Shorenstein Press Center

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Jon Keehner

T 212 355 4449

 

Shorenstein Releases 2018 Sustainability Report and Establishes New Long-Term Environmental Performance Goals

Continues Industry Leadership by Meeting Environmental Goals Ahead of Schedule and Establishing Aggressive New Targets

Inaugural Recipient of EPA’s ENERGY STAR Charter Tenant Space Recognition for New York Corporate Office

 

SAN FRANCISCO, CA – June 21, 2018 – Shorenstein Properties LLC (“Shorenstein” or the “Company”), an owner and operator of high-quality office, residential and mixed-use properties across the U.S., today announced the release of its 2018 Sustainability Report, highlighting the Company’s sustainability achievements and establishing new long-term environmental performance goals.

Having formalized its “green” initiative more than a decade ago, Shorenstein remains an industry leader with a commitment to responsible business practices, achieved by continually enhancing investment performance, operational resilience and business governance for the benefit of properties, tenants, employees and communities. Surpassing its peers in global sustainability assessments, over the past year Shorenstein established aggressive new milestones for environmental performance objectives.

Having achieved prior targets ahead of schedule, the Company completed 58 efficiency projects across the portfolio and earned multiple regulatory and industry recognitions for sustainability, including the Environmental Protection Agency’s inaugural ENERGY STAR recognition for office tenants.

“At Shorenstein, we embrace sustainability as an opportunity to strengthen the communities in which we operate, reduce our impact on the environment and improve our business practices,” said Charles W. Malet, President and Chief Investment Officer of Shorenstein. “In addition to environmental stewardship, as an industry leader we believe our responsibilities encompass the social and governance factors that underpin the long-term strength and success of our business. As evidenced through our accomplishments in the past year, these efforts have generated substantial value while maintaining Shorenstein’s legacy of building a sustainable future.”

 

New Sustainable Performance Targets

One of the first commercial real estate companies to join the Department of Energy’s Better Buildings Challenge, Shorenstein announced last year the completion of its initial goal – decreasing energy use across the office portfolio by 20%1 – three years ahead of its original target, with the resulting efficiency gains lowering the Company’s energy bills by $6.5 million annually.

As outlined in the report, Shorenstein is continuing its decade-long support of the Better Buildings Challenge by establishing new long-term environmental performance targets for energy, greenhouse gas emissions and recycling. The first commercial real estate company to achieve its initial Better Buildings Challenge goal and publically set a new target – by 2025 the Company is seeking to cut both energy use and greenhouse gas emissions by 40%2, while increasing recycling by 20%3.

 

Achievements

As evidenced by its achievements over the past year, Shorenstein has expanded on its early adoption of sustainability programs and stayed ahead of the pack as these strategies become standard practice in the real estate industry. Notable accomplishments include:

  • Outperforming the average for all privately-held U.S. office peers on environmental, social and governance assessments by earning four out of five “Green Stars” on the 2017 Global Real Estate Sustainability Benchmark;
    • Receiving the Environmental Protection Agency’s inaugural ENERGY STAR Charter Tenant Space recognition for the Company’s New York corporate office;
  • Completing 58 energy and water efficiency projects across the portfolio in 2017, which will save over $650,000 annually and eliminate emissions equivalent to taking 492 cars off the road; and
  • Maintaining platinum membership of the U.S. Green Building Council, with all properties built and operated to the LEED (Leadership in Energy and Environmental Design) standard and more than 30 employees earn the LEED Green Associate or LEED AP credential, signifying the Company’s ongoing commitment to sustainable building principles. Shorenstein currently owns 12.2 million square feet of LEED office property, primarily certified at the Gold level.

Shorenstein upholds the highest industry standards across the entire Environmental, Social and Governance (ESG) spectrum, which plays an integral part in its investment process as well as strategic operations. In addition to its environmental advocacy, the Company employs best-in-class governance practices and maintains robust programs that actively support community impact and employee well- being.

 

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm that owns and operates high-quality office, residential and mixed-use properties across the U.S., with offices in San Francisco and New York. Since 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million. The firm uses its integrated investment and operating capabilities to take advantage of opportunities that, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns. Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures. These funds have invested in properties totaling 64.1 million square feet in transactions with a gross investment value in excess of $15.2 billion.

Contact

Jon Keehner / Jed Repko / Julie Oakes / Kate Clark Joele Frank, Wilkinson Brimmer Katcher 212.355.4449 / 415.869.3950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.      Based on a 2008 baseline measurement

 

2.      Based on a 2008 baseline measurement

 

3.      Based on a 2016 baseline measurement


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Las Olas

Shorenstein Press Center

Press Contacts

Sarah Keaton

T 585 730 0764

 

2000 West Loop South in Houston Receives LEED Gold Recertification

Houston, TX – May 2, 2018 – Shorenstein Properties LLC and JLL announce LEED Gold recertification of 2000 West Loop South, a Class A building located in the heart of the Galleria Uptown District in Houston, Texas.  2000 West Loop initially earned LEED Gold in 2013.  The U.S. Green Building Council requires recertification every five years to maintain the LEED for Existing Buildings designation.

 

The 2000 West Loop South building is 357,000 square feet of Class A office space in a prime location near the Houston Galleria.  The building amenities include a fitness center, a deli, onsite banking and an attached parking garage.  The building currently carries an ENERGY STAR rating of 84.

 

LEED for Existing Buildings: Operations and Maintenance (LEED EB O&M) addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  LEED EB O&M helps building owners and operators measure operations, improvements, and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

 

Some recent sustainability highlights of the 2000 West Loop South building include:

 

  • Alternative transportation rate of 50.5% achieved due to tele-commuting, car-pooling and vehicles with a high green score, one of the highest ratings for certified buildings in the State of Texas
  • Completion of an ASHRAE Level II Energy Audit Report and implementation of the recommended energy conservation measures to keep pace with industry best practices
  • Over 90% of all cleaning products and materials purchased at the building continued to meet industry sustainability criteria
  • All cleaning equipment used on site is considered sustainable, boasting such features as comparatively low sound levels, filter guards for capturing fine particulates and ergonomic design
  • Over a 50% reduction in water used for landscaping compared with conventional means of irrigation
  • Completion of a Waste Audit to help tenants, construction and management continually improve their waste diversion practices and lower their environmental impact
  • LEED Accredited Property Management and Engineering team

 

Shorenstein is a platinum member of the U.S. Green Building Council (USGBC) and has achieved LEED certification for over 23 million square feet of office properties to date, primarily certified at the Gold level.  Shorenstein is a member of the Department of Energy’s Better Buildings Challenge and an Environmental Protection Agency ENERGY STAR for commercial buildings partner.  www.shorenstein.com/sustainability.

 

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About the Property Owner, Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 64.8 million square feet in transactions with a gross investment value in excess of $15.2 billion.

 

 

About the Property Management Company, JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2017, JLL had revenue of $7.9 billion; managed 4.6 billion square feet, or 423 million square meters; and completed investment sales, acquisitions and finance transactions of approximately $170 billion. At the end of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of 82,000. As of December 31, 2017, LaSalle had $58.1 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.


Shorenstein Press Center

ATCO Properties forms $350m JV

By Andrea Zander

ATCO Properties & Management has formed a partnership with Shorenstein Properties.

The venture will build a $350 million multi-phase project at Camp North End in Charlotte, N.C.

The five-building conversion project will consists of 1.5 million square feet of office space, 280,000 square feet of retail, 1,500 multifamily units and 65,000 square feet of light industrial space.

Shorenstein will serve as a strategic capital partner on the redevelopment and leasing of the creative office and retail buildings.


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Source

CoStar

 

Shorenstein backing Atco in Creative Adaptive Reuse Project in Charlotte

By Carlos Likins

Shorenstein Properties LLC, a national real estate investment fund manager based in San Francisco, has agreed to team up with New York-based Atco Properties & Management as a capital partner to undertake an adaptive reuse project within Camp North End, a 1 million-square-foot redevelopment project in Charlotte, NC.

This is the first joint venture partnership between Shorenstein and Atco, which has filed plans for the first phase of the redevelopment project with Shorenstein, proposing to transform five former manufacturing and industrial structures in Camp North End into creative office and retail space.

First up for the newly-formed partnership are plans to redevelop a 140,000-square-foot Gama Goat facility, which previously served as production plant for the Humvee’s predecessor, and a portion of Building 3 adjacent to The Mount, one of the project’s districts.

Plans for the Gama Goat facility include creating passageways that will cut through the building to connect with cross-streets in the Lockwood neighborhood, establishing new east-to-west connectivity through the site and the broader North End corridor. The cross-streets will be filled with ground-floor retail space, forming a path that will connect all of the buildings within Camp North End.

The redevelopment plan for Building 3 includes renovating the 25,000-square-foot facility into a creative office space with individual entrances for tenants.

Renovations for both properties are slated to be completed around mid-2019.


Shorenstein Press Center

Source

BisNow

 

Camp North End brings in National Investor Shorenstein for Next Phase

By Melissa Oyler

Shorenstein is a privately owned real estate firm, with national projects and offices in San Francisco and New York. Shorenstein has adaptive reuse and large-scale creative office redevelopment experience, including Market Square in San Francisco and The Reserve and Ford Factory, both in the Los Angeles area. “Shorenstein is pleased to be in partnership with ATCO on this multi-phase project,” Shorenstein Properties President Charlie Malet said in a statement. “We have completed a number of successful creative office redevelopments around the country, and we look forward to working with ATCO to transform Camp North End into a vibrant, mixed-use project that will benefit the Charlotte community for years to come.” The redevelopment of Camp North End opens up new doors for creative office space in Charlotte, Hemmerdinger said. “There are companies all across the U.S. that view employee recruitment and retention as their biggest challenge. A set of those companies choose to put their offices in a certain kind of building and a certain kind of neighborhood all around the U.S.,” Hemmerdinger said. “Until this project, there really have been no opportunities in Charlotte for a large office tenant to provide that experience to their employees. That’s what’s most important from the tenant perspective.”

The next two buildings to open will be the Gama Goat Building and Building 3, which faces The Mount, an area that includes outdoor seating and games, the former Army General’s Office and Hygge Coworking. With the Gama Goat Building, at 1701 North Graham St., development plans include the creation of pedestrian passageways that will cut through the building to connect with the Lockwood neighborhood. The building will have a 140K SF creative office property along with retail, dining and outdoor patio options along the pedestrian walkways. The plan for Building 3, at 1720 Statesville Ave., involves redeveloping the 25K SF property into Class-A creative office space. Tenants will have individual entrances, and local artists will be asked to create murals on the property. Camp North End’s epicenter, a community space featuring a courtyard called The Boileryard, is open every Friday evening through October. The area includes a fire pit, outdoor games, food trucks, live music and murals showing “innovation in Charlotte” created by local artists; and the Boileryard Building at 1824 Statesville Ave., which houses several businesses in addition to Camp North End’s event space. Tenants include Ally Financial’s Innovation Studio; BLKTECHCLT, a community initiative supporting technologists and entrepreneurs of color; Junior Achievement of Central Carolinas; Goodyear Arts; Hygge Coworking; Hex Coffee Roasters; Wily design consulting firm; Black Market interactive gallery and creative studio space; Silver Eye Studios multimedia collective; Alchemy: The Workshop hair salon; DUPP&SWAT creative studio and art gallery; Umbrellamindz music studio; and Prism Supply, a custom motorcycle parts company. The campus also houses a set of industrial users.

“The quality of life and high-caliber workforce in Charlotte make our community attractive for business growth, expansion and relocation,” Charlotte City Manager Marcus Jones said in a statement. “Camp North End offers an exciting and unique opportunity in our city: a place employers can find creative industrial office space and employees can enjoy a dynamic campus environment that features inspiring workspaces, art, retail, food and community gathering areas.” The Gama Goat Building and Building 3 will be completed in early to mid-2019.


Shorenstein Press Center

Source

New York Yimby

 

New Look Inside 1407 Broadway’s Lobby by Fogarty Finger in Midtown, Manhattan

By Andrew Nelson

New images have been shared for the redesigned lobby in 1407 Broadway, a 512-foot-tall Mid-Century skyscraper designed by Ely Jacques Kahn in Midtown, Manhattan. Lightstone Group sold the building to Shorenstein Properties in April of 2015. Tenants are largely from the fashion, technology, advertising, media, and information industries, and Fogarty Finger is behind the revamp.
Project Manager Marco Giardina of Fogarty Finger shared a few words with us regarding the concepts and influences that went into the lobby’s redesign. “Our design plays on the angle of Broadway throughout, with the angle expressed through curves in the awning, ceiling, reception desk, and bronze terrazzo patterns on the floor.”
When considering the building’s relationship with its immediate neighborhood, Giardina elaborated that they, “wanted to design a space that draws visitors in from the street. Our design incorporates two new ten-foot-high glass revolving doors that welcome visitors into the bright, open, ADA-accessible space.
The whiteness of the lobby was inspired by found material in the prior lobby. “We were inspired by a beautiful white marble that was in about 50% of the existing space. This material was lost in the space due to not-so-aesthetically pleasing red, green, and bronze marble that accompanied it.”
The building is positioned just a few blocks south of Times Square. The location has access to an incredible array of transit just blocks away, including Grand Central and Penn Station transit terminals. 33,000 square feet of retail are included on the building’s ground floor.
The heavily-trafficked 6,600 square foot lobby was finished in December of 2017.

Shorenstein Press Center

New Food Hall Opens at Bank of America Plaza

By Amy Wenk

The city’s tallest skyscraper now is home to a new food hall.

Called Marketplace 600, the food hall is located in the west wing of Bank of America Plaza. It’s open to the public for breakfast and lunch. 

It was created in partnership with Eurest, a food and vending division of Compass Group North American.

It features offerings such as a Chef’s Table, which will bring in emerging and celebrity culinary talent. Food stations include a salad bar, hot meal bar, grill, deli, fresh juice bar and dessert bar.  

It also offers catering, cooking classes and digital order and pick-up through its Thrive app.

San Franciso-based Shorenstein Properties LLC has been investing in Bank of America Plaza since it acquired the trophy tower in early 2016. 

The new food hall was part of a $10 million west wing renovation project. 

Food halls have become very popular with developers across metro Atlanta. Read about all the food halls now planned.


Shorenstein Press Center

Spec Suites are all the Rage in Center City Office Buildings

By Natalie Kostelni

Landlords in Center City are increasingly turning to so-called speculative suites to attract tenants and lease up space in their office buildings. 

These pre-built spaces, called spec suites, are move-in ready. They vary in size but are usually small, ranging from 2,000 and 10,000 square feet and rents can come at a premium since the space is already fit out with carpet, painted walls, kitchenettes, conference rooms and offices. Some even come fully furnished, which can add to the expense for a tenant but also the convenience. 

At the Wanamaker building, Rubenstein Partners and Amerimar Enterprises have outfitted a 7,136-square-foot spec suite on the 10th floor that it plans to market to tenants. At 1818 Market St., Shorenstein Properties is building out a 2,369-square-foot spec suite and completed a 5,800-square-foot pre-built space on the ninth floor. It’s going bold and big as well, outfitting a 24,000-square-foot space on the building’s seventh floor. 

At 1700 Market, Shorenstein is building out five spec suites of which four will be 4,000 square feet and one 9,500 square feet. Nightingale Properties plans to carve out a 2,200-square-foot spec suite at Centre Square that will have views of City Hall. Spec suites have been recently created and leased up at other buildings such as 2000 Market and 1650 Arch St.

Depending on the market, Shorenstein will use different designs, but there is a general formula it follows to make the space turnkey, said Christopher Caltabiano, a senior vice president at Shorenstein. Sometimes the company will furnish the space and sometimes it won’t. Most of the time, it will charge a rent of $1 to $1.50 a square foot.

“A lot of the spec suites we build are more challenging spaces to lease and sometimes if you build it, tenants will see it and understand the space better,” Caltabiano said.

The market demand is there and spec suites are a way for landlords to compress the time it takes to get a space ready for a tenant who isn’t picky about color palettes. “No one wants to wait anymore,” said Dave Hagan of Amerimar Enterprises. “Everyone wants to walk in and move in.”

For a lot of companies that may have outgrown coworking spaces or even a home office, time is of the essence to keep a business operating while quickly moving into more permanent space. “Speed to market is important to Roger T. McManimon, a broker with Cushman & Wakefield. “They want to be up and running fast.”

Engine Room Technology leased the 2,369-square-foot suite at 1818 Market based on the rendering of the space, said McManimon, who handles leasing in the building. Construction of the space started in December and the firm is expected to move in next month.

Over the last couple of decades, Center City landlords have attempted to use such fit-out spaces to attract tenants but they weren’t very successful, said Christian Dyer, a broker with CBRE Inc. More often than not, tenants would want to make alterations or the spaces would stay unleased because they weren’t designed well. There’s now a new approach with these spaces that seems to be working better.

“Owners will now do a full-blown build out with nice finishes and work with an architect to determine the best use for the space and as a result they show wonderfully,” Dyer said, noting that can be expensive to do, but the cost can be recouped. 

“They lease much faster than vacant small spaces and that they are leasing it sooner than normal makes it economical,” he said. “They lease at a strong rate, you get a good lease, tenants move in quickly and take space off of the market.”

Spec suites are filling a niche in the market as well. As Class B and Class C space has become scarce, smaller tenants find they can afford to lease a spec suite and, in some cases, in a building along Market Street that they might not otherwise have been able to afford.


Shorenstein Press Center

1818 Market St. Enters into Second Phase of a $21M Renovation

By Natalie Kostelni

Shorenstein Properties is reaping what it believes are the benefits of $21 million investment in upgrades at 1818 Market St., a 37-story office building in Center City.  

The real estate company has lured 160,000 square feet of new tenants to the 940,000-square-foot building including: McCormick and Taylor, which leased 60,000 square feet and is relocating out of Commerce Square; Berger & Montague, which took 45,947 square feet and is departing from 1622 Locust St.; Simon & Simon, which leased about 30,000 square feet and is relocating from 1515 Market St.; Market Resource Partners, which took 25,000 square feet and moving from 1650 Arch St.; Langan Engineering, which moved from 30 S. 17th St., into 18,123 square feet; and Engine Room Technology, which is moving into 2,369 square feet from 601 Walnut St.

Other tenants have expanded, such as Medical Guardian, which has grown from 12,000 square feet to 37,000, and the Coalition of Cancer Cooperative Groups, which went from 20,000 square feet to 30,000. 

Shorenstein, which bought 1818 Market in 2015, decided to invest millions of dollars in renovations and other upgrades to the building beginning late that year. It has so far completed renovating the main lobby and elevator corridors on each floor as well the bathrooms. It expanded the window lines and upgraded the façade. 

It is now completing the second phase of the renovations, building out a 6,000-square-foot fitness facility and a conference center that can accommodate 65 people. A Saxby’s has leased space in the lobby, so has a barber.

“With our original plan, we didn’t think we were going to spend a lot on the amenity package,” said Chris Caltabiano, senior vice president at Shorenstein. “We thought we were going to have a light touch, but we decided to spent a little more money.” 

The reason became clear why that was necessary. The landlord started to lose tenants to buildings that had more amenities.

Tenants also have been attracted to the space for its polished concrete floors, coffered ceilings, exposed duct work and expanded window lines, said Roger McManimon, a broker with Cushman & Wakefield.

Some tenants that want to be on Market Street don’t want to be in 1980s- and 1990s-style trophy office space. Shorenstein appears to have positioned 1818 Market to be what they seek. 

“If someone wanted loft space, they don’t have to go north of Vine,” McManimon said. “We looked at where the market had the most demand and this was an underserved part of it.” 

The building is now 90 percent occupied though that figure could take a hit. Five Below moved out of 60.000 square feet in February and 30,000 square feet of that space has so far been released to Simon & Simon. Jazz Pharmaceuticals is vacating 20,000 square feet in the fall. 

Shorenstein, a San Francisco real estate company, bought 1818 Market for $184.75 million when it was 79 percent occupied and rents were in the mid-$20s a square foot. Rates now run about $32 a square foot. Shorenstein is refinancing the building.


Shorenstein Press Center

Under Shorenstein’s Management, 1818 Beneficial Bank Pl., Philadelphia Receive $21M Renovation

Philadelphia, PA — Shorenstein Properties LLC, a San Francisco-based private real estate investment firm announced 1818 Beneficial Bank Place’s $21 million renovation project is moving into Phase II of construction. Under Shorenstein’s management, 1818 Beneficial Bank Place renovations have elevated the building to one of the premier class A buildings in the city. Additions in Phase II will include, a tenant-only 6,000 s/f fitness facility overlooking Market St., a conference center with capacity for 65 and a new Saxbys Coffee location in the building lobby. “Shorenstein is extremely pleased with the progress of our renovations to date”, says Shorenstein’s senior vice president of asset management Christopher Caltabiano. “New leasing activity and existing tenant retention has been very positive. Our team values tenant happiness at 1818 and looks forward to unveiling Phase II.”To date, 1818 Beneficial Bank Place has completed the following upgrades: building facade restoration, lobby renovation, elevator cab retrofit, new cooling towers and chillers, select common corridor and bathroom upgrades, pre-built office suites and a new bike room. The renovations and additional amenities have been instrumental in assisting the Cushman & Wakefield leasing team led by Roger McManimon, Jack Meyers and Jason Bernardi in securing high quality tenants. In addition to the new tenants, a number of existing tenants have expanded within the building including Medical Guardian, U.S. Legal Support and Coalition of Cancer Cooperative Groups. Notable new tenants include:

● McCormick Taylor, relocating from Commerce Square

● Berger Montague P.C.

