2016 - July 2016 Newsletter

2016 - July 2016 Newsletter

President's Message

In writing this, my sophomore message to the Chapter, I fell back on the rules of writing I learned in my freshman composition class -- start any writing assignment by listing the key topics.  As I typed out bullet points, I had to smile as I realized just how many things the Chapter has accomplished this past month.  But, because I am not being graded on this and we are all pressed for time, I decided to simply share the list of accomplishments (with thanks to the numerous volunteers who made them happen):

 

  • A fantastic 2016 golf tournament with 122 participants and a winning team score of 22 under par (why are you folks still working?). (Click here for photos of the golf tournament courtesy of Tom McCune.)
  • Two sponsor appreciation lunches provided an opportunity to 1) thank this very important set of constituents of our Chapter; 2)  learn from them how CoreNet NorCal is adding value to their enterprises, and 3) share opportunities that CoreNet can offer to  further enhance their success.
  • CRE Awards Honoree selection.  We had a record number of submissions for our annual CRE Awards, and many worthy nominees.  We are thrilled to announce we will honor Jim Morgensen (LinkedIn) and Steve Hargis (Woods Bagot) at the annual gala on November 17 at The Westin St. Francis in San Francisco.
  • We hosted a new-member orientation lunch, welcoming more than 30 new members to the CoreNet community.
  • We established a new collaborative relationship with SPUR (San Francisco Bay Area Planning and Urban Research Association), one of the premier research, education and advocacy nonprofit organizations, promoting good planning and good government in the Bay Area.
  • In June, we provided an insightful presentation on key drivers in the Bay Area that aid in attracting Chinese real estate investment.  This program was also highlighted in the latest issue of The Registry.  (There is a link to this article later in the newsletter.)
  • Women of CoreNet hosted an in-service day with Habitat for Humanity, with members participating in a beautification event at India Basin Shoreline Park in San Francisco.

Coming up we have Chapter programs in San Francisco and Oakland, networking events including our “Day on the Bay” to watch the Blue Angels up close in October, and MCR classes in July, and all are amazing opportunities for our members to continue to learn, network and have fun!


As a final thought, there are bigger issues than corporate real estate that are of concern to our members right now.  As the leader of a professional organization, I don’t expect to be called on to comment on social issues, but the violent events of the last couple of months should not be ignored (as Jay Sholl acknowledged during the June chapter meeting).  While geography has insulated many of us from the painful reality of the devastating events in Florida, Dallas, Minnesota, France and other places, I suspect that some in our area are now being asked to design or operate facilities to protect occupants from previously unthinkable events such as active shooter incidents.   

We all react differently at times of tragedy: some instinctively enhance safety and security at work and home, some spend more time together, and others may feel compelled to be more demonstrative and active.  When we react, I believe each of us, individually, has the ability to effect positive change in this world and to make a lasting and meaningful difference - big or small - for our families, colleagues and customers.   As corporate real estate professionals, the nature of our work allows us to touch a lot of lives at once in a positive way, so I have hope.

Mike Bangs

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Featured Platinum Sponsor – XL Construction

XL Construction builds to improve lives. Knowing that our work directly effects people, we are committed to delivering quality in both the end product and the construction process. As a contractor of choice for leading companies in life sciences, advanced technology, healthcare, and education, our focus on team success has earned us a network of excellent partners and a 90% client referral rate. Whether constructing open office space or a critical facility, we offer a practical approach built on a foundation of technical construction experience and tailored to meet each project’s specific needs.

http://www.xlconstruction.com/

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Announcing Our 2016 CRE Awards Honorees

   

Congratulations to Jim Morgensen, of LinkedIn, Corporate Real Estate Executive of the Year, and Steve Hargis, of Woods Bagot, Corporate Real Estate Provider of the Year!

The Chapter’s 19th Annual CRE Awards Gala honoring Jim and Steve will take place on November 17th at the Westin St. Francis Hotel in San Francisco.  More information to follow.

