CORPORATE OFFICE PERSPECTIVES | AUGUST 1, 2007

Green Building Update: “LEED buildings use 20-50 percent less energy and cut
carbon emission by as much as 40 percent more than conventional buildings,”
according to Taryn Holowka, spokeswoman for the U.S. Green Building Council,
Contra Costa Times (5/31/07). “Silver-level LEED certification is believed to add
roughly 2-3 percentage points to total construction costs, with LEED gold adding 2-3
more and LEED platinum remaining expensive,” San Francisco Business Times
(6/22/07). “Wells Fargo recently announced its loan offering for commercial projects
that implement solar energy,” Today’s Facility Manager (May 2007). ECO-tough
San Francisco code proposed for buildings – “the task-force is suggesting that private
commercial developers meet the gold LEED Standard by 2012 … a key feature of the
task force report is the recommendation that the standards be phased in between 2008
and 2012, becoming more stringent each year. For instance, new large commercial
buildings in San Francisco would have to meet the most basic LEED standard in
2008. Gold certifications would be required in such buildings starting in 2012,” San
Francisco Chronicle (7/11/07). Has there been any dramatic increase in tenant
desire to be in a LEED-certified building versus one that isn’t? Not yet, but I agree
with a number of experts who predict that at some point in the future it may be a
requirement of Fortune 1000 to be in a LEED-certified project, the same as we
experienced back in the 1980s when asbestos-free office buildings became mandated
by Corporate America. Better employee working environment, sustainability of our
natural resources and on top of that, significantly lower energy costs … not a bad
package of benefits to offer up to tenants!

Office building replacement values: For Central Business District (CBD) high-rise,
the most expensive U.S. city in New York with Manhattan replacement costs ranging
from $650 psf to $750 psf (excluding land which can be $300-$500 psf), and at the
other end of the spectrum is Memphis, with a low of $145 psf and a high of $170 psf.
San Francisco averages $625 psf, and the entire report can be found at
http://officetimes.com/Aug2007/ResearchBlast.htm.

Office worker stress reduction 101 … “Working at Clif Bar & Co., the Berkeley
energy bar and drink company, may be the closest thing to corporate Utopia.
Employees can bring their dogs and babies to work, get a haircut or massage or have
their car detailed at work, and they can even throw a load of laundry in the employee
washing machine. At Clif Bar, the 194 workers can exercise 30 minutes a day in the
company gym, have a personal training session or take one of a suite of classes –
from boot camp to swing dancing – offered on site. How about a life coaching
session or a spin on one of the company’s shiny red Schwinn bicycles? …. Clif says it spends an estimated $1,000 per employee per year on its wellness program … In general, companies can expect to see at least a $3 return after three years for every $1 they spend on workplace wellness, says
health promotion guru Dr. Ron Goetzel, director of the Institute for Health and Productivity Studies at
Cornell University,” East Bay Business Times (June 8, 2007). What’s Cool – stuff that makes the job less
of a chore: “Long workweeks – up to 120 hours – are common at the Boulder, Colo. offices of Crispin
Porter & Bogusky. So the award-winning ad agency, known for incentive campaigns like Burger King’s
Subservient Chicken website and Virgin Atlantic’s mock flight-safety cards, decided to look for an
equally creative way to help employees with their work/life balance. The solution: hiring 44-year-old
adventure junkie Kevin Mullen. Stop by Mullen’s 1,440-square-foot ‘office’ and you’ll find him tuning
up a Harley or replacing the wheels on some inline skates. He also helps organize snowshoe excursions
and motorcycle camping trips, takes employees shopping to advise them on major gear purchases, and
stocks loaners of snowboards, camping gear and bikes. ‘I view myself as a facilitator of fun,’ he explains.
‘I’m here to break down any barriers that would impede anyone from having a good time,’” Business 2.0
(July 2007).

According to Bus 2.0 (June 2007), out of the 100 Fastest-Growing Technology Companies in the U.S.,
“only” 29 are based in California. And, according to the San Francisco Chronicle (5/18/07), “The Bay
Area is the nation’s leading nanotechnology center, according to a new study, setting the stage for the
region to lead the way in developing yet another crucial technology sector with a potentially huge upside.
San Jose was the No. 1 city in the report, as measured by how many nanotech companies, universities,
government labs and non-businesses organizations are working on nanotechnology and call it home.”
Boston was in second place, while San Francisco came in third and Oakland, fourth place.

Offshoring … in a recent article titled “Help Wanted,” Today’s Facility Manager (June 2007), Bob
Woolley of Lee Technologies based out of Fairfax, VA states, “Any company that does not leverage
international labor will be at a distinct competitive disadvantage because the global talent pool, combined
with global communications, makes it almost incumbent upon American businesses to find ways to be the
most efficient.”