● Simon & Simon, P.C.

● Market Resource Partners

● Langan Engineering

● Engine Room Technology.


Shorenstein Press Center

Source

GlobeSt.com

 

Twin Cities Near the Top of Investors’ Wish List

By Brian Rogal

As a secondary market, it provides higher returns, but a very healthy economy means its not as risky as other, smaller regions.

MINNEAPOLIS—A vibrant economy and solid office fundamentals has recently brought many of the most well-known investors to Minneapolis and its suburbs. Shorenstein Properties LLC just became the latest big player to secure a deal for a significant property. The San Francisco-based firm bought the landmark Capella Tower and the adjoining Star Tribune Building from ASB Real Estate Investments for $255 million. ASB made the sale on behalf of its Allegiance Fund, a $7.4 billion core vehicle.


Shorenstein Press Center

First Look: Food Hall Features Italian Pizza Oven inside One Oxford Centre

San Francisco-based Shorenstein Properties, LLC debuted what’s expected to be a major component of its upgrades to One Oxford Centre: its new food hall in the building’s first floor.

Opening to the public beginning Tuesday, the new Oxford Market and its companion Bar Oxford celebrated the downtown office building’s new approach to food service with a ribbon cutting with Mayor Bill Peduto and a sneak peek to local media.

For a renovation of more than $2 million to a space that was formerly occupied by the restaurant Easy Street, Shorenstein contracted with Charlotte-based food service conglomerate Eurest, a division of international firm Compass Group North America, to establish a more fine-dining version of a cafeteria or food court.

Oxford Market features five food stations, some of which will rotate, allowing what Eurest regional vice president Ken Macintyre called “guest restaurants,” including those of local chefs, to serve up plenty of variety at the new venue.

The new food hall includes a pizza oven imported from Italy, along with bright video menu displays and food options for just about every taste.

Along with a full salad bar and a selection of grab-and-go items, Oxford Market offers dishes in a variety of cuisines, serving Italian pizzas and pastas along with pad thai and tacos.

The food hall is joined by Bar Oxford, a companion bar with a garage door that opens onto the adjoining courtyard of One Oxford Centre.

Chris Caltabianco, a senior vice president of asset management for San Francisco-based Shorenstein, said the company has worked with Eurest for other food halls at its properties in other cities. He said food halls “are really important to attract quality tenants” into Shorenstein’s buildings.

“It’s a destination more than just an office building now,” he said.


Shorenstein Press Center

Capella Tower Sells for $255M to Familiar Investor in Minneapolis

By Nick Halter

The Capella Tower office complex in downtown Minneapolis has sold for $255 million to Shorenstein Properties, a San Francisco company that’s been active in Twin Cities real estate.

The seller, ASB Real Estate of Washington, D.C., announced the transaction in a press release. It bought the 58-story Class A skyscraper for $245 million in 2006. The Business Journal reported that the building was under contract in December.

The deal includes the main tower, which is recognizable for its halo, as well as the attached 20-story Star Tribune Building. The complex totals 1.4 million square feet, so the sale price works out to $182 per square foot.  

ASB spent $7 million on a renovation of the complex in 2014 and extended anchor tenant Capella Education Co.’s lease until 2028. It also signed leases with Star Tribune for 138,000 square feet and with co-working giant WeWork for 50,000 square feet. 

“After successfully owning the asset for 11 years, Capella [Tower] had become a less strategic investment from a portfolio diversification standpoint, and the current market dynamics presented a good opportunity to sell and redeploy capital,” Larry Braithwaite, ASB’s senior vice president and portfolio manager said in the release.

Capella Tower was built in 1992 and is the second-tallest building in the downtown skyline.

Shorenstein owned 33 South Sixth Street/City Center for four years before selling it in 2016 to Chinese conglomerate HNA Group for $315 million. The firm also owns the Washington Square campus on the north side of downtown.

Shorenstein, through a spokeswoman, declined to comment for this story, except to confirm that the Capella Tower deal closed Thursday.


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Capella Tower

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McKenzie Gernes

T (651) 303-6777‬

 

1818 Beneficial Bank Place Completes Major Renovations and Developments Amidst $21 Million Building Overhaul, over 160,000 SF of New Tenants Follow

Under Shorenstein’s management the Class A building will boast some of the best amenities in city

(Philadelphia) – February 12, 2018 – Shorenstein Properties LLC, a San Francisco-based private real estate investment firm, is pleased to announce 1818 Beneficial Bank Place’s $21 million renovation project is moving into Phase II of construction. Under Shorenstein’s management, 1818 Beneficial Bank Place renovations have elevated the building to one of the premier Class A buildings in the city.

Additions in Phase II will include, a tenant-only 6,000-square foot fitness facility overlooking Market Street, a conference center with capacity for 65 and a new Saxbys Coffee location in the building lobby.

“Shorenstein is extremely pleased with the progress of our renovations to date”, says Shorenstein’s Senior Vice President of Asset Management Christopher Caltabiano. “New leasing activity and existing tenant retention has been very positive. Our team values tenant happiness at 1818 and looks forward to unveiling Phase II.”

To date, 1818 Beneficial Bank Place has completed the following upgrades: building facade restoration, lobby renovation, elevator cab retrofit, new cooling towers and chillers, select common corridor and bathroom upgrades, pre-built office suites and a new bike room.

The renovations and additional amenities have been instrumental in assisting the Cushman & Wakefield leasing team led by Roger McManimon, Jack Meyers and Jason Bernardi in securing high quality tenants. In addition to the new tenants, a number of existing tenants have expanded within the building including Medical Guardian, U.S. Legal Support and Coalition of Cancer Cooperative Groups. Notable new tenants include:

●    McCormick Taylor, relocating from Commerce Square
●    Berger Montague P.C.
●    Simon & Simon, P.C.
●    Market Resource Partners
●    Langan Engineering
●    Engine Room Technology

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About Shorenstein
Shorenstein is a privately owned real estate firm active nationally in the ownership and management of high-quality office and residential properties, with offices in San Francisco and New York.  Shorenstein’s portfolio includes properties owned by the Shorenstein family through its affiliates Shorenstein Company LLC and Shorenstein Residential Equity Investors, as well as properties owned by a series of closed-end institutional funds sponsored by Shorenstein Properties LLC.  These funds, with equity commitments totaling $7.9 billion, have invested in properties totaling 62.6 million square feet in transactions with a gross investment value in excess of $14.9 billion. Shorenstein Properties LLC is currently investing its eleventh fund, which has total equity commitments of $1.2 billion. Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included land entitlements, ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures. 


Shorenstein Press Center

Press Contacts

Sarah Keaton

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Kruse Woods Corporate Park Recognized by Clackamas County and U.S. Green Building Council for Sustainability Achievements

Portland, OR – January 19, 2018 – Shorenstein Properties LLC earned recognition for sustainability excellence at its Kruse Woods Corporate Park, located in Lake Oswego, Oregon.  The Clackamas County local government presented Shorenstein’s management team with its “Leaders in Sustainability” award, in recognition of the team’s environmentally and socially conscious business practices.  Additionally, Shorenstein has renewed the LEED Gold certification for its Kruse Oaks III property.

 

The Leaders in Sustainability program certifies the positive environmental and social impact of businesses across Clackamas County.  Shorenstein’s Kruse Woods Corporate Park counts over 50 such sustainable business strategies in its property management operation.  Clackamas County’s sustainability team reviewed and verified these sustainability strategies, confirming the Park management office’s achievement of “Gold” recognition, the highest possible level.

 

Shorenstein’s sustainable business strategies include:

  • EPA ENERGY STAR partner and campus-wide average ENERGY STAR score of 90, indicating that Kruse buildings are more efficient than 90% of similar office buildings
  • Green cleaning practices that minimize environmental and human impacts
  • Dual-stream recycling program
  • Annual electronic waste recycling event and semi-annual secure paper recycling event
  • Integrated pest management
  • Energy and water efficiency measures
  • Free electric vehicle charging
  • Community engagement activities including annual Earth Day promotional event for Kruse Woods tenants
  • Annual, publically-available sustainability report

 

The sustainable features and property management practices pre-approved by Clackamas County help any organization located in the Kruse Woods Corporate Park obtain County sustainability certification.  OBEC Consulting Engineers, an infrastructure engineering firm located at 5000 Meadows Road, recently received Leaders in Sustainability certification at the Gold level, benefiting from over twenty of these features and management practices.  “We appreciate that the Shorenstein organization shares OBEC’s sustainability values,” said John Kelly, who chairs OBEC’s sustainability committee.  He noted that the pre-approved features and practices enabled his company to move from Silver to Gold certification status, and that more and more of OBEC’s clients award work partly on a company’s sustainability practices.

 

In December, Shorenstein celebrated the LEED recertification of its Kruse Oaks III property, a 108,454 square foot class A office building located at 5500 Meadows Road within the Kruse Woods Corporate Park.  Designed and constructed to the LEED Gold standard in 2009, the building has now demonstrated Gold-level operation and maintenance via the LEED Performance Score, which provides USGBC’s 3rd party verification of the building’s energy, environmental, and human performance.  Shorenstein is evaluating feasibility of additional LEED certifications at Kruse Woods Corporate Park and across its national real estate portfolio.

 

LEED (Leadership in Energy and Environmental Design) is an internationally recognized green building certification program for the design, construction, and operation of real estate assets.  The U.S. Green Building Council, the independent standards and rating body that administers LEED, provides the real estate market with a transparent, third-party measure of building performance.  LEED is widely recognized by tenants, landlords, brokers, and design and construction professionals as a standard of excellence.  Shorenstein pursues certification wherever it is appropriate for the property type and in alignment with market expectations.  The LEED performance score corresponds with the globally recognized LEED certification levels – Certified, Silver, Gold and Platinum.

 

Kruse Woods Corporate Park is a 20-building office campus located in Lake Oswego, one of the most attractive and exclusive communities in the Portland area. This distinctive property offers state-of-the-art facilities and amenities, scenic oak groves and natural wetlands lining the south edge of the property, and magnificent views of Tualatin Valley.  

Lake Oswego is just eight miles southwest of Portland on the banks of the Willamette River. The quaint downtown offers locally owned boutiques, trendy shops and restaurants, and a variety of services that cater to the business community. Kruse Woods Corporate Park’s easy access to Lake Oswego’s executive housing and amenities, along with its location near the confluence of four major roadways, make it the perfect destination for work, play and everything in between.

 

Shorenstein is a platinum member of the U.S. Green Building Council (USGBC) and has achieved LEED certification for over 23 million square feet of office properties to date, primarily certified at the Gold level.  Shorenstein is a member of the Global Real Estate Sustainability Benchmark (GRESB), the Department of Energy’s Better Buildings Challenge and an Environmental Protection Agency ENERGY STAR for Commercial Buildings partner.  www.shorenstein.com/sustainability.

 

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About Shorenstein

Shorenstein is a privately owned real estate firm active nationally in the ownership and management of high-quality office and residential properties, with offices in San Francisco and New York.  Shorenstein’s portfolio includes properties owned by the Shorenstein family through its affiliates Shorenstein Company LLC and Shorenstein Residential Equity Investors, as well as properties owned by a series of closed-end institutional funds sponsored by Shorenstein Properties LLC.  These funds, with equity commitments totaling $7.9 billion, have invested in properties totaling 62.6 million square feet in transactions with a gross investment value in excess of $14.9 billion. Shorenstein Properties LLC is currently investing its eleventh fund, which has total equity commitments of $1.2 billion. Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included land entitlements, ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  For more information, visit shorenstein.com.


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Sacramento Bee

 

Sacramento’s Prominent U.S. Bank Tower Sold to Bay Area Investment Group

By Benjy Egel

A San Francisco real estate investment company has purchased the 25-story U.S. Bank Tower just south of Golden 1 Center.

Sacramento-based development firm David S. Taylor Interests Inc. and Britannia Pacific Properties real estate agency sold the skyscraper Wednesday to a fund sponsored by Shorenstein Properties, according to a news release distributed Thursday morning. Terms of the sale were not disclosed.

“David S. Taylor Interests has been a great long-term partner and developed a best-in-class property,” Britannia Pacific Properties managing director Hector M. Caldera said in the release. “Sacramento has been a great investment market for the group and we look forward to recycling the proceeds into other local developments over the next few years.”

The 366,000-square-foot building at 621 Capitol Mall was completed in 2008. It’s the second-tallest building in Sacramento at just over 400 feet, with the Wells Fargo Center taking the top spot, and includes dozens of offices as well as more than 23,000 square feet of retail and restaurant space.

Read more here: http://www.sacbee.com/news/business/real-estate-news/article194129739.html#storylink=cpy

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S.F. Based Shorenstein Properties Snaps up U.S. Bank Tower in Sacramento

By Ben van der Meer

San Francisco-based real estate investment firm Shorenstein Properties bought 621 Capitol Mall, a 25-story building known as U.S. Bank Tower, for an undisclosed price on Tuesday.

Developed by David Taylor in 2008, the building was sold by a joint venture of David S. Taylor Interests Inc. and Britannia Pacific Properties. At 366,000 square feet and 400 feet tall, 621 Capitol Mall is the second-tallest building in the Sacramento region. Wells Fargo Center on Capitol Mall, which sold for $175.5 million in 2016, is the tallest.

JLL Capital Markets brokered the deal for the Class A office space with ground-floor retail on behalf of the seller.

Prominent office tenants at U.S. Bank Tower include U.S. Bank; law firms Downey Brand LLP, Nossaman LLP and Kassouni Law; lobbying firm KP Public Affairs; and the California Restaurant Association.

The tower is the only building owned by Shorenstein in Sacramento. The company is best known in the Bay Area as the owner of the Twitter Building at 1355 Market St., but it also owns six other office properties in the city. Its residential division is developing a large apartment complex in Mid-Market that’s expected to break ground this year.

It was unclear whether the purchase included the parking lot to the west of U.S. Bank Tower. That lot at 601 Capitol Mall is approved for a residential project called Aura — a 38-story tower of 262 condominiums above parking and 14,000 square feet of retail space. Approvals were extended through February 2022 at the request of David S. Taylor Interests.

Rob Cole, executive vice president of JLL Sacramento, said a statement that the building is one of the highest-caliber assets in Sacramento.

David Taylor and his team have done a phenomenal job creating and maintaining a world-class asset,” he said.

Cole was assisted in marketing the building by Rob Hielscher, Alan Stevenson and Michel Seifer of JLL.

Britannia Pacific managing director Hector Caldera said a statement that proceeds from the sale of U.S. Bank Tower would be directed into other local developments over the next few years. 


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BisNow

 

1700 Market St. Signs 7 New Tenants, Including HFF

By Matthew Rothstein

Shorenstein Properties rang in the new year with the announcement of seven new leases at 1700 Market St. The San Francisco-based company has leased 85K of the 845K SF of office space at 1700 Market to a collection including investment sales brokerage HFF, Tierney, CH2M, IHS Markit and the Center for Applied Research. CBRE represented Shorenstein in the leases, which brought the building to 90% leased. Shorenstein purchased 1700 Market from Nightingale Properties for $33M in January 2016, according to property records, and is in the midst of renovating the building. Originally constructed in 1968, its modernization is estimated to be finished in March. It is one of two office buildings Shorenstein owns in the city; it also owns 1818 Market St. just over a block away. HFF moved into its new Philly headquarters on the 32nd floor from its previous location in Conshohocken the week of Thanksgiving. Along with its new neighbors, its space is above a five-story parking garage and a retail mix of a Wells Fargo bank, a Cosi sandwich shop, a Pickwick Pharmacy, a day care center and a florist.

Read more at: https://www.bisnow.com/philadelphia/news/office/1700-market-seven-new-tenants-jll-83211?utm_source=CopyShare&utm_medium=Browser

Shorenstein Properties rang in the new year with the announcement of seven new leases at 1700 Market St. The San Francisco-based company has leased 85K of the 845K SF of office space at 1700 Market to a collection including investment sales brokerage HFF, Tierney, CH2M, IHS Markit and the Center for Applied Research. CBRE represented Shorenstein in the leases, which brought the building to 90% leased. Shorenstein purchased 1700 Market from Nightingale Properties for $33M in January 2016, according to property records, and is in the midst of renovating the building. Originally constructed in 1968, its modernization is estimated to be finished in March. It is one of two office buildings Shorenstein owns in the city; it also owns 1818 Market St. just over a block away. HFF moved into its new Philly headquarters on the 32nd floor from its previous location in Conshohocken the week of Thanksgiving. Along with its new neighbors, its space is above a five-story parking garage and a retail mix of a Wells Fargo bank, a Cosi sandwich shop, a Pickwick Pharmacy, a day care center and a florist.

Read more at: https://www.bisnow.com/philadelphia/news/office/1700-market-seven-new-tenants-jll-83211?utm_source=CopyShare&utm_medium=Browser

Shorenstein Properties rang in the new year with the announcement of seven new leases at 1700 Market St. The San Francisco-based company has leased 85K of the 845K SF of office space at 1700 Market to a collection including investment sales brokerage HFF, Tierney, CH2M, IHS Markit and the Center for Applied Research. CBRE represented Shorenstein in the leases, which brought the building to 90% leased. Shorenstein purchased 1700 Market from Nightingale Properties for $33M in January 2016, according to property records, and is in the midst of renovating the building. Originally constructed in 1968, its modernization is estimated to be finished in March. It is one of two office buildings Shorenstein owns in the city; it also owns 1818 Market St. just over a block away. HFF moved into its new Philly headquarters on the 32nd floor from its previous location in Conshohocken the week of Thanksgiving. Along with its new neighbors, its space is above a five-story parking garage and a retail mix of a Wells Fargo bank, a Cosi sandwich shop, a Pickwick Pharmacy, a day care center and a florist.


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18 Projects to Watch in 2018

By Eddie Kim, Jon Regardie and Nicholas Slayton

DTLA - When it comes to transformative projects, it will be hard for Downtown Los Angeles to top 2017. After all, last year saw the opening of the $1.2 billion Wilshire Grand Center, the tallest building west of the Mississippi. Additionally, the community welcomed its largest recreation space in L.A. State Historic Park, several new hotels and approximately a dozen housing developments.
Downtown may not have quite as many mega-projects coming online this year, but that’s not to say the roster is thin. In fact, the development pipeline is packed, and in the next 12 months the community will see the opening of hundreds of housing units, the arrival of at least three hotels, and a cascade of creative office space.
In the following pages, we run down 18 development highlights of 2018, some of which will debut, and others that will advance. As always, consider it just a start — there’s a lot more to come.

Opening This Year

At Mateo: Developer Blatteis and Schnur’s transformation of a series of warehouses in the Arts District is one of the most anticipated projects in Downtown Los Angeles, as well as one of the most delayed. At this time last year the team expected an opening by March 1. That didn’t happen, of course, and anticipation for the mixed-use complex continues to build. Designed by Edge Architecture, the $90 million At Mateo will offer a series of gleaming brick and glass structures with 50,000 square feet of office space, 130,000 square feet of retail and restaurants, and a 540-space parking structure for tenants and customers. Meal replacement drink company Soylent has inked a deal to move its headquarters to At Mateo. Once the project opens, the quickly changing Arts District will become even busier and more crowded.

Circa: Work on the twin-tower mega-project continues, with the focus on the interior layouts and finishes after the “topping out” of the buildings in June. The complex across from the Convention Center, from a partnership led by Jamison Services and Hankey Investments, sits on a seven-story podium with resident amenities, parking and roughly 48,000 square feet of retail and restaurant space. The dual 35-story towers will hold 648 residential units, mostly one- and two-bedroom apartments as well as a handful of penthouses, with rents ranging from $3,000 to a staggering $20,000 per month. The facade includes 17,000 square feet of LED signs, which will light up South Park. Move-ins at the $500 million complex are expected early in the year.

Ford Factory Building: Another entrant on the list of most anticipated projects of 2018 is developer Shorenstein Properties’ renovation of the hulking former Ford Factory complex at Seventh Street and Santa Fe Avenue. The excitement builds partly from the transformation, but also for the tenant: Warner Music Group has a 13-year lease on the space, and will move staff from its current offices in Burbank to the 254,000-square-foot building at 777 S. Santa Fe Ave., likely in the summer. Construction crews are currently building out the offices ahead of WMG’s arrival. Since the announcement of the deal in October 2016, the area has become a destination for youth-skewing and tech businesses. Expect the opening to inject even more energy into the neighborhood, and to draw additional restaurants, bars and other service businesses.

Hotel Figueroa: The iconic hotel at 939 S. Figueroa St. closed in late 2015 after being purchased for $65 million. An extensive transformation of the 1926 edifice began, and a series of anticipated opening dates have been pushed back. Now the work by Green Oak Real Estate and Urban Lifestyle Hotels appears to be nearly complete, and the hotel’s website lists room availability starting on Feb. 7 at $369 a night (rates jump to $819 for the following week’s NBA All-Star weekend). The 13-story building with the three massive ad-boasting panels will have 268 guest rooms, including a selection of “signature suites” with monikers such as the Casablanca, the Mirador and the El Rey. Chef Casey Lane is overseeing a menu rooted in Basque cuisine. The project includes several bars, a rooftop garden, a fitness center and a pool. Its arrival will add more street life to the corridor connecting L.A. Live and the Financial District.

