said Andrew Johnson, a spokesman for New York-based AT&T’s cable and broadband operations. “That certainly describes the area better than Tri-Valley,” which refers to the San Ramon, Livermore and Amador Valleys.”

There are a number of office hoteling software programs available, including ARCIBUS/FM Hoteling, which allow for: tracking time-based ownership of rooms and equipment; linking assets to move planning; handling fast-growth companies and/or companies undergoing mergers or acquisitions; encompassing photograph and graphical images of rooms. More info on this specific product is available at www.archibus.com. Another one of interest is Critical Path at www.cp.net.

In a recent article in Entrepreneur - November 1999, a Challenger, Gray & Christmas survey sought to identify where our workplace is headed in the Year 2005. “One of the most apparent differences will be the physical size of the workplace. Forty-six percent of chief information officers in one recent study cited by OfficeTeam said offices will be smaller in 2005. The big benefit of that change is clear: lower real estate costs for entrepreneurs. But the forces behind it may be less obvious. One is the general shift towards customer-focused business model many industries have adopted. “You don’t want a big headquarters operation anymore,” Challenger says. “You want your people out at the customers’ sites, working on their problems. You don’t want them sitting in an office. Another office-shrinking force is the popularity of the flexible work arrangements, including telecommuting. One-third of U.S. workers will telecommute at least part of the time by 2005. Challenger sees hoteling, a cost-saving measure which calls for two or more workers to share the same office, as becoming so popular that corporate hotels will spring up to rent generic office space to individuals from different companies at the same time. As they shrink, offices will feature more meeting areas to facilitate teamwork and moveable, modular furniture to fit fast-changing work styles. “You’re going to have to accommodate work teams as well as telecommuters,” says Taylor (Lynn Taylor, vice president and director of research for Menlo Park, California’s OfficeTeam). “So you’ll want open flexible space.”

A few of the differences in leasing to a dot-com company as reported in www.PikeNet.com - October 26, 1999, “Biggest difference is speed of delivery. Every aspect of e-company’s moves at a very rapid speed. Their race to build market share is intense. Consequently, the demands they place on all their service providers are equally intense and time sensitive. E-mail is essential in coordinating all the activities of contractors, subcontractors, as well as all the tenants vendor and operating groups.” To add a few of my own comments: There might be a need for extra power, extra HVAC, 24x7 building systems and access, over-standard parking ratios as these e-companies expand and stuff more bodies into insufficient space, access to high-speed telecom, and on a number of occasions I’ve also had requests for a close-by Starbucks ...

Our son Jordan, turned 2½ years old last week and what a difference just a few months does to a developing child! This week he sat through his first full-length movie (Toy Story 2) without fidgeting, two weeks ago out of the blue he mastered the mouse and can now install tiny bolts onto an on-line bulldozer, and I just took him bowling for the first time and he actually scored a spare! I’ve never seen a ball roll as slow as his - we went to get a soda and his ball was still rolling down the alley when we returned ... in late-December the family, grandfather, aunt and uncle, and cousins all go to ClubMed Kids Camp in Xtapa, Mexico. We wish you the very best holiday season!

Sincerely,

Jeffrey S. Weil