Deals & Rumors: In Redwood Shores, Shutterfly leased 12,000 sf at 3000 Bridge Parkway, and at 201
Marshall in Redwood City, Moteiv took 15,000 sf. Foster City had a lot of activity with Acxiom Corp.
leasing 52,000 sf at Parkside Towers, 1001-1051 East Hillsdale Blvd., where Reardon Commerce took
42,000 sf.; Sling Media leased 25,000 sf and Pacific Partners signed for 19,000 sf. In San Mateo, U.I.
Pacific Games leased 10,000 sf at 1820 Gateway Drive, and Sterling Commerce took 39,000 sf at 800
Concar Drive. Farther North in San Francisco, Soma Networks leased 16,000 sf at 650 Townsend St.;
Markmonitor took 18,000 sf at 303 Second St.; EF International Language Schools signed for 12,000 sf at
2748 Hyde St.; Salesforce.com expanded once again by 20,000 sf at One Market St., and in the same
building Autodesk leased 46,000 sf.; Godfrey Q. and Partners took 20,000 sf at 100 California St.; at
Westfield San Francisco Centre, San Francisco State expanded by 18,000 sf to 125,000 sf.; Pacific
Fertility Center leased 21,000 sf at 55 Francisco St.; at 71 Stevenson Place, Bare Escentuals expanded by
24,000 sf.; VMWare expanded by 14,000 sf and Regus leased 18,000.; Second Life, Linden Research,
Inc. leased 28,000 sf at 945 Battery St., and at 4 Embarcadero Center, Stockbridge Capital Partners leased
44,000 sf and Marsh & McLennan is reportedly looking at 64,000 sf. Up in Marin County, Activision
Publishing leased 12,000 sf at Hamilton Landing in Novato. Across and down the Bay in Fremont,
Macroflux Corp. took 55,000 sf at 34790 Ardentech Court, further up in Alameda, Concise/ABB Optical
leased 48,000 sf of office/flex at 1740 N. Loop Rd., and in San Ramon, Chevron sublet two spaces, one
55,000 sf, and the other 52,000 sf and also leased 30,000 sf. The big news for Walnut Creek was the
250,000 sf lease signed by CSAA for an office project to be built near the PH BART Station, and AXA is
reportedly out in the East Bay looking for 90 to 120,000 sf of office space.

I’m not quite sure how this will affect our future usage of corporate office space, but there is a new and
rapidly growing online management software that shows managers at a glance who’s productive and
who’s not. “Today, thanks to a new executive team and a new breed of management software from
Authoria, Aetna believes it has turned things around. Supervisors across the 30,000 employee company
can pull up a secure online dashboard to read employee skills and competency, assess career growth and
training needs and even pinpoint key players who need an incentive to stay. ‘It gives us a lot more data to
manage our workforce,’” says Deborah Kelly, head of learning services at Aetna, who developed Aetna’s
performance strategy and pushed for the software. Business 2.0 (July 2007) This management
transformation could cross-over to telecommuting, outsourcing, offshoring and may have major
implications for future office usage and layout. Before you continue with this next quote, think about the
possible impact if, for some industries, online management software was so effective both management
and employees did not have to physically be in the same place to get their respective jobs done. “Home is
where the work is – for some employees. In a nationwide survey this spring of 150 senior executives who
work at the nation’s largest companies by OfficeTeam – the Menlo Park temporary staffing service of
Robert Half – 43 percent said they feel telecommuting is an effective option for staff-level employees,
whose tasks can often be performed more autonomously than those of managers or support personnel.
However, that figure dropped to 18 percent and 14 percent when they were asked the same question about
management employees and senior executives, respectively, and 11 percent for administrative support
workers. Managers equate quality with how often workers are seen,” East Bay Business Times
(5/18/07).

San Francisco Bay Area office development update: In San Francisco, about 2.5 million square feet of
new office projects are under construction, and an additional 8 million square feet in various stages in the
development pipeline. In Oakland, one new office project will be completed this October with several
additional projects in entitlement process. Emeryville has 250,000 sf of bio-office under construction, and
entitlements are underway for new office projects in Pleasanton and San Ramon.

Tips for keeping your office environment more safe and secure: “The following top 10 tips may help
facility professionals to keep the ‘office creeper’ at bay and protect the working environment:
1. Office Creeper 101 – An office creeper may skulk into your office dressed in uniform like a building engineer or
suit and tie – try to become familiar with all of the coworkers in your immediate area
2. Flag and tag the wanderer
3. Honor your access control policy
4. Sharing Isn’t Always Caring – Never share keys or access codes with anyone and never leave your office keys
unattended
5. Don’t hide valuables in plain sight – the first place an office creeper looks for purses and wallets is in unlocked
drawers or under desks
6. Lock and mute – when you leave the office, lock the door and mute the telephone ringer so there aren’t clues your
office is empty
7. Secure the ties that bind – use security cables for laptops
8. Maintain up to date inventory logs – and keep in locked, fireproof cabinet or outside location – mark PDA’s and
cell phones
9. Laptop awareness – Lock it up after-hours (3,000 computers are stolen each day …) Invest in laptop data security
tools, and never leave your laptop in full view in your car, never check-in as luggage at the airport,” Today’s
Facility Manager (May 2007).

At a recent SIOR event at Sacramento’s Capital Club, we heard a presentation from Roy McBrayer,
deputy to the State Architect and manager of Governor Arnold Schwarzenegger’s Green Building
Initiative on what California is doing to “green” their office buildings. All new state buildings will be
built to LEED Silver. All existing office buildings 50,000 sf and larger are being “retrocommissioned” and the state is discovering that even well-maintained buildings are still showing 15 percent or greater
utility savings after retrocommissioning. Most older buildings have a cost savings potential of 30 to 50
percent. They are benchmarking all 16,000 buildings for energy usage and plan to retune buildings in
excess of 50,000 sf every five years.

Summertime reminds me of how great we had it as kids but we had no idea at the time. Going to the
county fairs, summer camp, hanging out with friends at the pool for hours at a time … meanwhile us
worker bees grab a day off here or there to maintain balance, and look wistfully out the office window as
children bicycle by … Jordan and Madison jumped right into summer school, with 10-year old Jordan
focusing on math and reading and 4 ½ and ¾ (her birthday is August 23 and this is always the response to
“How old are you?”) Madison doing art and crafts. Jordan will then head off for a two-week stay-away
camp, his first, and even though he hasn’t left yet, I am already dreading the “I miss my child not being
home” feeling those of you with older children have already experienced.

To see Jordan and Madison’s summer highlights go to www.officetimes.com/JMAug2007.htm.
Have a terrific summer and we will be back to you October 1st!
Sincerely,
Jeffrey S. Weil, MCR.h, CCIM, SIOR
Senior Vice President