La Plaza Cultura Village: Developer Trammel Crow Company is deep in construction on the project just north of El Pueblo and Olvera Street. The development is a partnership with the County of L.A. A paseo will wind between two structures that have a combined 43,000 square feet of retail/commercial space and 355 apartments (20% will be designated as low-income housing). In addition to restaurants and shops, La Plaza Cultura Village will have arts and historical spaces to educate visitors on the city’s birthplace. An opening is expected toward the end of the year. 

MyFigueroa: While many Downtown stakeholders cheered the start of construction on the bicycle/road diet project, delays throughout 2017 left a lot of people frustrated. The city Department of Transportation is in charge of the project that is cutting driving lanes in favor of wider sidewalks, new bike lanes and transit platforms along the Figueroa Corridor and a stretch of 11th Street in South Park. Part of the delay was due to the discovery of underground utility lines, and DOT now anticipates wrapping the project in the spring. Local business owners have been complaining about the enduring construction, but the project should improve pedestrian and bike connectivity in a rapidly growing segment of Downtown.

NoMad Hotel: The Sydell Group finished a big Downtown redevelopment last year, turning the 1924 Commercial Exchange Building into the 226-room Freehand Hotel. The developer will build on that in the Financial District, as the 12-story, 1923 Giannini Place emerges as the 241-room NoMad Hotel. Check-ins begin Jan. 20 at the establishment at 649 S. Olive St. that, in a previous life, was the headquarters of the Bank of Italy (a precursor to Bank of America). As with New York City’s NoMad, the hotel will feature a wide food and drink program, including a mezzanine-level restaurant, a lobby bar and a cafe. There will also be a rooftop pool deck with a bar. The NoMad could emerge as the most buzz-worthy Downtown boutique hotel since the Standard, and will draw not just tourists, but a wide swath of Angelenos. 

Proper Hotel: If all goes according to plan, the second Proper Hotel (following one in San Francisco) will open in the middle of the year. The Kor Group and Stork/Alma Development spent $13.5 million in 2013 to acquire the 1924 Case Hotel. The 13-story structure at 1106 S. Broadway will hold 148 guest rooms, a trio of restaurants and two unique suites — one will boast a basketball court, and the other an indoor pool. The project will also have a fitness center. The Proper continues a wave of revitalization in South Park, and prefigures other projects including the renovation of the historic Herald Examiner building across the street, and another boutique hotel, the Hoxton, which is under construction a block north.

The Aliso: More signs of change in the Arts District will be apparent this year as construction progresses on The Aliso, the massive housing effort from Legendary Development and Fairfield Residential. Framing of the complex at 950 E. Third St. has been completed. Kava Massih Architects is designing the five buildings, which range from five to six stories. The Aliso will hold 472 apartments and a public paseo will run through the space, linking Traction Avenue to Third Street and enhancing pedestrian access in the neighborhood. The Aliso is expected to wrap in late 2018, and its debut will increase the residential base in the Arts District. Expect some students and staff at the nearby SCI-Arc to be among the tenants. 

Trust Building: Nelson and Christopher Rising, who breathed new life into the low-slung Financial District office complex Park DTLA, and later transformed the One Bunker Hill edifice into the shiny and restored CalEdison, are at it again. Their Rising Realty Partners, in partnership with Lionstone Investments, is expected to complete a renovation of the former Title Insurance Building by mid-year. The 320,000-square-foot structure at 433 S. Spring St. is being marketed as creative office space. The 11-story, 1928 Art Deco/Zig Zag Moderne property was originally designed by Parkinson and Parkinson. The project both restores a Historic Core treasure, and stands to propel the community forward by being a hub for new businesses and hundreds of workers.

In the Works

6AM: Right now, the gargantuan Arts District development exists merely as a plan and a collection of renderings from starchitect firm Herzog + de Meuron. Will 2018 be the year it takes a few big steps forward? The Department of City Planning is currently reviewing the application for the $2 billion mixed-use complex that would rise at Sixth and Alameda streets, where a few produce warehouses sit. Developer SunCal submitted its application in September 2016 and expects to secure entitlements this summer. That would allow the team to move into honing the final design. The 6AM plan comprises more than 1,300 apartments and 430 condominiums, 500,000 square feet of space for hotel and office uses, 64,000 square feet for retail, 18,000 square feet for a school, and another 18,000 square feet for miscellaneous cultural uses. 

Broadway Trade Center: If you’re in the neighborhood of Eighth and Broadway, then it’s impossible to miss the work happening on the gigantic Broadway Trade Center, especially after the construction netting was removed last year. One of the biggest Downtown renovations ever, Broadbridge Capital is turning the former May Company building into a 1.1 million-square-foot mixed-use destination. Along with a two-story food hall, the complex will have a 150-room boutique hotel, two rooftop decks (one open to the public), 400,000 square feet of office space, a private club and retail and restaurants. Broadbridge paid $130 million to acquire the 1908 Beaux Arts structure. Architecture firm Omgivning is handling the redesign, and while much work remains, the façade reveal last year dazzled with a restored, gleaming terra cotta exterior.

Los Angeles Streetcar: The saga of the Downtown streetcar lurches on, and the chances that meaningful construction will start in 2018 seem desperately low. Instead, proponents continue to seek funding for the project with an estimated budget of $274.2 million. So far, the city has only earmarked $65 million for construction from a tax levied on property owners along the proposed 3.8-mile route, which would loop from the Civic Center down Broadway to South Park and back north through the Financial District. Streetcar officials and 14th District City Councilman José Huizar are pushing to expedite the release of $200 million in Metro Measure M money (set aside for the streetcar… but in 2053), as well as looking for private partners. LADOT has also applied for a $100 million grant. 

Merritt Building: With the stately columns running along its upper levels, the 1915 Merritt Building is an eye-catching edifice. Unfortunately, the graffiti and general lack of maintenance have also long made it one of Downtown’s most frustrating eyesores. That is finally changing, as Bonnis Properties last year purchased the building at 761 S. Broadway for $24 million and announced plans to turn it into office space. The small floor plates, generally 6,500-7,000 square feet, make it a likely destination for tech and other creative businesses. There will also be approximately 9,200 square feet of retail space on the lower levels. The buffing of the approximately 50,000-square-foot structure will restore some gleam to the neighborhood.

Music Center Plaza Renovation: Navigating the Music Center Plaza will be more difficult this year. That’s because the arts complex in January is initiating a $40 million renovation, the first major overhaul since 1964. The work will involve “flattening” the plaza, a process that includes moving the Jacques Lipchitz sculpture “Peace on Earth” (which contains a water element) closer to Hope Street. Construction is expected to continue through spring 2019, and when complete the plaza capacity will double, from 2,500 to 5,000 people, and the sight lines toward Grand Park and City Hall will be clearer. Additionally, the staircase to Grand Avenue will be widened and flattened, and escalators will be added. The revamped Music Center will have five new dining and drinking options. 

Regional Connector: The $1.75 billion project that will speed rail travel across L.A. County won’t finish until 2021, but it will impact Downtowners all year long, probably because of construction closures. The project’s tunnel-boring machine finished a path from Little Tokyo to Bunker Hill last month, and will now aim toward Fourth and Flower streets.

The Grand: On the downside, Bunker Hill could soon lose a parking structure. On the bright side, that “Tinker Toy” complex on First Street between Grand Avenue and Olive Street is ugly, and its shuttering will be a definitive sign that developer Related Cos.’ long-gestating Grand Avenue project is finally ready to go. Project representatives last year said work will commence in 2018, with the aim of a 2022 completion. Frank Gehry is designing the $950 million complex across from Walt Disney Concert Hall that will feature a 450-unit residential tower, a 305-room Equinox hotel, and a retail and restaurant component arranged around a central plaza. The project was first announced before the Great Recession, and Related has spent years lining up financing, including a $290 million investment from Chinese entity CORE. This would be Downtown’s most important groundbreaking of the year.

The Reef: One of Downtown’s biggest proposed projects, The Reef could take some big steps forward in 2018. Planned for two parking lots at 1933 S. Broadway, the project resolved a legal standoff with community activists in 2017, with the developers agreeing to set aside more apartments as low-income housing. With the conflict smoothed out, Reef owners Ara and Avedis Tavitian also dipped their toes into international capital markets, with CBRE representing a listing seeking potential financing partners or a sale. The Reef would bring more than 1,400 apartments and condominiums, a hotel, and 120,000 square feet of retail space to a neighborhood that has seen little development.

 

 

 


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901 Battery

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The Registry

 

The Swig Company and Medley Partners Complete Sale of 901 Battery Street

San Francisco, CA (September 6, 2017) – The Swig Company and Medley Partners today announced their venture has completed the sale of 901 Battery, an 89,904 square foot creative office building with adjacent parking structure in the city’s North Waterfront-Jackson Square submarket. The buyer is Shorenstein Company, a San Francisco-based family office. Terms of the transaction were not disclosed.

The partners purchased 901 Battery in December 2012 and immediately instituted a capital investment program designed to reposition the four-story building as an institutional-quality asset in a submarket growing in popularity with creative tenants. As part of the program, The Swig Company executed a seismic retrofit, lobby and façade renovations, and upgrades to each tenant floor. The renovated building features large, open floorplates, abundant natural light and high ceilings. Tenants include Viscira and architectural firms BAR and KMD.

“The repositioning of 901 Battery succeeded both as a tribute to the building’s historic presence in the North Waterfront neighborhood (through the façade restoration), and as an expression of strong, contemporary design in the reconstruction of interior lobbies and path-of-travel, all of which resonate strongly with today’s creative tenants,” said Deborah Boyer, Executive Vice President of Asset Management, The Swig Company.

Kyle Kovac, Michael Taquino, Daniel Cressman and Mandy Lee of Newmark Knight Frank arranged the sale on behalf of The Swig Company and Medley Partners.

About The Swig Company
The Swig Company, LLC is a privately-owned, San Francisco-based real estate operator with an 80 year history of investment, development, partnership and management of commercial real estate properties in major US markets. Founded by Benjamin H. Swig in 1936, The Swig Company is guided by a long-term investment perspective that has proven adept at stewarding investors safely through multiple market cycles. The company’s vertically-integrated operational platform, which includes investment, asset and property management, and leasing expertise, uses flexibility, generational thinking and sensitivity to sustainable practices to stay at the forefront of emerging trends in the commercial real estate industry. For more information, visit: www.swigco.com.

About Medley Partners
Medley Partners manages private market investments on behalf of Jim Simons’ family and affiliated foundations. Medley invests primarily in limited partnerships across the private asset classes, including buyout, growth equity, venture capital, real estate and credit in the United States, Europe and Asia. Medley will also participate in co-investment opportunities with existing managers and direct investments in real estate with experienced operating partners. For more information, visit www.medleyp.com

About Shorenstein
Shorenstein is a privately owned real estate firm active nationally in the ownership and management of high-quality office and residential properties, with offices in San Francisco and New York.  Shorenstein’s portfolio includes properties owned by the Shorenstein family through its affiliates Shorenstein Company LLC and Shorenstein Residential Equity Investors, as well as properties owned by a series of closed-end institutional funds sponsored by Shorenstein Properties LLC.  These funds, with equity commitments totaling $7.9 billion, have invested in properties totaling 62.6 million square feet in transactions with a gross investment value in excess of $14.9 billion. Shorenstein Properties LLC is currently investing its eleventh fund, which has total equity commitments of $1.2 billion. Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included land entitlements, ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  For more information, visit shorenstein.com

 


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Loft House

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Eleventh and Third

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Shorenstein Receives LEED Gold Certification for Santa Clara Tower II

Santa Clara, CALIF – August 03, 2017 – Shorenstein Properties LLC announced the LEED Gold certification of Santa Clara Tower II, one of two twin granite office buildings located at 3965 Freedom Circle in Santa Clara, CA.  This certification brings the entire Santa Clara Towers property up to the LEED Gold standard.  Santa Clara Tower I, the matching twin building, achieved LEED Gold recertification in February 2017.

Santa Clara Towers is a leading Class A asset located in the Golden Triangle submarket of Santa Clara fronting Highway 101, with convenient access to Route 237 and Interstate 880. The twin granite office buildings offer efficient floor plates that can accommodate full floor and multi-tenant configurations. Shorenstein has made a number of recent improvements to the property, including a full upgrade to the lobby at Tower II, new corridor lighting, and elevator finish enhancements. A strong amenity base surrounds the property; onsite amenities include Birk’s Restaurant – one of Silicon Valley’s most recognized business eateries, a fitness center, indoor pool and Jacuzzi, and abundant structured parking. The property is close to major hotels, universities, and San Jose International Airport.

LEED for Existing Buildings: Operations and Maintenance (LEED EB O&M) addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  LEED EB O&M helps building owners and operators measure operations, improvements, and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

Some sustainability highlights of Santa Clara Tower II include:

  • ENERGY STAR Score:  92
  • Water use reduction standards
  • Extensive LED lighting upgrades
  • LEED-compliant cleaning procedures and supplies
  • Recycling and composting program
  • Regular e-waste collection events
  • Green construction standards
  • LEED-compliant pest control management
  • Secure bicycle storage for tenants
  • LEED-accredited Property Manager

Shorenstein is a platinum member of the U.S. Green Building Council (USGBC) and has achieved LEED certification for over 23 million square feet of office properties to date, primarily certified at the Gold level.  Shorenstein is a member of the Department of Energy’s Better Buildings Challenge and an Environmental Protection Agency ENERGY STAR for Commercial Buildings partner.  www.shorenstein.com/sustainability.

 

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About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 62.6 million square feet in transactions with a gross investment value in excess of $14.9 billion.


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Shorenstein Releases 2017 Sustainability Report and Reaches It’s Goal of Reducing Energy Use by 20% – Saving Millions Per Year

San Francisco, CALIF – June 22, 2017 – Shorenstein Properties LLC announced the release of its 2017 Sustainability Report. The report describes progress in the company’s long-standing commitment to environmental, social, and governance best practices across its real estate operations.

Shorenstein is committed to sustainability for the benefit of its properties, tenants, and employees, as well as the communities in which the company operates. In 2016, Shorenstein reached its ambitious goal of reducing energy use by 20% – an achievement that the company estimates is currently saving $6.5 million in energy expenses per year. The company’s sustainability efforts have added measurable value through reduced operating expenses, enhanced tenant satisfaction, and positive impacts to the environment.

Among Shorenstein’s accomplishments last year:

  • Achieved the company’s U.S. Department of Energy “Better Buildings Challenge” goal to reduce energy use by 20% – four years ahead of the original 2020 timeline.
  • Earned the “Green Star” rating for the third consecutive year on the 2016 GRESB (Global Real Estate Sustainability Benchmark) assessment of sustainability performance for real estate portfolios.
  • Completed 43 efficiency projects across the portfolio, resulting in annual operating expense savings of $850,000.
  • Redeveloped the Ford Factory in the Los Angeles Arts District, with emphasis on design elements such as natural lighting, energy efficiency, and historic preservation.

Shorenstein has been a firm advocate for sustainability within the real estate industry. The company is a partner with the U.S. Environmental Protection Agency’s ENERGY STAR program and benchmarks all buildings using ENERGY STAR Portfolio Manager. Shorenstein is a Platinum-level member of the U.S. Green Building Council and has achieved LEED certification for 23 million square feet of office properties, primarily certified at the Gold level.

 About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 62.6 million square feet in transactions with a gross investment value in excess of $14.7 billion.

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Shorenstein Press Center

Shorenstein Picks up East Village Rental Building for $57M

By Kathryn Brenzel

An affiliate of Shorenstein Properties has added an East Village rental building to its portfolio, shelling out $57 million for Benchmark Real Estate Group’s 200 East 11th Street.

Benchmark purchased the 12-story, 57,000-square-foot building for the same price in 2013, and then sold the retail condominium portion in 2015 for $25 million, Benchmark’s Jordan Vogel told The Real Deal on Wednesday.

HFF represented Benchmark on the deal and arranged $31 million in financing from Helaba Bank on Shorenstein’s behalf. Representatives for the San Francisco-based Shorenstein Company, an arm of Shorenstein Properties, confirmed the purchase.

Benchmark started marketing the building for sale last year, along with two other buildings in the West Village. The investment firm was seeking $130 million total for all three properties.

In March, Benchmark sold one of the buildings, 65 Bank Street, for $31 million. The firm had purchased the property, a 37-unit rental building, for $15.2 million in 2015. The third building, at 82 West 12th Street, is still available.

Benchmark has shed several of its rental properties in the past year, including a Midtown West building for $48 million in May and a rental building near Gramercy Park for $87.5 million in March 2016.

Shorenstein recently scored a new tenant at its Garment District office building at 1407 Broadway. Women’s footwear designer Vince Camuto inked a 10-year lease for nearly 43,000 square feet.


Shorenstein Press Center

Source

Real Estate Weekly

 

Henry Hall Making Some Noise on West Side

Imperial Companies, in partnership with the San Francisco based Shorenstein family, announced the official start of leasing at Henry Hall, an hip and posh rental in the Hudson Yards.

The building will offer a residential option that merges New York’s nightlife and boutique hotel experience with luxury residential living.

Henry Hall – as part of its programming – will debut Delicious Hospitality’s new food and beverage restaurant. The restaurant, bar and lounges will be spread over the building’s first and second floors, in effect making these public areas and Henry Hall’s common spaces – such as the second-floor bar, drawing room and wine room – one and the same.

“Every space, however unique, public or private, is considered an essential part of the Henry Hall story. They become a defining element of the residential experience,” said Eric Birnbaum, Co-Founder and Partner at Imperial Companies.

“So many people would love to live in their favorite hotel or have the City’s newest restaurant be just downstairs – Henry Hall makes that a reality.”

Developed by Imperial Companies, on behalf of the joint venture partnership with Shorenstein, and located at 515 West 38th Street, the site of the former Legacy Recording Studio, the 33-story building offers 225 studios, one and two bedroom residences.

Other amenities include a “jam room,” resident’s club room, private dining rooms and wine room, roof deck, training center as well as exclusive access to Henry Hall Concierge for 24-hour service.

Rents start at $3,200 per month.


Shorenstein Press Center

Vince Camuto Signs 43K sf Office Lease at Shorenstein’s 1407 Broadway

Women’s footwear designer Vince Camuto is moving into nearly 43,000 square feet at Shorenstein Properties’ Garment District office building at 1407 Broadway.

The apparel and accessories conglomerate, founded by late designer Vince Camuto, signed a lease for about 42,750 square feet on most of the third floor in the 1.1 million-square-foot, Class A office tower, sources told The Real Deal .

The asking rent in the 10-year deal was in the high $50s per square foot. VCS Group is relocating offices and showrooms it has in a corporate campus spread across a pair of buildings on West 36th and 37th streets in the Garment District.

Representatives for VCS Group and Shorenstein were not immediately available for comment.

Vince Camuto, who died in 2015, was the founder of the footwear giant Nine West, which he named after Sheldon Solow’s exclusive office property overlooking Central Park at 9 West 57th Street.

The company has two retail stores in Manhattan at Grand Central Terminal and Westfield Corporation’s World Trade Center mall.

The lease is part of Shorenstein’s repositioning effort at 1407 Broadway , which the San Francisco-based landlord operates under a ground lease it acquired on the property in 2015 for $330 million .

Many of the floors in the 38-story tower between 38th and 39th streets are broken up into smaller spaces for multiple tenants, and as those leases roll, Shorenstein is combining spaces to create larger floor plates that can attract major tenants like Vince Camuto.

The lease “underscores the desirability of big, efficient floor plates,” said CBRE’s Peter Turchin, who is handling leasing at 1407 Broadway along with Brett Shannon and Gregg Rothkin.

Jeff Rosenblatt of CBC Alliance represented Vince Camuto in the negotiations. He declined to comment.


Shorenstein Press Center

First Look: Shorenstein Previews New Renovations at One Oxford Centre

Shorenstein Properties LLC moves forward with second phase of renovations at downtown office tower.

With $10 million in renovations underway for the building’s HVAC, windows and parking garage, Shorenstein Properties LLC has provided a preview of its second phase of renovations at One Oxford Centre.

With Perkins Eastman serving as the architect and PJ Dick performing the construction, Shorenstein plans to begin making the updates later this month. The renovations will also include a facelift of the building’s atrium and lobby, as well as new tenant amenities.

The company offered the preview a day after one of One Oxford Centre’s biggest tenants, the law firm Buchanan Ingersoll & Rooney PC, announced it has signed a letter of intent to move to the Union Trust Building, adding new incentive to Shorenstein’s marketing efforts.

Shorenstein also announced that its new food hall, Oxford Market, is expected to open late this summer.

The company has indicated in the past that it expects to invest upwards of $50 million to renovate One Oxford Centre, downtown’s third largest office building.