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Summer Reading List

Here are some books our Chapter members and leaders are reading this summer:

“Tribes” by Sebastian Junger (recommended by Jay Sholl, CBRE, CoreNet Executive Vice President.)

“The Circle” by Dave Eggers (recommended by Amber Schiada, JLL, CoreNet Young Leaders Co-Chair, who added: It’s a mystery that focuses on a corporate campus in what sounds like Silicon Valley, and follows a new hire who gets sucked into the corporate culture, eventually agreeing to have her every move recorded for her followers, co-workers, etc. I am unable to really express how great this book is.  Really good, easy read, and would definitely be of interest to anyone working in the corporate real estate world.)

“Big Magic - Creative Living Beyond Fear” by Elizabeth Gilbert (recommended by Janet Merriman, RMW Architecture & Interiors, CoreNet Director at Large.)

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June Chapter Meeting In The News

The June Chapter meeting on the impact of Chinese direct investment on Bay Area commercial real estate was featured in an article in The Registry. Here is a link:

http://news.theregistrysf.com/chinese-investors-like-bay-area-understanding-motivations-key-say-experts/

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May Chapter Meeting Recap

   

By Erin Carew, Instigate

The second installment of CoreNet NorCal’s Spring International Series, “Outsourcing in a Strange Land” was held May 19 at Synopsys’ headquarters in Sunnyvale and over 150. The program was a lively and informative look at the more practical side of doing business overseas. John Scott of CBRE moderated a panel of seasoned corporate real estate executives with significant international experience. The group shared generously from their personal experiences offering up many valuable insights and entertaining stories from fascinating places around the globe.


Panelists included:
Luigi Sciabarrasi, Senior Director, Global Real Estate and Workplace Services,  Imperva
Barbara Donaldson, Vice President, Real Estate and Facilities, Synopsys
Anthony Smith, Director, Real Estate and Workplace Services, Google
Coleen Hurley, Senior Director, Real Estate and Workplace, VMWare

Scott commented on the significant impact of urban densities and showed a chart outlining the densest cities. The city of Dhaka, India, topped the list.  “A big part of doing business overseas is being prepared for what you are going to see when you step off the plane,” Scott said.  “Densities can be staggering and impact real estate decisions in a major way.”  He concluded his introductory remarks with an overview of challenges and risks to consider and gain thorough understanding of before developing a market entry strategy in complex and emerging markets.  Among them were:

    Corruption
    Bureaucracy
    Cultural differences
    Political instability
    War and conflict
    Social instability
    Humanitarian issues
    Staff retention
    Skills shortages
    Import / export issues
    Trade restrictions
    Corporate risk
    Brand risk
    Quality standards
    Lack of local knowledge
    General embargos
    Taxation issues
    Legal barriers
    Lack of infrastructure
    Language barriers
    Security

He pointed out the importance of understanding that the infrastructure is often underdeveloped compared to the U.S. “You need to go in with a more comprehensive plan that includes how you will deal with security, IT and communications, HR, tax and many other aspects,” he said. “Make sure you know enough about what you are getting into and that your plan is feasible.  Support structures and resources are different.”

Anthony Smith an anecdote about war breaking out in Nairobi, Kenya, during a project that illustrated how quickly things change and that being prepared for anything is essential.  He then shared his perspective that a great deal of the problems are similar from region to region, they just repeat in different contexts.


Smith’s top tips for doing business overseas included:

India
    Make sure you have clear title.
    Register leases.

Brazil
    Anticipate red tape delays for permitting, occupancy, business licensing.
    Expect volatility of the currency.

Southeast Asia
    Be patient and plan ahead - things take a lot of time.
    Be prepared for the corruption component.
    Anticipate hot competition for space due to highly demanded, heavily growing markets.
    Be nimble and act quickly.
    Pick the right developer.
    Watch quality.