Shorenstein Press Center

Software Firm GeoFields Inc. Relocating Midtown Office to Bank of America Plaza

By Douglas Sams

Software company GeoFields Inc. is relocating its Atlanta office to Bank of America Plaza.

The company, which provides data management solutions for the oil and gas industry, is currently housed at Midtown’s One Atlantic Center.

GeoFields is moving into the “tech lofts,” a section of the 55-story Bank of America Plaza building dedicated to technology and creative class companies. It would lease about 4,400 square feet, according to City of Atlanta building permits, though the exact size of the office has not been formally released.

Bank of America Plaza is continuing to generate leasing momentum under owner Shorenstein Properties, which bought the iconic tower — Atlanta’s tallest — in 2016. Last fall, Fortune 50 health insurer Anthem Inc. said it was putting $20 million into its new Midtown technology hub at Bank of America Plaza. The hub would employ about 2,000, Atlanta Business Chronicle reported.

Since then, Shorenstein Properties has completed an additional 35,000 square feet in leases in the tower with tech/creative class companies.

A CBRE team of Jeff Keppen and Elliott Grand are leasing the building on behalf of Shorenstein Properties.

 


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Press Contacts

Sarah Keaton

T 585.730.0764

 

Shorenstein Named Honoree for CREATE’s Annual Benefit Gala

Come and Support the Industry Leaders Who Are Developing a Pipeline of Talent for the Bay Area’s Commercial Real Estate Industry

San Francisco, Calif – April 18, 2017 – The Commercial Real Estate Alliance for Tomorrow’s Employees (CREATE) has named Shorenstein Company as this year’s honoree for CREATE’s May 18, 2017 gala.  CREATE underwrites an education and training program, the centerpiece of which is a partnership between San Francisco State University and commercial real estate companies.  The program is developing a pipeline of new talent for commercial property employers. The workforce development initiative provides paid summer internships, mentoring with executives at commercial real estate companies, a Commercial Real Estate (CRE) Certificate Program at SFSU, and placement in well-paying careers in the CRE industry.

“For seven decades, Shorenstein Company has been a civic, cultural, and philanthropic leader in our community.  As a builder, owner, and manager of some of San Francisco’s most iconic structures, they know the value of well-trained operational personnel, as their support of CREATE’s workforce training program demonstrates” says Marc Intermaggio, Executive Director & CEO of BOMA San Francisco Foundation and EVP of BOMA San Francisco.  “We’re pleased to honor Shorenstein at CREATE’s 2017 Gala.”

CREATE’s mission is to address a talent drought in the industry. CREATE is working to make careers in CRE a career of choice – not chance.  Since inception of the CRE Certificate Program with SFSU, 52 students have earned their CRE Certificate and 34 students have successfully completed internship programs with a majority finding full-time employment in industry positions.

Shorenstein, among many of its peers in the industry, has been a beneficiary of the CREATE program.  “We have enjoyed mentoring students and currently have two full-time employed program graduates. We encourage you to join us at this year’s gala and help support this very important program.  You will have the opportunity to meet some of the graduates at the event and see for yourself the quality of the talent pool and how they’ve benefited from this program,” says Glenn Shannon, vice chairman at Shorenstein Properties. “We also extend a warm thank you to program supporters, NAIOP, BOMA, and IREM, as well as this year’s signature and legacy sponsors, Hathaway Dinwiddie and Kilroy Realty Corporation.”

Information about this year’s benefit event:

CREATE 3rd Annual Gala

May 18, 2017
5-7:30 pm
The Bently Reserve
301 Battery Street, San Francisco
createworkforce.org/gala-2017
Tickets are available at creategala2017.eventbrite.com

 

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 63.2 million square feet in transactions with a gross investment value in excess of $14.9 billion.

 

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Shorenstein Press Center

Source

The Registry

 

Shorenstein/MetLife to Start Major Office Development in Oakland in Ma

By Jon Peterson

San Francisco-based Shorenstein Properties and New York City-based MetLife are planning to start the development of the 602,000 square foot office development in Oakland called 601 City Center. This property is located at 601 12th Street in downtown Oakland and totals 1.38 acres.

“This is a development that we never would have started without some sort of pre-leasing being concluded. We were not willing to start this development on a speculative basis,” says Charlie Malet, president and chief investment officer for Shorenstein. An announcement was made earlier this week with a lease signed with Blue Shield for 200,000 square feet or about 1/3 of the building.

Shorenstein is expecting that once the project is started it will take 20 months to complete. The real estate firm declined to state what the development cost of the project would be.

The office market in Oakland can offer many benefits for companies looking to move there. One is that the current rents are much lower than San Francisco. “The existing rents for Class A office space in Oakland are about 65 percent of what they are in San Francisco. Another factor for us is that Oakland might have the best public transit system in the Bay Area. Our site has mass transit nearby in that we are located about two blocks from a BART station. This is something that is very important for many employers,” said Malet.

Shorenstein believes that there will be many potential tenants taking a look at its project. “I would think that this would include professional/law firms, major corporations and technology companies,” said Malet. The leasing efforts on the property going forward are being overseen by John Dolby and Dane Hooks of the Oakland office of Cushman & Wakefield. The Oakland office market remains tight with the vacancy for Class A space being 10 percent.

Shorenstein has owned the 601 City Center property for 10 years. It currently holds ownership in the property through a joint venture with MetLife. Malet declined to comment on how much is owned by each company.

The portion of the property that Shorenstein owns is placed into two of the company’s commingled funds. These are Shorenstein Realty Investors Eight and Shorenstein Realty Investors Eleven. Fund Eight was formed in 2006 with $1.1 billion of committed capital with a $100 million commitment from Shorenstein. Fund Eleven was put together in 2011 with a total capital raise of $1.22 billion. Shorenstein made a $75 million co-investment into this fund.


Shorenstein Press Center

Blue Shield Moving its HQ from San Francisco to Oakland

By Raquel Maria Dillon

Health insurer Blue Shield is moving its headquarters from San Francisco’s Financial District to downtown Oakland in an effort to reduce costs and create options for growth.

The non-profit health insurance company said it signed a letter of intent to lease 200,000 square feet of office space on Wednesday, but the move isn’t scheduled until 2019.

In fact, the location where Blue Shield of California is moving is nothing but a muddy gravel pit right now.

Oakland Mayor Libby Schaaf said landing an anchor tenant means that construction that stalled years ago can resume on the 24-story office tower. The development is called 601 City Center, and is being developed by Shorenstein Realty Services.

Schaaf said about 2/3 of the 1,200 employees who will report to work in Oakland already live in the East Bay. 

“This is going to improve their quality of life, lessen their commutes, make their environmental footprint less, and add to the vitality of downtown Oakland,” Schaaf said.

Blue Shield joins another healthcare giant with headquarters in downtown Oakland: Kaiser Permanente.

In 2015, Uber Technologies bought the former Sears Building. Pandora Media rents space at 2101 Webster. The University of California Office of the President also recently signed a letter of intent to rent space at 1100 Broadway.


Shorenstein Press Center

Source

The Mercury News

 

Oakland Lands Blue Shield Headquarters and 1,200 Workers

By George Avalos

OAKLAND — Blue Shield of California has agreed to move its headquarters and 1,200 workers to Oakland, the nonprofit health plan said Wednesday, a move that will help it escape fast-rising office rents at its current location in San Francisco.

Blue Shield’s move represents the largest relocation of an office tenant from San Francisco to Oakland in at least 30 years. The health care company will move to the City Center complex in downtown Oakland.

“This is huge for Oakland,” Mayor Libby Schaaf said Wednesday in an interview with this newspaper. “It’s an amazing time for Oakland. We are seeing unprecedented levels of revitalization and investment in Oakland.”

The health care company is leasing a third of the space in the 600,000-square-foot, 24-story 601 City Center building. The office tower is being developed by a joint venture of Shorenstein Realty Services and MetLife.

“After extensive evaluation, we believe the move to Oakland will lower our administrative costs, allow us to invest in our people, services and products, and better position us to scale our business as we grow to serve more members across the state,” said Paul Markovich, president of Blue Shield.

The building should begin construction this year and be ready for Blue Shield to move in during the July-through-September quarter of 2019. The lease for the property was arranged through commercial realty brokerages Jones Lang LaSalle and Cushman & Wakefield.

Blue Shield of California has been located in San Francisco since it was founded 78 years ago. Blue Shield’s executives and most of its employees will relocate to Oakland.

The Blue Shield of California Foundation, the organization’s philanthropic arm, will remain in San Francisco.

“For nearly eight decades, Blue Shield has been a leader in the San Francisco business and philanthropic communities,” Mayor Schaaf said. “We’re happy that Oakland can now share directly in this strong and proud tradition.”

The tech boom in San Francisco has lifted office rents in the prime spots of that city to spectacular levels. But the soaring office rents make it tougher for non-tech companies to pay what San Francisco commercial landlords demand.

Office rents in San Francisco are roughly 20 percent to 30 percent higher than they are in downtown Oakland, estimated John Dolby, one of the Cushman & Wakefield brokers involved in the Blue Shield transaction.

“This deal signifies that downtown Oakland has changed dramatically,” Dolby said. “With the new mayor, the amount of investment in the downtown, that has dramatically improved the quality of life in downtown Oakland and is attracting top-quality tenants.”

In 2015, Uber Technologies unveiled plans to create a co-headquarters complex with hundreds of workers in a downtown Oakland office and retail complex that the ride-hailing startup is redeveloping. Pandora Media also has its headquarters in downtown Oakland.

“Today’s announcement solidifies Oakland’s status as the center of health care and tech in the East Bay,” Schaaf said.

Downtown Oakland also has emerged as a center for popular, cutting-edge restaurants and night life, with much of that activity centered in the fast-rising and bustling Uptown District. And as part of a quest to extend the downtown beyond an 8 a.m. to 5 p.m. Monday-through-Friday urban center, Schaaf said Wednesday her administration is committed to starting or completing 4,500 new residential units in Oakland.

“As someone who was born and raised in Oakland, who grew up experiencing a bustling downtown and then seeing it fall on hard times, it is fantastic to see the energy in downtown, both commercial and residential,” the mayor said.


Shorenstein Press Center

Press Contacts

Sarah Keaton

T 585.730.0764

 

Blue Shield of California Headquarters to Move to Shorenstein’s 601 City Center in Oakland

SAN FRANCISCO (March 8, 2017) — Blue Shield of California today announced it will relocate its headquarters to Oakland in a move designed to reduce administrative costs, provide a new, state-of-the-art facility for approximately 1,200 employees and strengthen the company’s position for long-term, sustainable growth. The nonprofit health plan will maintain a substantial presence in San Francisco, where Blue Shield of California Foundation will remain headquartered.

Blue Shield’s executives and most of its San Francisco-based employees will move from their office at 50 Beale St. to 601 City Center in Oakland, in mid-2019. 601 City Center is being developed by Shorenstein Realty Services, L.P. on behalf of a joint venture between a Shorenstein investment fund and MetLife. Construction on the 24-story building begins in 2017 and will be ready for occupancy in the third quarter of 2019.

Blue Shield will continue to support and engage with San Francisco social, civic and community organizations, and will open a new office in the city with a conference center, event space and sales department; the Foundation will remain headquartered in San Francisco in a to-be-determined location.

Aligning with Blue Shield, the Foundation is focused on improving the lives of all Californians, particularly the underserved, by making health care accessible, effective and affordable, and by ending domestic violence. The Foundation is an independent organization funded entirely by contributions from Blue Shield. Through grantmaking to nonprofit organizations, research and convening, the Foundation is advancing health and safety for the most vulnerable Californians.

“Blue Shield has called San Francisco its home since the health plan was founded 78 years ago. We are proud of our relationship with San Francisco, dedicated to its communities and committed to keeping the Foundation headquartered in the city,” said Paul Markovich, president and CEO of Blue Shield. “However, Blue Shield’s mission challenges us to evaluate our resources in a way that furthers access to affordable, quality health care.

“After extensive evaluation, we believe the move to Oakland will lower our administrative costs, allow us to invest in our people, services and products and better position us to scale our business as we grow to serve more members across the state. It also minimizes the impact of a move on our Bay Area workforce, as more than two-thirds of the employees who work in our San Francisco office live in the East Bay.”

Blue Shield estimates the lease in Oakland could save the company at least $26 million over the term of the lease when compared to San Francisco. With 6,800 employees statewide, Blue Shield maintains 18 offices across California.

Blue Shield’s lease at 601 City Center is for approximately 200,000 square feet.  Blue Shield engaged the leasing firm of Jones Lang LaSalle, represented by Tom Maloney. The Landlord was represented by Tom McDonnell of Shorenstein Realty Services, L.P. and John Dolby and Dane Hooks of Cushman & Wakefield.

 

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Background on Blue Shield of California
Blue Shield of California, an independent member of the Blue Cross Blue Shield Association, is a nonprofit health plan with 4 million members, 6,800 employees and more than $17 billion in annual revenue. Founded in 1939 and headquartered in San Francisco, Blue Shield of California and its affiliates provide health, dental, vision, Medicaid and Medicare health care service plans in California. The company’s mission is to ensure all Californians have access to high-quality care at an affordable price. Blue Shield has contributed more than $450 million to Blue Shield of California Foundation since 2002. Contact your local agent or broker about Blue Shield of California products and services, or visit www.blueshieldca.com.

 

About 601 City Center

601 City Center is a planned office tower entitled for approximately 600,000 square feet.  

It is designed to achieve LEED® Gold certification. The 24-story office tower will provide a dramatic new addition to the Oakland skyline while offering phenomenal 360-degree views of San Francisco, the Oakland Hills, UC Berkeley and surrounding areas.

601 City Center is located on 601 12th Street in Oakland, California’s bustling City Center business district. City Center offers a wide variety of restaurants and retail shops. People-oriented public spaces feature fountains, sculptures, entertainment, abundant landscaping, festive lighting and al fresco dining.  City Center’s central location is unsurpassed in ease of access, with direct access to the BART system, major freeways, and Oakland International Airport, Oakland City Center is an ideal location for businesses and their employees. For more information, visit 601citycenter.com


Shorenstein Press Center

Source

GlobeSt.com

 

Many Creative Office Exits are at Core Plus Pricing

SAN FRANCISCO—The conversion of a property from industrial or retail use to creative office has become an increasingly popular value-add strategy for institutional investors or well-known owner/users.

By Lisa Brown

SAN FRANCISCO—A number of creative office projects have generated substantial returns for investors upon completion. Transwestern recently released a report examining the adaptive reuse developments in Boston, Chicago, Los Angeles, New York, Phoenix, San Francisco and Austin, TX. There are several examples of completed projects here, including 888 Brannan St.

Although they’ve received a lot of attention recently, creative office conversions are not new. Take for example, Chelsea Market in New York City or the Ferry Building in San Francisco, both delivered more than a decade ago with high-profile office components. What is new this cycle is the sheer volume of creative office exits nationally at core/core plus pricing with the buyers being major institutional investors or well-known owner/users, according to Michael Soto, director of research in Southern California and co-author of the report.

“The conversion of a property from industrial or retail use to creative office has become an increasingly popular value-add strategy for investors,” Soto said. “Two trends are fueling demand for this type of differentiated office product: One, technology, advertising, media and other companies trying to attract millennials are interested in the characteristic features of creative office space–open floor plans, natural lighting, common spaces, and amenities such as cafes and rec rooms. And two, tenants are returning to cities, where they can take advantage of live/work/play environments.”

Not all creative office properties adhere to a strict profile. Some are single-tenant buildings, some are multi-tenant campuses and some are mixed-use projects with major retail, residential or even hotel components. Usually the composition is determined by whatever mix of uses appeals to the developer financially.

No matter the mix, in many cases, the renovation/conversion of a major creative office project helps kick off increased property and business investment, and attract hundreds or thousands of high-paid workers to the area, says Transwestern. This is the case with Twitter in the Market Square/Tenderloin neighborhood at 1355 Market St. This project has completely revitalized the area, having a positive influence on adjacent properties as well.

Shorenstein Properties purchased the 1.1 million-square-foot former furniture mart in 2011 for $112 per square foot and invested $100 per square foot to repurpose the asset, according to Transwestern research. The project had large floor plates and unique space characteristics, which the developer targeted as key for creative office tenants in the market. Companies such as Twitter, UBER and more recently, Thumbtack and Nerdwallet, have taken significant space there, helping to stabilize the asset. The exit price of $859 per square foot to a core investment fund shows the continued viability in San Francisco for the value-add strategy of repurposing underutilized buildings to creative office space, says Transwestern.

“Following Twitter’s move and other technology giants following, the entire area experienced a revitalization,” Markus Shayeb, senior vice president at Transwestern, tells GlobeSt.com. “This is due to small tech tenants wanting to be close to their larger counterparts, as well as retail and residential developments that have improved the overall dynamics of the neighborhood.”

Based on favorable exit pricing of some major creative office projects around the country, this type of larger scale value-add strategy is now being considered by developers, either via direct investment or joint-venture partnerships with equity partners. Conversely, stabilized creative office properties are on the radar of many national and international institutional buyers that are paying traditional trophy class-A pricing for these types of properties, usually based on the credit-worthiness of the tenant, as well as the location of the project. The report cautions, however, that many of these projects were acquired and developed under very different economic conditions than exist today.

“Rising land, building and construction costs–especially in hot neighborhoods–may add more risk when compared to a few years ago, when we were at a different point in the real estate cycle,” said Sandy McDonald, director of research, Transwestern Chicago and co-author of the report. “In addition, adaptive reuse often comes with hidden costs and potentially expensive future property modifications.”

Moreover, the popularity of the creative office concept means that there is more inventory in the market today. Landlords that own existing office buildings or are doing ground-up development are considering strategic property enhancements and creative office-associated tenant amenities to stay competitive in the marketplace.

A visible project underway is Uptown Station at 1955 Broadway in the Oakland CBD. It was built in 1929 as a Sears department store with 370,000 square feet. The developers are UBER and Lane Partners. It is being renovated to creative office for UBER, which acquired the property for $123.5 million in September 2015 for its new corporate headquarters.

 


Shorenstein Press Center

Press Contacts

Sarah Keaton

T 585.730.0764

 

Shorenstein Receives LEED Gold Recertification for Santa Clara Tower I

Santa Clara, CA – March 1, 2017 – Shorenstein Properties LLC announced the LEED Gold recertification of Santa Clara Tower I, one of two twin granite office towers located at 3945 Freedom Circle in Santa Clara, CA.  Santa Clara Tower I initially earned LEED Gold in 2012 and the U.S. Green Building Council requires recertification every five years to maintain the LEED for Existing Buildings designation.  Santa Clara Tower II, the matching twin tower, is currently pursuing LEED for Existing Buildings certification.

Santa Clara Towers is a leading Class A asset located in the Golden Triangle submarket of Santa Clara fronting Highway 101, with convenient access to Route 237 and Interstate 880. The twin granite office towers offer efficient floor plates that can accommodate full floor and multi-tenant configurations. A number of improvements have been made under Shorenstein ownership including LED lighting retrofits to both exterior and interior lighting and a state- of-the-art parking lighting system.  Additional improvements extend to a fully upgraded lobby in Tower II and elevator finish enhancements in both towers. While a strong amenity base surrounds the property, there are many onsite amenities including Birk’s Restaurant – one of Silicon Valley’s most recognized business eateries, a health club, indoor pool and Jacuzzi, and abundant structured parking. The property is close to major hotels, universities, 49ers’ Levi Stadium, SJ Earthquakes’ Avaya Stadium and San Jose International Airport.

LEED for Existing Buildings: Operations and Maintenance (LEED EB O&M) addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  LEED EB O&M helps building owners and operators measure operations, improvements, and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

Some sustainability highlights of Santa Clara Tower I include:

  • Average ENERGY STAR Score:  92
  • Water use reduction standards
  • Extensive LED lighting upgrades
  • LEED-compliant cleaning procedures and supplies
  • Recycling and composting program
  • Regular e-waste collection events
  • Green construction standards
  • LEED-compliant pest control management
  • Secure bicycle storage for tenants
  • LEED-accredited Property Manager

Shorenstein currently owns twenty-seven LEED-certified buildings totaling twelve million square feet, with the majority certified at the Gold level.  The company has been a firm advocate for sustainability within the real estate industry.  Shorenstein is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20% by 2020 and to sharing energy efficiency best practices with industry peers, as well as a Platinum-level corporate member of the U.S. Green Building Council and an Environmental Protection Agency ENERGY STAR for commercial buildings partner.  www.shorenstein.com/sustainability.

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About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 62.6 million square feet in transactions with a gross investment value in excess of $14.9 billion.


Shorenstein Press Center

Source

Curbed Atlanta

 

Atlanta’s Bank of America Tower Redo Aims to Lure ‘Top Tech Talent’

By Josh Green

Atlanta’s most majestic skyscraper just got a little more Ponce City Market.

Consuming 24,000 square feet within the city’s tallest high-rise, Bank of America Plaza, a new collection of loft-style business suites has recently finished construction, aiming to “attract some of the state’s top tech talent,” officials said in a release today.

They’re calling it The Block @ BoAP.

Girded by large windows with views, it has a surprisingly lofty look to some ceilings, with open spaces meant to spur collaboration and dashes of bold color for inspiration. Light fixtures and large, trendy kitchens harken newer Midtown condos.

The suites “will be a great place for collaboration and innovation within the growing community of tech-related companies, students, and millennials surrounding the building,” states the release. “With a growing number of innovators in the area, these spaces will provide an ideal space for forward-thinking individuals to work and create.”

Standing 55 stories and 1,023 feet, the tower is still the 11th tallest building in America (with no equal in the Southeast), but it’s been traditionally considered the domain of mahogany-paneled law firms. With refreshed amenities and potentially more techie tenants, new owners and management hope to change that.

Shorenstein Properties paid in the ballpark of $230 million for the troubled landmark last year, at which time it was reportedly only half-leased. During the recession, the tower was foreclosed and actually actioned off on the courthouse steps downtown.

That’s quite a contrast to the big burgundy icon’s beginnings in the roaring early 1990s, when demand was so strong developers had to add floors to initial plans.

Could swanky office kitchens and fluorescent cabinetry (coupled with enviable MARTA proximity) help trigger a modern-day rebound? Time will tell.


Shorenstein Press Center

Source

The Registry

 

Progress is Moving along at The Spring District with 790 Units Under Construction

By Brittan Jenkins

Construction at Bellevue’s newest neighborhood, The Spring District, is moving along as 790 residential units are currently under construction. Selected by master developer Wright Runstad & Company and Shorenstein Properties to build the bulk of the residential units for The Spring District, Security Properties is currently working to get their units move-in ready.

Security Properties is building two of the three phases of residential development for the neighborhood. Housing options will range from apartments to multifamily housing units. AMLI Residential Properties is building the third phase of residential development, which includes a single residential building.

Security Properties recently completed The Sparc, a 309 residential unit complex across five buildings with best-in-class amenities including spacious floor plans and a Bright Horizons childcare center. The building is located in the southwest corner of the development and sits on a 2.5-acre parcel.

“The first phase of those units will get a certificate of occupancy this month and will likely be open to residents starting in March,” said Cooper Engst, development manager with Wright Runstad & Company. “The rest of those apartments are in various stages of completion,” he added.

The group is also working on the second phase of residential development that will include multifamily housing built to LEED standards. The 367,000 square foot mixed-use development will have a total of 279 units across three buildings. Plans for these multifamily housing units include a nine-story building and two six-story buildings. Units will range from studios to one, two and three-bedroom apartments and offer rooftop decks, a fitness facility, a pet salon, bike maintenance and storage areas. There will also be about 3,700 square feet of commercial real estate and two levels of below-grade parking for 255 cars. The site is about 1.8 acres and is directly east of The Sparc along N.E. 12st St. between 120th and 124th Avenues N.E. The second phase is scheduled for completion in late 2018.

While there are currently no tenants in any buildings, Engst said there will likely be residents living in the apartments as early as March and April of this year at the latest. He added that Security Properties will be setting up a model unit and leasing office staffer either this week or next week. Security Properties’ team also includes equity partner HAL Real Estate, financial partner Pacific Life Insurance Co., general contractor Walsh Construction and structural engineer Swenson Say Faget.

The third and final phase of residential construction is being built by AMLI. In February 2016, AMLI purchased a 1.47 acre parcel of The Spring District for residential development. The group plans to develop a single residential building of about 220 units on the southwest corner of neighborhood. AMLI is working with GGLO Architects and Rafn Construction to design and develop the site. Construction is set to begin in early 2017 with a completion date early 2019.

While construction of many components in The Spring District are nearing completion, the expected completion date for the entire master plan isn’t set until 2028.

Overall, Engst said he is happy about the progress of the development. “It’s coming along very quickly,” he said. “It’s been in the works for ten years now. When we bought the land in 2006, we laid out an initial vision for it but then hit a financial crisis.” Engst added that once things began to kick off over the past two years, progress has been really fast.


Shorenstein Press Center

One Oxford Centre getting $50M in renovations

By Tim Schooley

San Francisco-based Shorenstein Properties LLC is preparing to begin exterior renovations on One Oxford Centre as part of its $50 million in upgrades to the downtown office tower.

The company on Tuesday briefed the Pittsburgh Planning Commission on its initial plans for the lower floors of the building and its exterior courtyard.

We’re focused on a light touch and some modest improvements of the lower exterior of the building,” said Jeff Young, an architect for Perkins Eastman, which is representing Shorenstein in the plan.

The main change in the building itself is a new architectural ribbon to extend along the Grant Street in front of the building over to its Fourth Avenue, as well as some new LED lighting. The company plans to convert an existing fountain into a new planter.

The company also continues its renovation changes inside the building, including plans to convert the third and fourth floors of retail space into new office use, adding 30,000 square feet for each floor for new office tenants.

About two weeks ago, Shorenstein announced its plans for the new Oxford Market, a new food hall which is expected to take the place where the restaurant Easy Street closed at the end of last year.

Shorenstein’s new exterior plan is expected to be voted on by the commission at its next meeting.


Shorenstein Press Center

Food Hall Trend coming Downtown with Plan for Oxford Market

By Mark Belko

It might not rival Eataly or San Francisco’s Ferry Building, but Downtown Pittsburgh is about to get its first food hall, one of the hottest trends in the foodie culture.

Oxford Market, a 12,000-square-foot space packed with restaurants, chef demonstrations, wine tastings and other offerings, is expected to open this summer in One Oxford Centre.

The food hall marks one of the first big moves by San Francisco-based Shorenstein Properties, the new owner of the iconic Grant Street skyscraper, to upgrade the real estate built in 1983.

“It provides an amenity for One Oxford Centre and sends a resounding message that they are updating to the modern era,” said Herky Pollock, executive vice president of CBRE, the Downtown real estate firm handling the building’s leasing.

Shorenstein has reached a deal with Eurest, the $1.4 billion food and vending division of Compass Group North America, to bring the food hall into the building.

Oxford Market will be located in the 45-story skyscraper’s plaza level, taking up space once occupied by the Easy Street restaurant, which has closed, and management offices. It also will use Oxford Centre’s outdoor space during warmer weather.

The food hall will feature a variety of restaurants offering Mexican and Italian fare and other international dishes as well as specialty concepts involving salads and other healthy meal options.

Another section, Create Exhibition, will give local and Eurest chefs opportunities to showcase dishes and recipes. There also will be wine tastings and other special events.

Eurest is planning to partner with a number of Pittsburgh restaurants and celebrity chefs as part of the endeavor. In addition, there are plans for a small market selling fresh fruits, vegetables, baked goods and other items.

LaToya Evans, a spokeswoman for Compass Group, could not provide the names of potential restaurants or chefs Thursday, saying that discussions are still taking place.

“The goal is to cater, of course, to residents and employees in the Downtown area and to give them more fresh food options and variety in terms of what they are doing with their meals,” she said.

Mr. Pollock said food halls represent a move away from traditional food courts “oftentimes fraught with fried and unhealthy food” to more modern alternatives that appeal to a more health conscious crowd.

“There’s much more attention paid to food quality. It oftentimes includes no GMO, or organic or cutting edge food items you would never find in an older food court,” he said.

Food halls, he said, are a “wildly growing trend” that can be located in office buildings or at freestanding sites.

A study by the real estate firm Cushman & Wakefield found 96 major food hall projects totaling just over 2.4 million square feet of space in the United States by the end of last year’s third quarter.

It also was tracking another 28 projects in the planning stages that could add another 908,000 square feet of food hall space through 2019.

“New proposed projects are being added at the rate of nearly one per week,” the report stated.

The study concluded the trend is being driven by a number of factors, including the emergence of the “foodie” culture over the past two decades; demographics that resulted in millennials driving demand and preferences; and the strong growth in urban markets.

Among the most well known food halls in the country are Eataly, with locations in cities like New York, Boston, and Chicago; and San Francisco’s Ferry Building. Smallman Galley in the Strip District is the only food hall in Pittsburgh.

Oxford Market is part of $50 million in renovations that Shorenstein, a real estate investment company, is making in the Downtown property it bought for $148.7 million. Two current tenants, Au Bon Pain and a sushi restaurant, are expected to remain in the plaza level with the food hall.


Shorenstein Press Center

Shorenstein Sells Umpqua Bank Plaza in Downtown Portland

Chicago real estate investor Zeller sets its sights on the Pacific Northwest

By Jon Bell

For the past almost five years, Chicago-based real estate investment firm Zeller Realty Group has been itching to get into Portland, Oregon.

Now, they’re in.

ZRG has purchased the Umpqua Bank Plaza at 1 S.W. Columbia St. in downtown Portland from Shorenstein Properties. Several local sources confirmed the price was $90 million. Shorenstein paid $84 million for the 19-story building in 2007.

“We love the demographics and the fundamentals of the Portland market,” said Bill Rogalla, director of acquisitions and dispositions for ZRG. “This opportunity presented itself and we pursued it aggressively.”

Ryan Bergman, a vice president with ZRG, worked with Rogalla on the deal. Eastdil Secured represented Shorenstein.

Umpqua Bank occupies multiple floors of the building for its corporate headquarters.

ZRG has hired Cushman & Wakefield to handle leasing and management of the building. The local team includes Lana Baldock, Dan Swift and Havilah Coady, who also handled the leasing during five years of Shorenstein’s ownership and pushed the building’s occupancy rate up to 97 percent.

“We are eager to continue our effort of tenant retention while bringing this iconic tower to full occupancy,” Baldock said, in a release. “Umpqua Bank Plaza is a distinguishing property in Portland and we are thrilled that ZRG is entering the market by acquiring the asset.”

Although this is ZRG’s first foray into Portland, Rogalla said it will not likely be its last.

“We’d love to expand our presence in Portland, and Seattle has been on our radar as well,” he said. “The Pacific Northwest is a high priority for us.”


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Press Contacts

Sarah Keaton

T 585.730.0764

 

Shorenstein Receives LEED Gold Recertification for Denver City Center

Denver, CO – January 05, 2017 – Shorenstein Properties LLC announced the LEED Gold recertification of Denver City Center, a 1,256,650-square foot two-building office property located at 707 and 717 17th Street in Downtown Denver.  707 17th Street, which initially earned LEED Silver in 2011, demonstrated improved performance and moved up a rating level to earn LEED Gold.  717 17th Street, known as Johns Manville Plaza, maintained the LEED Gold status it initially achieved in 2011.  Recertification is required by the U.S. Green Building Council every five years to maintain the LEED for Existing Buildings designation. 

Denver City Center consists of two adjacent office buildings located in the heart of downtown Denver.  707 17th Street is a 42-story building incorporating the 20-floor Marriott City Center hotel and 22 floors of office space.  The second building, known as Johns Manville Plaza, is an adjacent 29-story office building. The property is central to Denver’s top food and leisure attractions, has exceptional access throughout the entire CBD and is immediately adjacent to both inbound and outbound light rail lines.  The 16th Street Mall is one block away, the Colorado Convention Center is three blocks away, and just minutes away from Pepsi Center and Coors Field. The two buildings share unobstructed views of the Rocky Mountains and Downtown Denver.  Under Shorenstein’s ownership, the company has upgraded 145,000 square feet of vacant space, created new amenities including state-of-the-art fitness and conference centers, and renovated the 30,000-square foot outdoor plaza with extensive landscaping, ambient lighting, outdoor seating and high-speed Wi-Fi.

LEED for Existing Buildings: Operations and Maintenance (LEED EB O&M) addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  LEED EB O&M helps building owners and operators measure operations, improvements, and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

Some sustainability highlights of Denver City Center include:

  • Average ENERGY STAR Score:  87
  • Water use reduction standards
  • LEED-compliant cleaning procedures and supplies
  • Recycling and composting program
  • Regular e-waste collection events
  • Green construction standards
  • LEED-compliant pest control management
  • Secure bicycle storage for tenants
  • Outdoor B-Cycle Station

Shorenstein currently owns thirty-five LEED-certified buildings totaling fifteen million square feet, with the majority certified at the Gold level.  The company has been a firm advocate for sustainability within the real estate industry.  Shorenstein is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20% by 2020 and to sharing energy efficiency best practices with industry peers, as well as a Platinum-level corporate member of the U.S. Green Building Council and an Environmental Protection Agency ENERGY STAR for commercial buildings partner.  www.shorenstein.com/sustainability.

 

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 About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 63.2 million square feet in transactions with a gross investment value in excess of $14.9 billion.


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Press Contacts



T

 

David Swensen

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Press Contacts



T

 

Sarah E. Stein

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Source

Star Tribune

 

City Center in Downtown Minneapolis Sells for Record Price

The Minneapolis skyscraper nearly sold for $280M last year before Target’s sizable layoffs.

By Nicole Norfleet

The City Center office tower and retail center in downtown Minneapolis sold for $315 million, a record for a Minnesota skyscraper.

The 51-story City Center tower, also called 33 South Sixth, sits along Nicollet Mall and is the fourth tallest building in the city.

Real estate services firm CBRE helped arrange the sale on behalf of Shorenstein Properties LLC, which purchased City Center for $205.5 million in 2012. The Class A office tower was sold to HNA Holding Group Co., Ltd., a subsidiary of Chinese conglomerate HNA Group.

The sale would be HNA Group’s first office acquisition in the Twin Cities market. This spring, a unit of HNA purchased Minnetonka-based Carlson Hotels, known for hospitality brands including Radisson and Country Inns and Suites.

“This sale further demonstrates the health of the Twin Cities market and its attractiveness to foreign capital such as HNA,” Tom Holtz, executive vice president of CBRE Capital Markets, said in a statement.

The sale closed Wednesday, but no electronic certificate of real estate value was available as of Thursday morning.

A person familiar with the transaction put the price at $315 million, eclipsing the $253 million value that the IDS Center sold for in 2013. That building, the tallest in Minnesota, went on sale again in March. In September, Ameriprise Financial Center in downtown Minneapolis was sold for $200 million, the biggest real estate transaction in the state this year.

Shorenstein nearly sold City Center last year for $280 million, but the potential buyer — Los Angeles-based CIM Group — was spooked after the building’s major tenant Target Corp. announced significant layoffs.

Since then, Target signed a 15-year lease on 984,000 square feet, or 73 percent, of the building’s entire office space.

In the ground-and-skyway-level retail portion of the building, Shorenstein attracted Saks Off Fifth earlier this year but also saw the departure of Sports Authority, Rosa Mexicano and the Italian restaurant Il Foro.

Late last year, Shorenstein sold a portion of the complex that is occupied by the Minneapolis Marriott Hotel.


Shorenstein Press Center

Press Contacts

McKenzie Gernes

T 612.333.1723

 

Bank of America Plaza Announces Anthem, Inc. as Newest Tenant

High-tech jobs creating significant growth potential for Midtown’s Atlanta neighborhood

ATLANTA, GA. October 26, 2016 Shorenstein Properties LLC, a San Francisco-based private real estate investment firm, is pleased to announce  Anthem, Inc., one of the nation’s leading health benefits companies, has signed a lease which includes six floors at Bank of America Plaza in Midtown Atlanta. The space will be used for Anthem’s newly established Information Technology Hub in Atlanta. Bank of America Plaza is underway with a major renovation project and is located in the Tech Square neighborhood, making it an ideal locale for Anthem, Inc. to attract top talent.

Under Shorenstein’s new management, Bank of America Plaza has been rejuvenated to reflect the entrepreneurial spirit of its tenants. In 2017, Bank of America Plaza will debut creative loft suites in addition to recent renovations to the fitness center and spa, lobby and café. Shorenstein also led a successful water conservation project, earning Bank of America Plaza numerous awards for its commitment to sustainability for cutting water usage by over 50 percent. Midtown Atlanta has become a center of discovery and innovation and under Shorenstein management Bank of America Plaza is transforming alongside it.

“We are very excited to welcome Anthem Inc. to Atlanta, “says Christopher Caltabiano, Senior Vice President of Asset Management at Shorenstein Properties LLC. “Tech Square is a great location for a company like Anthem that is looking for a centrally-located space that provides all of the amenities they will need. The addition of Anthem to our building further demonstrates the momentum we’re working to build for this historic property.”

About Bank of America Plaza

As the tallest building in the Southeastern United States and 11th tallest in the United States at 1,023 feet tall, Bank of America Plaza stands at the pinnacle of the Atlanta, Georgia skyline and serves as the anchor between Midtown and Downtown. This Atlanta skyscraper features 1.3 million square feet of prime office space in 55 stories, topped off with a 50-ton gold leaf spire. As a cherished Atlanta icon, it holds the distinction of being one of the most recognized buildings in America with a modern interpretation of art deco architecture. Connect on Facebook, Twitter and LinkedIn.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 63.2 million square feet in transactions with a gross investment value in excess of $14.9 billion.


Shorenstein Press Center

Anthem Plans 1,800 Jobs in Atlanta Tech Center; Project a Boost for Landmark Bank of America Plaza

By J. Scott Trubey

On Wednesday, Indianapolis-based Anthem, parent company of Georgia’s largest health insurer, announced it will open an information technology center in Atlanta’s tallest tower, Bank of America Plaza, where software developers will build apps and other customer interfaces.

The project will create 1,800 high-paying jobs over the next six years, and the company will spend $20 million outfitting the center, Anthem said. The announcement is the 18th new or expanded technology or software development center announced in Georgia in the past year, state officials said.

The Anthem deal also is a boost for Bank of America Plaza, which has been half empty for years and suffered through foreclosure in the aftershock of the financial collapse.

At a news conference at the State Capitol, Gov. Nathan Deal said the parent company of Blue Cross Blue Shield of Georgia adds to the roster of high-tech companies with tech development centers in the state, including Honeywell, NCR and Sage Software.

“No wonder we are called the Silicon Valley of the South,” the governor said, pledging to improve and enhance education in Georgia to maintain the flow of workers needed by Anthem and other companies.

How much Anthem will pocket in tax credits or other incentives wasn’t immediately known. Bank of America Plaza is in an Opportunity Zone, a state designated area for redevelopment that provides additional incentives when companies create jobs.

Anthem would be eligible for a $3,500 tax credit per job created for five years, or $31.5 million over that time if 1,800 jobs are created and retained. But additional grants and credits are possible.

Anthem’s announcement matches a recent expansion plan announced by NCR as the largest jobs-wise in Georgia so far in 2016. Chris Carr, the state’s economic development chief, said the 18 new or expanded technology centers announced in the past year will ultimately total 4,500 new high-tech and well-paid jobs for the state.

Such additions help balance job growth led by lower-wage service and distribution positions during the recovery from the last recession.

Anthem established an innovation studio at Technology Square at Georgia Tech earlier this year. Tom Miller, Anthem senior vice president and chief information officer, said the new tech hub will complement that facility’s mission of improving the patient experience and care.

The center will help customers access information, buy or shop plans and connect with providers through apps and other platforms, he said.

“Health care is a little bit of a complicated business model for our members to operate in, but technology eliminates complexity,” Miller said.

Atlanta Mayor Kasim Reed said city ranks as “a location of choice for major technology companies” to open software and tech hubs, noting announcements this year by GE Digital and Honeywell.

Anthem and its subsidiaries have more than 73 million customers. It has about 4,200 employees in Georgia. In February, the company announced it will add 450 call center and customer care jobs through 2017 in Columbus.

Georgia has more than 200 health care IT companies, according to the Institute for Healthcare Information Technology, an industry group. Major players include Athenahealth and McKesson Technology Solutions.

In April 2015, Kaiser Permanente announced plans for a new technology center in Midtown where it plans to employ 900. The Kaiser jobs included software development and cybersecurity positions.

Midtown and the area around Georgia Tech has seen a steady stream of expansions by companies, many hoping to tap faculty and student talent.

But the landmark Bank of America Plaza has seen few new tenants until now.

Nearly full when sold for a record price during the real estate boom, the giant building lost tenants and suffered the ignominy of going back to its lenders in 2012.

In January, San Francisco-based Shorenstein Properties acquired the building with promises of pumping millions in new upgrades. In February, the tower won its first major new lease in years when it landed the CDC Foundation.

A little more than a year ago, the leasing team started pitching the tower as a potential hub for software development and other technology uses.


Shorenstein Press Center

One Oxford’s New Owner Raises Bar (and Rents) Downtown

Jon Harrigan remembers when, in 1983, One Oxford Centre was a shiny new skyscraper vying for tenants with two other nascent buildings downtown as the real estate rush of Pittsburgh’s second renaissance was underway.

“I worked on that building when it was being built. At the time, it was a sexy building,” said Harrigan, then a commercial agent for Cushman & Wakefield Inc. assigned to represent Oxford Development Corp. in leasing the 1.01 million-square-foot office building at 301 Grant St.

One Oxford Centre will be undergoing major changes under new owner Shorenstein Properties.

Now CEO of Pennsylvania Commercial Real Estate Inc., Harrigan recalls the 45-story One Oxford as “the place to be” downtown at a time when the Dravo Building (now BNY Mellon Center) and PPG Place also were under development.

One Oxford was a crosswalk away from the Allegheny County Courthouse, a lure for law firms to take up residence there; it offered the Rivers Club as a contemporary alternative to the ultra-exclusive, century-old Duquesne Club; and featured a variety of higher-end shops and restaurants on its lower floors.

Companies such as Duquesne Light Co., Joy Manufacturing Co. and Westinghouse Credit Corp. established headquarters of more than 100,000 square feet, helping to fill One Oxford’s office space and spur its initial success.