Asia (facts with some levity)
    It is the largest continent.
    Population 4.1 billion people – larger than the rest of the world combined.
    Over 4,000 children in China are named “Olympic Games” from the Beijing Olympics.
    China and Japan are the 2nd and 3rd largest economies in the world.
    It is illegal to be fat in Japan.
    Indonesia is the world’s largest archipelago (17,000 islands).
    In Vietnam everyone has the same birthday (Vietnamese new year).
    Australia has 22 million people, three national Frisbee teams, 1 million wild camels and 50 million sheep.
    Asia is always interesting, exciting and challenging.

Smith shared four key points:
1. Inspect what you expect – “Never take things for granted in emerging markets,” he said, “You have to confirm that something that has been promised has been done, from small things to big things.”

2. Get partnered!   “Leverage your subject matter expert partners,” he said. “They have a wealth of knowledge for you to tap into.”

3. Be crystal clear and flexible.  “Even those of us who speak the same language frequently miscommunicate,” he said.   “If you add in culture, language and a whole bunch of other variables, you can only imagine how unclear and inflexible things can be.”

4. Many of his most rewarding experiences have been exciting and challenging international assignments.

Barbara Donaldson shared a few anecdotes from a project in Bangalore to illustrate the difficulties of doing business in India.  An adaptive reuse of an old ketchup factory, the building cause the employees to experience a “malaise” immediately after move in evidently due to ketchup that was left in the ground.

She also shared the story of an issue with the glue used in local furniture, despite being very specific with the manufacturer about what glue was acceptable.  “The smell was so strong, we had to bring charcoal into the building,” she said.   Donaldson also shared that move-in was complicated by the death of a famous movie star, which occurred during the same weekend they were scheduled to move in.  “The local team called me and said we would have to postpone the move due to a huge crowd of mourners that had gathered in the already densely populated area, which to us in the U.S. sounded crazy,” she said. “We worked around it and moved the users in on time.”

Donaldson recounted her first international project, which was in Armenia.  Having been under Russian occupation until about 15 years prior, the Russian mentality was still a major factor.  Additionally, there were economic issues as well as border wars with Turkey and Azerbaijan.  All of the materials and furnishings had to be imported and some it had to go over mountains where there were wars going on. “I got calls informing me that we had lost shipments, and I never really new if it was true or not,” she said. “There were no brokers there or any of the vendors you would typically reach out to for help.”

In Armenia, Donaldson and her team found an old transistor factory that they decided to take and gut.  Despite finding a suitable location, the project was far from easy.  The roof collapsed during construction when a non-load-bearing wall was taken down.  They learned that an acid leak made the wall load-bearing unbeknownst to them.  “You have to go and look at the properties,” she said.  “Things are not always as they seem.”  They had to fire their general contractor because he was neglecting to pay the subcontractors.  “We also ran three times over our budget”, she said, “Real estate prices around the world are higher than they might seem because you have to factor in so many other costs.”

Donaldson summed up her experience in some salient lessons learned, including:

1.    Allow more time.
2.    Plan on more money - low cost headcount does not mean low cost facility costs.
3.    Local team can help but they can’t do it alone.
4.    Expect the unexpected.
5.    Respect the local norms and customs.
6.    Ask questions.

Colleen Hurley focused her remarks on her extensive experience doing business in Costa Rica.  She began by sharing the central philosophy of Costa Ricans, called Pura Vida, which literally means “Pure Life.”   “Because it shapes the way they live and work, Pura Vida is critical to understand,” she said.  “It is a very relaxed and simple way of looking at life. There are no worries, no stress and they dwell on the positive.”

She shared some interesting facts about the country including:
    It is small, with just 19,700 square miles and 4.5 million people.
    They get a lot of small earthquakes which has an impact on design and construction.
    Locations and addresses are fluid.
    They get paid for 13 months of work per year.
    Payroll costs are very low.
    If it’s not nailed down, it walks out the door.
    Security is important.

Hurly indicated that VMware has significant facilities there because of the many advantages Costa Rica offers including:
    Located in the U.S. central time zone.
    Friendly and welcoming culture.
    No active military .
    Country invested heavily in security, culture and education.
    Highly educated workforce.
    Most stable country in Latin America.
    Salaries are lower (60%).
    Expenses are lower (consumables by 35% and rent and mortgages by 75%).
    Violent crime rate is low.