“We had a tremendous leasing campaign,” Harrigan said. “We had everybody in the [Cushman & Wakefield] office working on that building.”

More than 30 years later, the newest thing about downtown’s third-largest structure is its owner, San Francisco-based Shorenstein Properties , which bought One Oxford from Oxford Development in January for about $149 million.

John Ferreira , office managing partner for the law firm Morgan, Lewis & Bockius LLP, which recently renewed its lease at One Oxford for about a floor and a half of space, said he is eager to see how Shorenstein transforms the building.

“I have a fair number of occasions to go over to the Tower at PNC [Plaza],” said Ferreira, noting how his office compares to the financial services firm’s new headquarters with all of its green features and amenities. “It’s just clear how many advancements there have been. It will be nice to see if Shorenstein can upgrade [One Oxford] to make it feel like new construction.”

Managing expectations will be part of Shorenstein’s challenge as it moves forward with a $50 million renovation plan it is expected to soon unveil.

With most of downtown’s major office buildings now largely bought up by national and institutional investors, Shorenstein’s presence here could represent a significant step up for Pittsburgh’s status as an office market. Or, as some suggest, reinforce its limitations for being parochial and resistant to change.

One thing is for certain: The company that owns major buildings in some of the country’s biggest and most expensive cities already is pushing to see what kinds of rents can be achieved in Pittsburgh.

“It will be interesting to see,” said Jon Davis, founder and CEO of The Davis Cos., which recently completed a total restoration of the Union Trust Building a short walk away from One Oxford. “I would think every landlord in Pittsburgh is watching that very carefully.”

Deep pockets and smart money

Shorenstein is one of America’s oldest and most successful real estate companies, representing deep pockets, its national portfolio is valued at $8.2 billion and smart money, literally: Yale University is its largest investment partner.

It’s the kind of relationship the company first began to develop a strategy around in the early 1990s under Doug Shorenstein, its second-generation owner who died last November. By partnering primarily with college endowments and pension funds, it created investment funds from which to buy and develop property.

After patriarch Walter Shorenstein built the company from a local real estate brokerage he bought in 1960 into a firm that at one time owned a quarter of the office space in San Francisco, his son was able to leverage what eventually became 11 funds to build a national company with holdings totaling more than 26 million square feet.

Shorenstein owns prominent buildings in two-dozen markets and has been aggressive of late, buying the 848,000-square-foot 1700 Market building in Philadelphia and 1.2 million-square-foot Bank of America Plaza in Atlanta in the same month it closed on One Oxford.

Chris Caltabiano , a New York-based senior vice president with Shorenstein and its lead project manager on One Oxford, said the company studied the Pittsburgh market for years before it had the opportunity to buy here.

“This company excels at buying broken, high-quality assets,” he said. “We’re not tourists in a market. For years, we’ve looked at every building in the market and have chased other assets. We were fortunate enough to acquire this one.”

Caltabiano emphasized the One Oxford deal represents a major investment for his company.

“This is one of the largest renovation projects that Shorenstein has undertaken in its history,” he said.

Working with the architecture firm Perkins Eastman, Shorenstein already has begun “extensive renovations of the parking structure,” Caltabiano said of what will be a three-year project. The structure presently can accommodate 840 vehicles.

Shorenstein also is rethinking how space is used in the floors of its retail atrium, and is considering a plan for a tenant lobby as well as configuring space so it appeals to tech firms, he said.

Also on tap is a full upgrade of all mechanical systems.

“The guts of all these systems will be completely modernized,” Caltabiano said.

And along with modernizing its elevators and updating the second-floor entrances used often by people who park at the building, Shorenstein is planning to take out some of the lower level escalators, Caltabiano said.

“We’re reconfiguring how people will traverse this building,” he said.

Shorenstein has garnered a reputation for having a keen eye for office trends, catching early the growing preference for traditional brick-and-beam buildings that have become popular with tech firms. In fact, it redeveloped a building in San Francisco that became the headquarters for Twitter.

The company is known in commercial real estate circles for offering high levels of service, amenities and building quality in exchange for often asking higher rents.

Its approach, Caltabiano explained, acknowledges people “live in these buildings for 10 hours to 12 hours every day and we want to make sure the space is inviting.”

“You can tell a Shorenstein building when you enter it,” he added. “Cleanliness, security, safety, green spaces, fresh flowers – things like that are noticed by tenants.  We’re more focused on the details than a lot of other people.”

A recent report by the Pittsburgh office of JLL illustrates just what Shorenstein is shooting for rent-wise at One Oxford.

In a downtown office market in which vacancy levels are historically tight in the best buildings and only a few large blocks of space are available, the marquee properties PPG Place, EQT Plaza, Liberty Center, BNY Mellon Center and U.S. Steel Tower have seen their direct asking rents raised to between $30 and $32 per square foot, among the highest in the Central Business District, according to JLL’s research.

One Oxford’s asking rate is $34 a square foot, JLL reported. It’s a bold push given rental costs already have risen between 3.9 percent and 5.1 percent in the past five years, and marks a dramatic swing for Pittsburgh after decades of steady rates.

“We’re asking for a little bit more. But we’ve achieved those rents on recent renewals,” Caltabiano said. “I don’t think it’s that large of an ask.”

“We’re still in kind of the first inning of our ownership. We have a long-term view of the city and this asset,” he continued. “We have assets in Minneapolis, Chicago and Atlanta where the rents are actually lower than Pittsburgh.”

The next evolution

Close observers of Pittsburgh’s commercial real estate market see Shorenstein’s arrival as a further departure from a time when companies had a broader selection of space options and rent hikes were rare.

Harrigan, who has represented a range of law firms and other companies, is well-versed on how they view their office needs.

“Pittsburgh has always maintained a fairly nice cost environment over the last two decades for office users. They don’t mind paying a little more, they mind paying a lot more,” he said. “You may debate with them on the fact that they’ve been fortunate to have such a break over the last few decades. But they don’t really care what happens in Boston or New York. You’re still going to have that resistance from all the tenants that are reupping.”

Aaron Stauber, president of New Jersey-based Rugby Realty Co. Inc., has come to understand the Pittsburgh mindset by building a portfolio of downtown properties that includes the Frick Building and Gulf Tower.

“Pittsburgh has always been a very conservative market,” he said. “Most of the players that were in the Pittsburgh market were local players and they’re accustomed to business as usual in Pittsburgh. If you go to markets like New York or Boston or the West Coast, those markets are much more sensitive to fundamental market conditions.”

After watching other outside buyers follow Rugby into Pittsburgh and gradually begin to change the local ethos, Stauber projects Shorenstein will bring a more market-oriented approach he believes is long overdue.

“What you’re seeing with Shorenstein is that next evolution,” he said. “The landlords see what other landlords are doing. They see they’re willing to lose a tenant. They see that those tenants don’t have any place to go anymore. The market is finally catching up to what is really the reality. Shorenstein is not doing something that is outside the market. They’re meeting what the current market is. The question is why the other owners have taken so long to do so.”

Staying or going

As of now, One Oxford is losing at least two tenants, both of modest size.

McKinsey & Co., the management consulting firm, is set to move next month into a new office at One PPG Place, and law firm Dinsmore & Shohl LLP is relocating to Six PPG Place in two stages starting next year.

So the test ahead for Shorenstein is maintaining One Oxford’s current occupancy rate of more than 80 percent. Among its biggest tenants are a number of good-sized law firms.

Buchanan Ingersoll & Rooney PC, No. 3 in Pittsburgh by number of lawyers, acknowledged in June it had engaged in an office search for its headquarters three years in advance of its lease expiration. At more than 200,000 square feet now, it is anticipated Buchanan is seeking at least 150,000 square feet as it continues discussions with Shorenstein about the prospect of remaining at One Oxford.

Count The Davis Cos. among the competitors for the firm, given its $100 million investment in the Union Trust Building, which is only two blocks away on Grant Street and has one of the few large blocks of space available in any quality building downtown.

“I think almost every building in Pittsburgh is going to be hard after Buchanan Ingersoll & Rooney,” Davis said, adding he believes One Oxford is going to need lots of work to stay competitive.”

“One thing is for sure: They are going to have to deliver. If they are able to get to those rents, it will be because they deliver a very different project than they have today,” he said. “The building, from all appearances, has not been meaningfully renovated since it was built.”


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New LEED Version to Spur Green Building

How USGBC’s new iteration of its LEED certifiaction program will raise the bar on increasing energy efficiency.

By Gail Kalinoski

Green energy continues to advance, with a major milestone set for Nov. 1. That’s when the U.S. Green Building Council unveils its new version of the 16-year-old Leadership in Energy and Environmental Design certification program that created an international standard for sustainable buildings and communities. The new version raises the bar on increasing energy efficiency and covers more sectors, like data centers.

The new version of the LEED certification program, v4, becomes the primary version and “pushes the green building industry forward in a way that no previous iteration of LEED ever has,” said Corey Enck, vice president of LEED technical development at the USGBC.

Since it was unveiled in 2000, LEED has become an international standard, certifying hundreds of thousands of square feet per day. As of July, more than 80,100 total commercial and LEED ND (neighborhood development) projects have been certified.

The USGBC worked with more than 100 projects to test LEED v4 in a beta program. Currently, there are more than 110 LEED v4-certified projects, representing a range of building and space types.

LEED v4 is placing more emphasis on energy optimization. Enck said the projects must now be at least 14 percent more energy efficient than the previous version, and 20 percent of all points will be centered on energy efficiency. Projects must also have an Energy Star score of at least 75, up from 69, he said, referring to the Environmental Protection Agency-backed rating system that promotes energy efficiency and uses an interactive tool to track buildings’ energy, water and, most recently, waste consumption.

“It’s a lot more aggressive in terms of level of performance that is required. It is a higher bar to get over,” said Jaxon Love, sustainability program manager for the property management and construction division of Shorenstein Realty Services.

LEED v4 will also address 21 different market sector adaptations, like new and existing data centers.

“Data centers have vastly different building needs compared to traditional office spaces,” Enck said. “A data center must provide massive cooling power for its servers, which can use as much energy as a small town.”

Love said Shorenstein piloted the LEED Dynamic Plaque building performance and monitoring scoring platform at Lincoln Center Tower in Portland, becoming the first Shorenstein property to use the program. It went from LEED Silver to Gold. The score reflects performance across five categories, including energy. Established in 2014, LEED Dynamic Plaque allows members to monitor their buildings’ performance in real time and make adjustments to meet their sustainability goals.

Shorenstein, an owner and manager of office properties, is a member of the Department of Energy’s Better Buildings Challenge, which focuses on reducing energy use 20 percent by 2020 and sharing energy efficiency best practices. The company has already reduced energy use by 19.5 percent and cut carbon emissions by 19 percent. Shorenstein has 35 LEED-certified buildings and 52 Energy Star-certified buildings. It’s ranked second among 23 U.S. office portfolios on the Global Real Estate Sustainability Benchmark, an international industry sustainability assessment, and earned the GRESB “Green Star” designation twice.

One of its LEED Gold properties, 33 S. Sixth in Minneapolis, earned a 98 out of 100 Energy Star score. In August, The Russ Building, constructed in 1927 in San Francisco, received a LEED Platinum designation.

“Older buildings can perform at the same high level as new buildings, and in some cases, an even higher level,” Love said. “It’s really a matter of keeping the building systems up to date, continuing to invest over time and having a team that is well trained, motivated and really competent at operations.”

New Star

And the LEED program isn’t the only one seeing change. The EPA will soon be launching Tenant Star, which jumps off its popular Energy Star program and will provide recognition for energy-efficient design and construction and efficient operation of tenant spaces.

“It’s still in a very nascent stage,” Love said, adding that it could be a few years before tenants can pursue certification. But it will likely be appreciated.

“More occupiers are looking into energy costs these days. Our occupier clients, and even Cushman & Wakefield (itself), track our carbon footprints, and with that comes a lot more sophistication in how we look at energy consumption and energy costs,” said Eric Duchon, director of sustainability strategies at Cushman & Wakefield and chair of Building Owners and Managers Association International’s Energy and Environment Committee.

Duchon said building owners and managers need to be asking, “What can I do to ensure that I’m not only maintaining the energy efficiency that I’m operating at but improving it?”

One concern that affects tenants is submetering, said Duchon, who also chairs the commercial real estate steering committee with the Department of Energy’s Better Buildings Alliance. The committee is developing a map of how submetering is treated across the country.

“It’s not a new concept, but I think something that is becoming more of a common approach to how large occupiers pay for their energy in their lease spaces,” he added.

Of course, there are other options for property owners that can’t or don’t want to seek LEED certification. “Early on, we recognized the value that Energy Star and LEED could bring in terms of ratings systems. It’s good to have competition and to keep the market for building performance designations open and competitive,” Love said. “We find there is value in the certification, particularly the transparency to the market.”

Industry groups like the Institute of Real Estate Management and BOMA International offer property assessment and certification programs, including the IREM Certified Sustainable Property program and BOMA 360 Performance Program.

BOMA 360 works in tandem with other tools and rating systems and requires benchmarking through the Energy Star Portfolio Manager. It is an overall look at how a property is managed, with energy and sustainability as two of six categories. More than 1,400 BOMA 360 designations have been awarded since 2009.

BOMA International research found that following both BOMA 360 and LEED can provide a boost, including higher rents, but even those with only BOMA 360 report increased tenant satisfaction.

Todd Feist, IREM sustainability program manager, likewise sees room for both IREM’s certification program and LEED.

“(IREM) is filling a need for those other properties where LEED just isn’t in the cards,” he said. “It has its place, certainly, in the markets. And in some markets you can’t be Class A without having a LEED certification.”

Feist said the IREM certification—which has different requirements for office, multifamily and retail—is “meant to be done by the site staff. It’s designed that people at the property level can do it.”

Feist said IREM has issued about 20 IREM Certified Sustainable Property certifications so far and has more than 100 applicants working toward the certification, including portfolios.

“We’re pretty happy with the first year of this program’s existence, and we understand it’s going to take some time for properties to work through the certification process, as it should,” he said.

Angela Aeschliman, COO of Watermark Property Management Co. in Chicago and an IREM member, notes that some of her firm’s clients are retail and small offices that couldn’t achieve a LEED certification but are looking for ways to control their energy costs. Properties of a certain size that are located in Chicago—like many U.S. cities—are required to provide benchmarking sustainability data to the city. At the very least, owners would use a program like Energy Star but might also seek a sustainability certification through an organization like IREM, she said.

“Everyone is contributing in ways that are really meaningful (and) that I think are reaching or attempting to reach the whole marketplace,” Love observed.

Originally appearing in the October 2016 issue of CPE, the Energy Issue.


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Los Angeles Times

 

Warner Music leaving Burbank, Westside for downtown L.A.’s Arts District

By Paresh Dave

Already a growing haven for artists, fashionistas, foodies and techies, the Arts District is about to get a major influx of song and dance.

In a shift that reflects the increasing importance of infusing the music industry with tech culture, Warner Music Group plans to move hundreds of employees from Burbank and the Westside into a renovated former auto plant in the downtown neighborhood.

The Arts District has witnessed a flood of new residences, shops and restaurants — and the development of a nascent start-up scene. But the move of the company’s West Coast headquarters into the historic Ford Factory building is a watershed moment, said Carl Muhlstein, international director at real estate brokerage Jones Lang LaSalle.

“After years of courting tech and media, downtown has finally snagged a whopper,” said Muhlstein, who was not involved in the deal. “Downtown has been rehearsing for this part for close to 10 years, and Warner Music took them up on it.”

Los Angeles’ music industry has been confined mostly to Hollywood and the Westside, with Universal Music Group anchored in Santa Monica and Sony Music in Beverly Hills and Culver City. 

Warner Music, whose existing leases were expiring in the coming years, considered Culver City, Santa Monica and other neighborhoods, according a person familiar with the matter not authorized to publicly comment. But it decided it wanted an entire building it could make its own.

The Ford building, at 777 S. Santa Fe Ave., fit the bill. Constructed in 1912 by Ford Motor Co. to assemble Model T’s and other cars, it later housed U.S. Rubber, Lockheed Aircraft and Imperial Toy Co.

San Francisco real estate investor Shorenstein Properties acquired the 4-acre industrial complex in 2014 for $37 million with plans to turn it into creative offices with ground-floor shops, according to CoStar Group.

Warner Music leased the 257,000-square-foot building for 13 years for about $10 million annually, with an option for an additional 10 years, according to a regulatory filing. The lease starts in August and the company plans to move in 2018.

Online publisher BuzzFeed and some technology companies toured the Ford building too, sources said last year. Negotiations with BuzzFeed reached advanced stages before the New York company backed out, opting for space in Hollywood. 

The world’s third-largest music company plans to build offices, recording studios, performance spaces, a cantina and artists’ lounges. It envisions a large outdoor space leading to a 750-vehicle parking garage. Warner Music said it would spend $40 million to $50 million to complete the structure to its liking, the regulatory filing said.

Warner Music Chief Executive Steve Cooper told employees by email Friday that the Arts District “is a burgeoning art, fashion and food scene that’s a magnet for businesses, entrepreneurs, and creatives.”

“Above all, we wanted an exciting space that enables us to preserve our unique company cultures, while promoting greater collaboration across divisions,” Cooper wrote. The Ford Factory “will be given a dramatic new life, preserving its architectural character while bringing it fully into the 21st century.”

Architect David Rockwell, known for his efforts on Nobu restaurants and Hollywood’s Dolby Theatre, has been hired to work on the project, the source said.

The consolidation of the firm’s West Coast operations follows a similar move two years ago in New York, where the company has its official headquarters. The firm, whose talent roster includes Beyonce, Coldplay, Flo Rida and Sheryl Crow, found that consolidating offices on Broadway nears Times Square boosted productivity and creativity, according to the source familiar with the deal. 

Warner Music, which has long had offices on the lot of Warner Bros. Studio — a separate company — and leases a large building in Burbank’s Media District, hopes to foster relationships with up-and-coming artists and songwriters drawn to the Arts District.

Like others in the music industry, Warner Music has been hit with a decline in music downloads as consumers have shifted to streaming services. The privately held company, controlled by billionaire investor Len Blavatnik’s Access Industries, recorded just a $33-million profit in the nine months ended June 30, but that was better than its $65-million loss for the same period last year.

In moving to the Arts District, the company decided on a neighborhood undergoing huge changes. Real estate firm CBRE estimates 2 million square feet of office space is under construction in the district, already a fast-growing hub for media and tech that has lured businesses such as venture capital firm Greycroft Partners and crafts-selling start-up Seedling. 

Transportation start-up Hyperloop One, which is seeking to build high-speed transit tubes worldwide, has an expanding campus of more than 55,000 square feet a few blocks from the Ford building.

Other development envisioned in coming years could make the area more of a residential community.

Last month, Irvine-based SunCal announced plans to erect two 58-story condo and apartment towers at 6th and Alameda streets. The mixed-used project, also featuring hotels and creative offices, would dominate the skyline in the largely low-rise area.


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Billboard

 

It’s Official: Warner Music Group Moving to Los Angeles’ Downtown Arts District

The music group will occupy all of the Ford Factory building at 7th St. and Santa Fe

By Shirley Halperin

It’s official. Warner Music Group is moving its west coast headquarters from Burbank to downtown Los Angeles, Billboard has confirmed.

In a memo to staff on Oct. 7, WMG CEO Stephen Cooper announced the relocation to the downtown Arts District’s Ford Factory at 7th St. and Santa Fe. The move will occur in early 2018.

“When looking for new offices, we took many factors into consideration, including square footage, location and commutes,” he wrote. “But above all, we wanted an exciting space that enables us to preserve our unique company cultures, while promoting greater collaboration across divisions. … The Ford Factory is a landmark building listed on the National Register of Historic Places. It will be given a dramatic new life, preserving its architectural character while bringing it fully into the 21st century.”

Warners will occupy the entire building, which will also include recording studios, performance spaces, retail space and outdoor areas, although other than the Warners’ labels and publishing company Warner/Chappell, it’s unclear which other WMG businesses will be based there.  

Warner Bros. Records (which counts Green Day, Michael Buble, Jason Derulo and Red Hot Chili Peppers on its roster) has been based out of an iconic ski lodge-like structure on the Warner Bros. Studios for more than 40 years (the lease expires in late 2017), while Atlantic and Rhino reside across the 134 highway occupying 185,000 square-feet on Olive Ave.

The Arts District is an up-and-coming area that boasts “a burgeoning art, fashion, and food scene that’s a magnet for businesses, entrepreneurs, and creatives,” Cooper noted. 

CBRE Group’s John Zanetos, Todd Doney, Rob Waller, Christopher Penrose and Phillip Ruhl represented the landlord of the Arts District property, Shorenstein.

“The building started as a factory for Model T cars and will now be home to one of the premier music and entertainment labels,” said Zanetos in a statement. “This will significantly change the landscape for The Arts District and Downtown Los Angeles.” 