She shared a few of the challenges of doing business in Costa Rica including:
    Red tape – about 120 days for permits.
    High on the corruption index.
    They honor contracts but it takes a long time to get them enforced.
    Lengthy travel time to get there.
    Productivity is lower – Pura Vida!

Hurley offered attendees the following advice:
1.    Work with tax professionals regarding free tax and free commercial zones.
2.    Be open to kiss and hand shake – no bowing is necessary, but they are very demonstrative emotionally.
3.    Allow extra time – everything takes longer – again Pura Vida!
4.    Think global and act local – bring the colorful lively culture into the office to create an amazing and engaging workplace.

Luigi Sciabarrasi shared a variety of observations on doing business abroad.  He shared that he has been traveling internationally since 1986 due to his love and study of architecture.  “I got interested in international work early in my career, he said. “I was fortunate to have gotten connected with an international investor in Japan.”   Sciabarrasi emphasized the importance of learning how to set up the company beyond the real estate and added that he has always made it a point to develop relationships with his colleagues in legal, finance and international tax.

He emphasized the importance of understanding how rampant corruption is.  “I have seen candy boxes with $50,000 in them,” he said. “However, we won’t ever pay a bribe even if it means delaying a project for six months.”  He added that China is where he has seen the most corruption and that India also has a high rate.

Sciabarrasi also underscored the need to be patient in general.  “I have had projects delayed for six to 12 months in China due to earthquakes,” he said.  “Anything can happen.”

He offered four tips:

1.    Have great partners for real estate, and make sure that your other corporate colleagues have great partners as well.
2.    Be open minded and ask all the questions.
3.    Leverage your network – call peers for updates on what is happening.  Things change fast.
4.    Take corruption seriously.

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Young Leaders Update

 

 

The Corenet Young Leaders group often hosts learning events specific to the Bay Area.  On July 15th, the Corenet Young Leaders hosted a learning event focused on the Salesforce Tower project in San Francisco.  Rob Kain, construction project director at Boston Properties, discussed the construction process, project challenges, and unique attributes of Salesforce Tower, soon to be the tallest building west of Chicago.  Please join us at our next event!

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CoreNet NorCal Looking for Social Media Volunteer

The CoreNet NorCal communications committee is looking for a Chapter member volunteer to join our committee and help us with our social media presence, including on LinkedIn and Facebook.  If you are interested, please contact Ted Klaassen, at tklaassen@buchalter.com.

Request for New CoreNet NorCal Committee Members

Get more involved in CoreNet NorCal! One of the best ways to increase your involvement and really get to know other members of CoreNet NorCal is by joining a committee. The CoreNet committees create and organize the events, meetings, programs and publications that you enjoy. Committees you can join are: Young Leaders, Special Events, Programs, Membership, Community Reinvestment, Communications, and Technology. All of our committees are looking for volunteers. If you are interested in joining a committee, please contact our Administrative Director, Michelle Lagos, at michelle.lagos@cbre.com or (415) 720-0366, and she will connect you with a committee.

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Upcoming Events

 

August Chapter Meeting: Reimagining Work-Life in Oakland

Thursday, August 18th from 3:30 - 7:00pm

Location: SPUR, 1544 Broadway, Oakland 94612

The San Francisco Bay Area has a rich history of dreamers, creators, and visionaries. From cable cars to autonomous vehicles and from microprocessors to virtual reality, our region has long been the home of brave experimentation and innovation. This constant change and pressure on land use, transportation and cost presents as many challenges as opportunities for corporate real estate teams. Join CoreNet Global's Northern California Chapter and SPUR (www.spur.org) in a series programs in San Jose, Oakland, and San Francisco to re-imagine Work-Life in the Bay Area - learn more about what these cities are doing to create a more attractive offering to us as companies and communities. The August Chapter Meeting continues par two of our three-part summer series, "Reimagining Work-Life in the Bay Area" featuring Oakland.

REGISTER HERE

Individual tickets now on sale! Click here to purchase tickets!