With reporting by Peter Kiefer


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Shorenstein Receives LEED Gold Certification for Lincoln Center Tower in Portland, Oregon

Portland, OR – September 14, 2016 – Shorenstein Properties, LLC announced Lincoln Tower, part of a Class A office campus located in Portland’s suburban office market, has received LEED Gold certification.  Lincoln Tower, which initially earned LEED Silver certification in 2013, recertified the property through the LEED Dynamic Plaque which displays real time measurements about a building’s resource use. Lincoln Tower is the first Shorenstein property to utilize the LEED Dynamic Plaque platform to demonstrate operational performance according to the U.S. Green Building Council (USGBC) LEED (Leadership in Energy & Environmental Design) standard, the world’s most recognized green building rating system. 

Lincoln Center offers 731,451 square feet of Class A office property in a prime suburban location near Washington Square Mall.  Amenities include a fitness center, common area showers, secured and covered bike storage, three delis, two full service restaurants, conference rooms/training facilities, electric vehicle charging stations and onsite management provided by Shorenstein Realty Services.  Lincoln Tower, the 223,498 square-foot flagship building, bears a current ENERGY STAR score of 85.

The LEED Dynamic Plaque is a building performance monitoring and scoring platform, that provides a LEED performance score, annual LEED recertification and global benchmarking.  Performance is tracked through the LEEDon platform, which monitors energy, water, waste, transportation and human experience and is displayed publicly on the plaque. The LEED performance score corresponds with the globally recognized LEED certification levels – Certified, Silver, Gold and Platinum.

“We are pleased with the result of this LEED recertification,” said Kim Gach, General Manager of Shorenstein’s 4.2 million square-foot Portland portfolio.  “The Dynamic Plaque platform provides a unique means of engaging occupants and property staff with the building’s operational performance.”

Some of the highlights of the sustainability program at Lincoln Center include:

  • Retrofit of lighting systems throughout the buildings and parking structures for increased energy efficiency, including LED lighting;
  • Installation of high efficiency water fixtures and implementation of a new satellite-based irrigation system to reduce water consumption;
  • Comprehensive green cleaning program, featuring sustainable cleaning chemicals, recycled products and green cleaning equipment to reduce particulates and promote comfort;
  • Construction standards requiring low-VOC products and diversion of construction waste from landfills to recycling facilities;
  • Automated control of heating, ventilation and air conditioning and the optimization of outside air delivery;
  • Walkable campus and close to amenities including public transportation, restaurants and retail.

Shorenstein owns fifteen million square feet of currently-certified LEED property, primarily at the Gold level.

“The green building movement offers an unprecedented opportunity to respond to the most-important challenges of our time, including global climate change, dependence on non-sustainable and expensive sources of energy and threats to human health,” said Scot Horst, chief product officer at USGBC. “The work of innovative building projects such as Lincoln Tower is a fundamental driving force in the green building movement.”

Shorenstein has been a firm advocate for sustainability within the real estate industry.  The company is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20 percent by 2020.  The company is also a Platinum-level corporate member of USGBC and an Environmental Protection Agency ENERGY STAR for Commercial Buildings partner.  www.shorenstein.com/sustainability.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York. Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million. Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns. Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures. These funds have invested in properties totaling 63.2 million square feet in transactions with a gross investment value in excess of $14.9 billion.


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Accounting Firm Moving to Entire 14K-SF 40th Floor at 1407 Broadway

By Liam La Guerre

Long Island-based Gettry Marcus, an accounting firm, has signed a 13,797-square-foot lease to relocate its offices to 1407 Broadway, Commercial Observer has learned.

The company will occupy the whole 40th floor of the 43-story building between West 38th and West 39th Streets, which is owned by Solil Management and controlled by Shorenstein Properties via a ground lease.

Gettry Marcus is consolidating from two offices, one at 3 Park Avenue between East 33rd and East 34th Streets and the other at 462 Seventh Avenue between West 35th and West 36th Streets. Asking rent for the 10-year transaction at 1407 Broadway was in the $70s per square foot, according to a broker in the deal. Shorenstein is building out the space and expects the tenant to move into the property early next year.

“I think the reason 1407 Broadway was so attractive to them is because they like being on the West Side, and having a full floor was a desirable factor,” said CBRE’s Gregg Rothkin, who brokered the deal for Shorenstein with colleague Peter Turchin. Rothkin added that the location was key because of its “close proximity to Penn Station and Grand Central.”

The 40th floor of the building features panorama views of the city and the Hudson River, which was another draw to the space.

Shorenstein purchased the 34-year master lease for the property from Abraham Kamber & Company and a sub-ground lease from the Lightstone Group for a combined $330 million in April 2015. The California-based developer and property manager is wrapping up a $30 million renovation of the tower, featuring new office spaces, a new facade and storefronts, and a new lobby and elevator cabs, as CO previously reported.  

Cresa New York’s Vincent Tuminelli and Richard Plehn, who represented Gettry Marcus in the deal, did not immediately respond to requests for comment.

The building, which features a host of fashion companies like Ikeddi Enterprises, Lands’ End, Louise Paris and Alex Apparel Group, also recently signed leases with law firm Moritt Hock & Hamroff and software company JAMF Software.


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CoStar

 

Shorenstein and SKS Sell Massive South San Francisco Biotech Site

Joint Venture for Life Sciences Site is Third Major U.S. Investment by Shanghai-Based Developer

by Randyl Drummer

The U.S. unit of Shanghai-based Greenland Group and a group of equity partners have acquired a 42-acre development site at Oyster Point along the waterfront in South San Francisco, one of the world’s pre-eminent biotechnology hubs.

The joint venture, which includes Greenland USA as majority shareholder and equity partner Ping An Trust, along with minority equity partners Agile Group and Poly Sino Capital Ltd, plan to develop The Landing at Oyster Point, a $1 billion life sciences office and research and development complex.

A Chinese-language filing listed the purchase price from owner Shorenstein Properties as US $171 million. Shorenstein and SKS Investments acquired the property in 2008 and 2009 and entitled it through the city as a mixed-use development.

The project will include 2.25 million square feet of development, including public space and recreational areas, built in phases that will begin with 500,000 square feet in the southern portion of the property. Construction is expected to begin by mid-2018 following infrastructure improvements by the city of South San Francisco, including streets, utilities and grading.

The property along Highway 101 would be a coveted location for biotech and life science companies. South San Francisco has attracted more than 240 such firms to the area.

The vacancy rate in the South SF East of Hwy 101 submarket is about 6.7% for 4- and 5-Star grade office properties, according to CoStar analytics. There is currently no significant commercial construction under way in the submarket.

Tenants absorbed about 173,000 square feet in the submarket in the second quarter after three quarters of flat or negative demand.

Gang Hu, CEO of Greenland USA is chairman of the Oyster Point Development, LLC joint venture. Executive vice president Taotao Song, who oversees Greenland USA’s west coast operations, will serve as CEO.

The project follows Greenland USA’s $1 billion-plus investment in Los Angeles’ Metropolis and a $6 billion plan to develop New York’s Pacific Park Brooklyn.


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Landmark SF Tower gets LEED Platinum

A Silversmith’s Gold Rush Home Goes Platinum

By Adam Brinklow

The Russ Building, a Jazz Age San Francisco landmark at 235 Montgomery, is an old building but apparently not yet an outdated one, as it managed to snag a LEED Platinum designation last week for its green building standards.

That’s a step up from its previous Gold award. (Historic buildings have to be reevaluated every five years to maintain their ratings from the US Green Building Council.) Judges were impressed by things like the electric vehicle charging stations and the recycled materials that go into the building’s bones whenever there’s interior construction.

While it’s nice that the city’s landmark properties are setting a good example ecologically speaking, the best value of the award might be just in highlighting one of the city’s most storied but most often overlooked buildings. While we’re all distracted by the construction of the city’s tallest tower, the Russ sits a mere 1,750 feet away, and at 31 stories was our tallest for nearly four decades.

The high-rise tower (presently owned by Shorenstein [Company]) bears the name of Polish silversmith Emanuel Charles Christian Russ, who in 1847 bought the land at 235 Montgomery for $75 (the equivalent of about $2,000 today) and built a house there out of scrap lumber and old ship’s bunks.

Russ’ sons struck it rich during the Gold Rush, and his jewelry business took off. Later, he built hotels and public gardens. Nothing Russ made himself remains anymore, but they put the family name on the new building in recognition of the Russ legacy.

Built in 1927, the Neogothic tower by George Kelham (whose many other contributions to the city include the plan for the 1915 World’s Fair and the building that now houses the Asian Art Museum) was hailed as an all-time great. Critics dubbed it the defining building of the San Francisco skyline.

But these days, it’s easy to miss. Thirty one stories was enough to stand out for a while, but by the early ’60s, taller buildings were literally overshadowing the Russ. Soon, it was positively dwarfed by its own neighbors, and since then it’s become just part of the background of the Financial District.

Still, the old number has its devotees, including local critic John King, who dubs it “not San Francisco’s tallest, but maybe its best.” Most people probably prefer the Pflueger designed building at 140 New Montgomery (itself briefly the city’s tallest, until the Russ unseated it for that honor), but Kelham’s soaring addition to San Francisco still holds its own.

So next time you’re passing by Montgomery Street, pause to appreciate one of San Francisco’s most enduring gems, and the memory of an old San Francisco family whose legacy grants it what you might call an original silver and gold designation.


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What’s the Deal: Shorenstein’s New Eats

Landlord signs restaurants for 1407 Broadway

GARMENT DISTRICT

Shorenstein Building Signs Restaurants

A Garment District office building undergoing renovation is also revamping its retail space with four fast-casual restaurants.

Shorenstein Properties LLC has signed leases with sandwich chain ‘Wichcraft, seafood restaurant Luke’s Lobster, coffee shop Gregory’s Coffee and Juice Generation at 1407 Broadway between West 39th and West 38th streets. The leases range in size from about 2,900 square feet to about 500 square feet.

“It will not just be an amenity for the tenants, but a lot of people in the area will be attracted to it,” said Ronnie Ragoff, Shorenstein senior vice president.

Shorenstein, which secured the 1.1-million-square-foot tower last year, brought in real-estate-services firm JLL to market and lease the 20,000 square feet of retail space. The team decided to break up several large boxes into eight smaller spaces. Four other leases are close to being signed, Ms. Ragoff said.

“At the end of the day, this market needed food,” said Erin Grace, JLL managing director who was part of the retail leasing team. “The whole market is changing and more tech tenants and TAMI [technology, advertising, marketing and information] tenants are coming to the market.


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Clothing Company Stretching Its Garment District Office to 22K SF at 1407 Broadway

By Liam La Guerre

Fashion company Ikeddi Enterprises, which manufactures and designs clothes for girls and women, has signed an early office renewal and expansion at 1407 Broadway, Commercial Observer has learned.

The clothier will be moving its headquarters from the entire 13,700-square-foot 29th floor of the building to 22,318 square feet on part of the 16th floor, a source with intimate knowledge of the deal said.

Asking rent in the 10-year transaction was in the mid-$60s per square foot, the source said. And Ikeddi Enterprises is hoping to move into its new digs, which are between West 38th and West 39th Streets, around January 2017. The apparel company is known for its female youth-targeted brands Ultra Flirt and Missunderstood.

Jason Birk, Michael Okun and David Danick of Coldwell Banker Commercial Advisors represented Ikeddi Enterprises in the deal. Birk declined to comment.

San Francisco-based Shorenstein Properties purchased the 34-year master lease at 1407 Broadway from Abraham Kamber & Company and a sub-ground lease at the site from Lightstone Group for a combined $330 million in April 2015, as CO previously reported.

Bob Foreman of Shorenstein Properties, who handled the deal in-house, did not immediately return a request for comment via a spokesman.

Other fashion tenants in the building include Lands’ End, Louise Paris and Alex Apparel Group.


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GlobeSt.com

 

‘Cool’ Spaces, WELL and Boomer-sized Apts.

Transwestern’s latest Insights examines three development trends with potential for boosting tenant satisfaction and improving the bottom line.

By Paul Bubny

Occupancy has increased substantially at Shorenstein Properties’ Washington Square complex with a renovation program intended to transform the properties into cutting-edge workspaces.

Owners and developers looking to tap into burgeoning trends with tenant appeal should consider the WELL Building Standard, contemporary renovations to office properties or developing multifamily spaces with Baby Boomer appeal, according to Transwestern. In three separate articles appearing in the latest issue of its Insights newsletter, the firm provides in-depth narratives and examples on how each of these trends can boost tenant satisfaction and improve the bottom line.

Recently introduced by the International WELL Building Institute, the WELL standard identifies 100 performance metrics, design strategies and policies for measuring, certifying and monitoring how the built environment impacts health and productivity. “For instance, medical studies show that giving employees the freedom to sit in different places from day to day allows them to be more creative and productive,” according to the Insights article. “Resulting from humans’ innate tendency to connect to nature, organizers say workers are positively impacted by lighting, artwork, paint and carpet that reflect the outdoors.”

Along with promoting occupant health, developers can boost NOI through upgrades that help create a “cool” working atmosphere. “Organizations that see real estate as a strategic investment for their business seek the sort of cutting-edge environments that sway employment decisions across generations, and particularly for Millennials, which last year became the largest segment of the workforce and will represent 75% of the labor pool by 2030,” according to Transwestern.

Citing an example from its own leasing portfolio, Transwestern notes that Shorenstein Properties invested $20 million to renovate 1.2 million square feet at its three-building Washington Square complex in downtown Minneapolis. “Converting the older property into an urban campus environment has struck a chord with occupiers, especially those in technology, finance, advertising and consulting,” the Insights article states.

During the first 16 months of renovation, Transwestern leased more than 345,000 square feet of vacant space, boosting occupancy from 81 to 93% at 100 Washington Square and from zero to 65% at 111 Washington Square. Net rental rates have increased from $11.25 to $16.25 per square foot, or 30% above pro forma.

At the other end of the age spectrum, Transwestern notes that smart multifamily rental developers are targeting Boomers, who represented the most populous generation until Millennials assumed that distinction. In Dallas, for instance, Transwestern Development and its investment partner, JPMorgan, are building the Laurel, a rental project featuring 159 larger-sized apartments with the Boomer demographic in mind.

“Empty-nesters are not likely to downsize into smaller, existing multifamily units even though lifestyle changes and leisure pursuits make rentals appealing,” according to Transwestern. “The solution? The Laurel’s units range from 1,100 to 2,310 square feet and average 1,400 square feet, far surpassing the Dallas average of 825 to 1,000 square feet.”

 


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The Registry

 

Shorenstein’s Tenderloin Mixed-Use Project Moving Forward

By Nancy Amdur

Shorenstein Residential, LLC, will move ahead with plans to construct a 12-story, 304-unit residential-and-retail project at 1066 Market St. in San Francisco’s Tenderloin neighborhood following the developer’s recent agreement to purchase a nearby parcel for the city to use for affordable housing.

Appeals filed with the city’s Board of Supervisors had stalled Shorenstein’s project in the spring, in part due to community concerns that the proposed project did not include enough below-market-rate housing.

“We heard from Tenderloin residents that they can’t afford the rents under the city’s inclusionary program,” said Donald Falk, CEO of the nonprofit affordable housing developer Tenderloin Neighborhood Development Corp. (TNDC), which had appealed the project. “Shorenstein worked with us to come up with a creative alternative that will generate more housing at deeper levels of affordability. It’s a great outcome for everyone.”

The Board of Supervisors this month approved a resolution allowing Shorenstein to purchase the shuttered post office at 101 Hyde St., which it would then deed to the city to be used for an approximately 85-unit affordable housing development. The project also would include about 4,920 square feet of ground-floor retail space. Shorenstein expects to close on the purchase of the 0.25-acre site this summer. A developer for the project is not yet selected. With this agreement, Shorenstein would not be required to include on-site affordable housing at its Market Street project.

“1066 Market and 101 Hyde are the bookends of the Tenderloin, and the dedication of 101 Hyde to the city ensures both properties can now move ahead,” said Meg Spriggs, managing director of Shorenstein’s multifamily investments group, in a statement. “We are very pleased with the consensus solution, which will nearly triple the amount of affordable housing provided by the development of 1066 Market. Those 85-plus units will now be available at permanently lower levels of affordability.”

Shorenstein’s Market Street project, which will replace a vacant commercial building and parking lot, was approved by the city’s planning commission in March, with plans to include 36 affordable housing units, as required by city ordinance. But the TNDC appeal stated that the project showed “an insufficient acknowledgement of the community in which the proposed project is located.”

The proposed project’s rents, including below-market rate units slated to be affordable for households earning within 55 percent of the area median income, likely would not be affordable to many residents of the predominantly low-income neighborhood, where the median annual income for residents is about $23,000, according to the TNDC appeal.

San Francisco land use attorney Sue Hestor, on behalf of neighborhood group San Franciscans for Reasonable Growth, also had appealed the project, noting “it includes insufficient discussion of cumulative development of market-rate housing, in the area, which is decimating the existing low-income housing community in both the Tenderloin and South of Market.” Hestor said she withdrew her appeal in order to “enable serious discussions” with the developer and the Tenderloin community. Affordable housing at 101 Hyde St. “will strengthen that area,” she said.

The city’s planning department noted in its project report that Shorenstein’s proposed development at 1066 Market St. complies with the area’s zoning for land use, height and density.

Additionally, “the property is an ideal site for new housing due to its central downtown location and proximity to public transportation,” the report states.

Kathy Looper, executive director of the nonprofit Reality House West, Inc., which has owned the nearby single-room occupancy Cadillac Hotel at 380 Eddy St. since the 1970s, said she favors Shorenstein’s proposed project.

“I support the project because I believe in activation of these dead zones that are in the neighborhood,” she said. The project would be in a “blighted” area and “this development is a good thing and will make that street a little safer,” she added.

Looper also noted that a mix of incomes in the neighborhood helps make it a more “viable” community.

Randy Shaw, executive director of the nonprofit Tenderloin Housing Clinic, a provider of housing for single homeless adults, said housing could benefit the neighborhood.

“More housing is needed everywhere, but that particular corner does not function well for the community as a parking lot,” he said.

Shorenstein is the longtime property owner of the Market Street site and first submitted an application for the proposed mixed-use project to include about 4,540 square feet of ground-floor retail in 2014. The site now carries a two-story approximately 5,000-square-foot vacant commercial building and adjoining 23,419-square-foot parking lot and frontage on Jones Street, Golden Gate Avenue and Market. Buildings in the surrounding neighborhood include a 10-story low-income and senior housing development at 129 Golden Gate Ave. and a seven-story 82-unit homeless housing facility at 41 Jones St.

Plans call for the new 120-foot-tall project at 1066 Market St. to have a mix of studio, one- and two-bedroom units, two levels of underground parking comprising 102 spaces and amenities, including a lounge and fitness center.


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EDF Environmental Defense Fund : Climate Corps Joins Forces with New York to Help Meet Ambitious Energy Goals

(NEW YORK – May 24, 2016) (EDF) Climate Corps announced today that it will place 33 fellows throughout New York this summer to help public and private institutions work towards achieving the ambitious energy goals set by Mayor Bill DeBlasio and Governor Andrew Cuomo. EDF Climate Corps is an innovative fellowship program that embeds trained graduate students into companies, cities, schools and public institutions to accelerate clean energy projects. Over the course of the summer, fellows get clean energy projects on the fast track to accomplishment – simultaneously improving the organization’s bottom line and environmental impact.

The Mayor’s ambitious 80×50 goals, pledging to reduce the city’s greenhouse gas (GHG) emissions by 80 percent from 2005 levels by 2050, and the Governor’s state-level target of receiving half of the state’s power from renewable energy by 2030 have set New York up as a national leader in clean energy policy. To meet these ambitious targets, both the public and private sector need to mobilize to identify and execute broad scale solutions that improve building performance and implementation of distributed energy resources. EDF Climate Corps has deliberately stepped up its presence in the state to provide hands-on support for a variety of building-level projects such as on-site renewable power generation, energy efficiency upgrades, and commercial such as rooftop solar and energy storage.

‘For the first time, we are deploying almost a quarter of our fellows to one strategic location-it’s necessary given the scope of what needs to be accomplished,’ said , Program Director, EDF Climate Corps, ‘Ultimately, we want to ensure that New York creates lasting solutions and successfully transforms its energy system.’

‘Climate Corps is providing critical boots on the ground that will ultimately help both the public and private sectors accelerate and execute on New York’s clean energy goals,’ said , Director, New York Clean Energy at EDF. ‘The deployment of fellows in multiple sectors will help building owners and operators turn smart energy policy into reality.’

In addition to working with commercial real estate companies like Shorenstein Properties to green iconic buildings, Climate Corps will have a strong presence in the public sector. 17 fellows will be working with city agencies including Mayor’s Office of Sustainability, NYC Department of Citywide Administrative Services (DCAS), NYC Department of Education and New York City Housing Authority (NYCHA).

‘Shorenstein Properties is committed to reducing energy in our portfolio and helping New York City work toward its ambitious energy targets,’ said Jaxon Love, Sustainability Program Manager at Shorenstein. ‘Our Climate Corps fellow will help us continue to lead on this issue and help New York move towards a low-carbon future.’

‘Since the release of OneNYC, we’ve made great strides on everything from driving down energy emissions in buildings to increasing solar installations citywide,’ said Nilda Mesa, Director, NYC Mayor’s Office of Sustainability. ‘Cutting NYC’s greenhouse gas emissions 80% by 2050 is a high bar. It will take a continued concerted effort plus a lot of creativity to develop the path to achieve it, across many sectors of the city. EDF is making a major contribution by providing Climate Corps fellows to so many key sectors in the city. Together we can lead the way for other cities and regions in achieving our goals.’

For more information on the Climate Corps 2016 program, including a list of all participating, click .

EDF – Environmental Defense Fund published this content on 24 May 2016 and is solely responsible for the information contained herein.

Distributed by Public, unedited and unaltered, on 24 May 2016 16:20:07 UTC .


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Shorenstein Releases 2016 Sustainability Report

San Francisco, CA – April 22, 2016 – Shorenstein Properties LLC announced the release of its 2016 Sustainability Report.  The report describes progress in the company’s long-standing commitment to corporate responsibility and to reducing the environmental footprint of its real estate operations.

Shorenstein is committed to sustainability for the benefit of its properties, tenants, and employees, as well as the communities in which the company operates and, since 2008, has reduced energy use by 19.5% and cut carbon emissions by 19.0%.  The company’s sustainability program reduces operating expenses, enhances tenant satisfaction, and positively impacts the environmental.

Among Shorenstein’s accomplishments last year: 

  • Rated second among 23 U.S. office portfolios on the Global Real Estate Sustainability Benchmark (GRESB), an industry-driven assessment of sustainability performance for real estate portfolios. Shorenstein earned the GRESB “Green Star” designation for the second consecutive year.
  • 35 LEED-certified buildings totaling 15 million square feet, with the majority certified at the Gold level.
  • 52 ENERGY STAR-certified buildings, with a portfolio average score of 88 out of 100.
  • Realized $569,000 in annual energy cost savings that will avoid approximately 2,000 metric tons of carbon dioxide per year – the equivalent of taking over 400 cars off the road.
  • Awarded the “Green Lease Leader” designation by the U.S. Department of Energy.

Shorenstein has been a firm advocate for sustainability within the real estate industry.  The company is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20% by 2020 and to sharing energy efficiency best practices with industry peers.  Shorenstein is a Platinum-level member of the U.S. Green Building Council and a member of the Environmental Protection Agency’s ENERGY STAR program for commercial buildings.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Since 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 61.7 million square feet in transactions with a gross investment value in excess of $14.5 billion.


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Saks Off 5th Outlet Store Opens in City Center Thursday

By John Ewoldt

Saks Off 5th, the outlet store of the Saks Fifth Avenue, is reopening tomorrow in downtown Minneapolis, just across the street from a location it closed last year.

“We’re really excited to be back,” said Jonathan Greller, president of Saks Off 5th stores. “Minneapolis is very much part of our growth strategy.”

The decision to close the Minneapolis was made before Saks was acquired by Hudson’s Bay Co., Greller said. After the 2013 purchase, Hudson’s Bay decided to keep the Saks brand in Minnesota. But by that time, it was too late to retain the space it had in Gaviidae Common. It has now moved into two floors of City Center, just across Nicollet Mall, that was formerly occupied by Office Depot.

The 40,000-square-foot space will be divided into 24,000 square feet on the street level and 16,000 square feet on the skyway level. That is a bit larger than the 28,000-square-foot Saks Off 5th outpost that anchors Twin Cities Premium Outlets in Eagan. The downtown location will include the same selection of women’s, men’s and kids apparel and accessories as Eagan, but it will have a larger selection of shoes and handbags.

Keeping stores downtown has been challenging for many U.S. cities. Minneapolis lost Saks’ full-line store and Neiman Marcus, as well as several high-profile restaurants. And Gap left the IDS Center last year.

Rumors have circulated since last year that Nordstrom Rack, which has long been eyeing a downtown location, would create a two-level store at IDS, using the former Gap space on the first floor and the former TJ Maxx space, which hasn’t been used since 2004, in the lower level.

Deb Kolar, general manger of operations at IDS Center, said the building is “in the middle of negotiating with a great national retailer,” though she wouldn’t say identify it by name.

In a visit to the Twin Cities last fall, Blake Nordstrom, co-president of Nordstrom, said “Downtown Minneapolis is a very attractive location with a strong customer base.” The Seattle-based company plans to add more than 100 Nordstrom Rack stores in the next four years.

Hudson’s Bay plans a similar expansion for Saks. In 2015, there were 90 Off 5th stores and 38 Saks Fifth Avenue stores in the U.S. This year, Hudson’s Bay plans to add 32 outlet stores in the U.S.

Department store outlets continue to outperform the full-priced stores. In Saks fiscal year, outlets saw same-store sales gains of 6.3 percent while its department store group fell 1 percent.

Online sales at Saksoff5th.com showed the biggest increase at 63 percent. “Our digital traffic draws more traffic to the stores,” Greller said. “Customers preview it in the store and buy it online or vice-versa.” Customers who buy items online at Saks Off 5th can return them in the stores.

Saks Off 5th also recently changed its pricing strategy to make all discounts be reflected on price tags. In the past, many sales racks featured “take an additional percentage off” signs so that customers were often surprised by the price at the register. “Now they’ll know exactly what the price is before taking it to the register,” Greller said.

Saks Fifth Avenue opened 26 years ago in Gaviidae Center downtown. In 2005 it was reworked as an outlet as its department store business declined. City Center, located at 33 S. 6th St., is owned by Shorenstein Properties of San Francisco.


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The Millennial Spark: Something Old, Something New

By Haril Pandya

Hipster, vintage, retro, charming, revivalist, classic. These words all have one theme in common, “they are descriptors for why we love and appreciate old things.”

Over the past five years, the Millennial generation has reinvigorated a movement, bringing back old trends that lost their appeal over time, “canned beer, old school hats and vinyl records. What were once considered trendy styles but then lost their favor, are now being brought back into the spotlight.”

We experience the same feelings of association with our own homes, the buildings that make up our neighborhoods, as well as the architecture and design of our communities.

A homeowner who has the appetite and know-how (or hires a great architect) can renovate a post-modern or classic Deck house into a beautiful, contemporary home that could land a spot on the cover of Architectural Digest.

This same concept applies to office buildings. We like old buildings and their styles, and appreciate their place in history.

As a culture, our preferences for the places we live and work are all over the map. Some people want to live in new buildings and work in old ones; some live in old and work in new. Some prefer old/old, while others favor new/new.

Whichever the case may be, one thing is undeniable: there are many more old buildings than new in the world, which means there is plenty of value-add product on the market. In an economy where sites for ground-up construction are growing scarcer by the day, especially in dense urban cities, building owners are increasingly looking to retrofit existing commercial and residential properties where, for a low investment, they can achieve a high return.

Why? Because today’s generation wants to work in modern, flexible, hip spaces that are housed in older buildings that exude a unique appeal. That’s why the youngest building in town these days is often something old.

For instance, 10 years ago, would most business owners have considered moving their companies to old warehouses, former federal buildings or historic properties? Probably not. But this is the trend today, and several visionary developers have been at the forefront of this movement for years.

At Playa Vista, the mixed-use development on Los Angeles’ Westside, Shorenstein Properties converted a former U.S. Post Office campus into a modern, trendy, fully-leased 20-acre complex. Reopened in 2013 under a new name, the Reserve, the property features industrial walls with glass, a fitness center and beach volleyball court, and serves as home base to creative, fast-growing companies like Sony Corp.’s PlayStation and TMZ, the celebrity-gossip website.

n San Francisco, Twitter chose to relocate its headquarters to the Western Furniture Exchange and Merchandise Mart, which dates from 1937. Shorenstein completely retrofitted and repositioned the three-acre site into a hub of social activity integrated with office space.

Renamed Market Square and completed in 2012, the building features beautiful and spacious interior public spaces, an outdoor plaza and social gathering area, three restaurants, a fitness center and the imaginative repurposing of existing wood to keep the building’s history alive.

In the Northern Liberties section of Philadelphia, Alliance Partners HSP is planning to reposition a 250,000-square-foot warehouse in an old industrial neighborhood into cool, creative and original office space that will cater to Millennials in the media, advertising and technology sectors. The project, which is dubbed SoNo for “South Northern Liberties” currently serves as a distribution center for Destination Maternity, but the retrofit plans include a distinctive open work space rich in amenities, such as outdoor seating areas with food trucks, stadium seating for presentations and a rooftop amenity deck that will have private club areas for outdoor meetings and events.

CBT’s own Asset Strategy & Building Repositioning team works closely on such projects with commercial property owners, managers, brokers and forward-thinking developers. Together, we evaluate the property, devise strategies for improving its brand and create design solutions. Through this process, we alter how the property is perceived in the market and make it as competitive as possible, thus increasing its value.

In downtown Boston, for example, Center Plaza is today an uninspiring street-level arcade whose atmosphere resembles that of a parking garage. When we were tasked to assess the property by Shorenstein, its owner,  we concluded that it’s not really Center Plaza’s façade that needs a makeover, but the visitor experience as a whole. With that in mind, we are working with Shorenstein to transform the property to an exciting and experiential pedestrian arcade. New pavers, benches, lighting and greenery will complement the retailers and restaurants that currently occupy the ground level. Also on the way are upgrades to interior lobbies and exterior walkway/breezeway areas, as well as rooftop improvements to enhance the tenant experience.

Buildings reside in neighborhoods, and neighborhoods greatly influence the economy of their cities. Each building plays an important role in activating, supporting, inspiring and cultivating its surrounding area, and has a responsibility to be a great civic neighbor. Of the many contributions we make to society, few are more valuable than refreshing vintage buildings in ways that keep them vital for decades to come.


Shorenstein Press Center

MHP Buys 850 Third Avenue in NYC

A joint venture between MHP Real Estate Services and China-based HNA Property Holdings paid a hefty price for 850 Third Ave. in Manhattan.

By Barbra Murray

New York ”Perhaps it’s going to be an annual ritual. One year after announcing the acquisition of a major New York City office property, MHP Real Estate Services has snapped up another. The company recently partnered with Chinese conglomerate HNA Property Holdings on the purchase of 850 Third Ave., a premier office tower in Midtown Manhattan. MHP and HNA shelled out $463 million for the 617,000-square-foot asset, taking it off the hands of Shorenstein Properties in an off-market transaction.

A 21-story building with ground level retail, 850 Third first opened its doors in 1962. Today, the Emery Roth & Sons-designed tower is home to the likes of the city of New York, Radio One and Discovery Communications, which anchors the building with a 165,000-square-foot space.

It’s not a bad time to own office property in Midtown, but according to MHP, it’s a really good time to own in Midtown East.

“The Midtown East office market is experiencing an extraordinary renaissance that will further redefine the city, and reshape a time-tested enclave of New York business,” Norman Sturner, CEO of MHP Real Estate Services, said in a prepared statement. “The East Side Rezoning efforts, along with the area’s existing transportation infrastructure and addition of the Second Avenue subway line, have created new opportunities for growth, and we’re excited to be part of this movement.” The vacancy rate in Midtown East is just 5.7 percent, according to a first quarter 2016 report by Cushman & Wakefield.

Morgan Stanley provided MHP and HNA with financing for the acquisition of 850 Third, including a $210 million gap mortgage, per New York City records. Lenders like the property; in 2014, MetLife Inc. provided then-owner Shorenstein with $170 million in financing to replace a $180 million loan that had been obtained from Deutsche Bank in 2010.

MHP will serve as operating partner of 850 Third’s joint venture ownership, and HNA will hold the position of majority partner.

MHP is no stranger to big Manhattan office deals. In January 2015, the real estate investment and management company revealed it had joined forces with Clarion Partners to acquire 180 Maiden, a 1.2 million-square-foot office tower in the Financial District, for approximately $470 million.

 


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BusinessDen

 

Construction Commences on another Union Station Apartment Project

By Burl Rolett

Another nine-figure apartment tower is under construction in Union Station.

California-based Shorenstein Properties is moving dirt on a new two-tower, 500-apartment development in Union Station. The project at 1707 and 1777 Chestnut Place was issued more than $100 million worth of building permits last week.

Shorenstein has proposed building one 12-story and another 24-story tower on a 1.66-acre parcel at the corner of 17th Street and Chestnut Place. The larger tower will sit just to the north of the smaller tower and will house 401 of the complex’s 508 apartments.

According to the most recent set of plans Shorenstein has submitted to the city, about half of the units will be two- and three-bedroom apartments. There are 109 studios and 157 one-bedroom units in the plans. All told, there will be about 880,000 square feet of residential space.

Shorenstein also is planning about 20,000 square feet of retail space, according to the company’s website. Plans also show a pool deck and fitness center on the fourth floor of the project’s north tower.

The Shorenstein site said the project would break ground in the first quarter of this year and the towers will open near the end of 2017. Shears Adkins Rockmore designed the towers and Saunders is the general contractor.

Shorenstein bought the property from Union Station master developers East West Partners and Continuum Development in 2014 for $19 million, city records show.

The building is going up as Union Station continues booming with large-scale development. Across Chestnut Place, Holland Partner Group is building 580 apartments. East West is building another $190 million office tower on the other side of 17th Street. Integral Group is building another 107 apartments at the corner of 18th Street and Chestnut Place.

Shorenstein also owns Denver City Center, a 42-story office building at 707 17th St.


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Work begins on 1709 Chestnut

After a couple months of site prep work, it now appears that construction has begun in earnest on 1709 Chestnut.

This development is taking shape Denver’s Union Station neighborhood. 1709 Chestnut will feature a 24-story building and a 12-story building

Between these two structures 500 apartment units and 20,000 square feet of ground-floor retail space will be constructed. The residences will be offered in one and two bedroom options. Structured parking will be incorporated into 1709 Chestnut totaling 500 spaces. Shorenstein is the developer of this project.

Denver-based Shears Adkins Rockmore is the architecture firm that designed this development.

 


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REI will ‘Embed the Outdoors’ into its New Bellevue Campus

By Marc Stiles

Recreational Equipment Inc. (REI) has a big canvas in Bellevue on which to sketch out its new headquarters, and it’s a safe bet that the color green will dominate.

The co-op on Tuesday announced it has a non-binding deal to develop eight acres in the Spring District. That represents more than a fifth of the space in the former warehouse district that Seattle real estate developer Wright Runstad & Co., is turning into a neighborhood of office and retail space, apartments and public parks.

REI and Wright Runstad officials were not available to answer questions but have issued statements about the outdoorsy character of the district at the southeast corner of Interstate 405 and Highway 520.

“We envision an accessible, energizing space that is within reach of some great local outdoor spaces,” REI Chief Operating Office Eric Artz wrote in an email to employees.

In a statement to the media, REI said it will “embed the outdoors” into its new campus at the Spring District that has views of Mount Rainier and Lake Washington. “Think green space all around, open air meeting locations and more.”

In planning the Spring District, Wright Runstad and its partner on the project, Shorenstein Properties of San Francisco, has emphasized values important to REI: environmental sustainability, walkability, regional transit and connections to recreational trails, Wright Runstad President Greg Johnson said.

Brass tacks planning is at least several months away. REI and Wright Runstad’s deal allows either side to pull out at any time without penalty, according to REI, which said it will know by this summer whether it will move ahead with plans to move to the Spring District.

How much space REI plans to have at its new headquarters is unknown but based on its current size and growth, it’s a lot.

REI occupies around 300,000 square feet of office and studio space in the Puget Sound region with most of it in Kent, where the co-op has around 1,100 employees. REI posted record revenue of $2.4 billion in 2015, when membership grew by 1 million.

REI said it’s working with three Seattle companies on its future headquarters: architecture firm NBBJ, real estate services company Heartland and design and branding company Hornall Anderson.


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Shorenstein Sells 850 Third Avenue

Chinese conglomerate backs MHP’s $463M deal for 850 Third

HNA Group subsidiary now “equity owner” of 21-story Midtown office building

MHP Real Estate Services was not alone in its $463 million acquisition of 850 Third Avenue in Midtown with the firm receiving significant equity backing from Chinese conglomerate HNA Group’s HNA Property Holdings.

HNA and MHP closed Tuesday on their purchase of the 614,000-square-foot office building, located between East 51st and East 52nd streets, from Shorenstein Properties.

HNA is now the equity owner of the 21-story building, the Chinese investment firm said in a statement, with MHP serving as the operating partner.  The two sides entered contract on the property earlier this year in an off-market deal. Inquiries regarding HNA’s ownership stake in the building were not returned.

The office building is the latest addition to HNA’s New York City portfolio, which already includes the Cassa Hotel , at 70 West 45th Street, and 1180 Sixth Avenue, a 400,000-square-foot Midtown office property that it also co-owns with MHP.

HNA said it will set up its U.S. headquarters at 850 Third Avenue, joining current tenants like Discovery Communications, Radio One and the City of New York.

San Francisco-based Shorenstein tapped a JLL team last year to market 850 Third Avenue , and the deal with HNA and MHP falls within the company’s asking price of between $450 million and $500 million for the property.

Shorenstein acquired the building in 2008 as part of a package that included Park Avenue Tower, at 65 East 55th Street. The deal for the two properties was valued at a combined $930 million.

MHP, which owns and manages more than 6 million square feet of office space in New York, teamed with Clarion Partners to buy 180 Maiden Lane in the Financial District for $470 million in late 2014.


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The Doug Shorenstein Legacy: How the Real Estate Visionary turned the Family Business into a Legendary Office Landlord

The real estate visionary was widely admired for his steady leadership, kindness and civic engagement

By Roland Li

Doug Shorenstein transformed his family’s real estate company from a major San Francisco builder into one of the largest office landlords in the country by pioneering a fund model that has raised $7.9 billion and invested in nearly 60 million square feet over the last 20 years.

He was a visionary on Market Street, turning an empty 1930s property into one of the most valuable office buildings in San Francisco and luring Twitter as an anchor tenant. His realization that creative brick-and-timber office space would be the future bolstered the returns for his investors and his company, Shorenstein Properties, where he served as chairman and CEO beginning in 1995.

Shorenstein’s careful investing and steady personality led the company through two recessions, emerging stronger than many of its peers.

Shorenstein also served as chairman of the Federal Reserve Bank of San Francisco, where he worked with Janet Yellen, who is now chair of the Fed.

Friends and colleagues remember Shorenstein, who passed away in November from cancer, for his civic commitment and his approachable personality. He was 60.

“What characterized Doug was his brilliance — his subtle brilliance — in that he never waved it in your face. He was always tremendously humble. Whenever we chatted, he tried to make me feel like the smartest guy in the room, when I always knew he was the smartest guy in the room,” said Rick Swig, founder of hotel company RSBA & Associates.

He “was always elegant and respectful. Whenever you left Doug Shorenstein, you felt great,” said Swig.

Shorenstein was deeply involved in philanthropy: he was a board member of the Environmental Defense Fund, UCSF Medical Center and the United Way.

“Doug was deeply invested in the city,” said Glenn Shannon, vice chairman of Shorenstein Properties. “He was a real leader across every aspect – social, political, economic.”

Deep roots in San Francisco

Shorenstein was born in San Francisco in 1955. After working as a real estate lawyer in New York at Shearman & Sterling LLP, he joined the family firm in 1983. Shorenstein’s father, Walter, built Shorenstein Properties from a brokerage named Milton Meyer and Co., which Walter Shorenstein bought in 1960. With its history in leasing, Shorenstein Properties would continue to emphasize cash flow and keeping buildings full, even if that meant missing out on near-term rent growth.

“My father started off as a leasing broker, and the essence of what he did was build and acquire properties that he could keep leased. That is our guiding principle today,” Shorenstein told the Business Times in 2012. “If we can’t lease it, it’s not going to be a good deal. If we can lease it and keep it leased, we’ll be fine.”

“This was a big Doug mantra: Sign the lease, add rent to the rent roll,” said Shannon.

At one point, Walter had owned a quarter of San Francisco’s office space, but Doug had even wider ambitions. To expand the company’s holdings, he moved in 1992 to create investment funds through partnerships with college endowments, pension funds and wealthy families. Rather than doing one-off deals with investors on individual buildings, Shorenstein Properties used the fund model to attract recurring financing that made it more nimble. The firm also invested its own money in each fund. Shorenstein bought buildings throughout the country, focusing on properties with rents that were below market and with upcoming lease rollovers.

Shift to creative office

Under Shorenstein’s leadership, Shorenstein Properties’ seventh fund would be a turning point. In 2005, the company bought a 50 percent stake in the Starrett-Lehigh building, a 1931 building in Manhattan. Tenants’ tastes were changing, favoring historic brick-and-timber office spaces over highrise glass towers, and Shorenstein capitalized on that trend, attracting Martha Stewart Living Omnimedia and Hugo Boss to the building.

That shift toward creative office space would fuel one of the firm’s most successful deals: The redevelopment of San Francisco’s 1355 Market St. By 2010, the Mid-Market office submarket had been devastated by the departure of Bank of America, AAA and the State Compensation Insurance Fund, remembered Charles Malet, who is now president of Shorenstein Properties. The submarket’s vacancy rate exploded from single-digits to more than half empty. The Western Furniture Exchange and Merchandise Mart abandoned 1355 Market St. and moved to Las Vegas, leaving the 1 million-square-foot building vacant.

But Shorenstein saw value in the property, and he was confident that the firm would make a profit if it could get a bargain price, said Malet.

Shorenstein’s father, Walter, questioned the deal, but he was confident.

“His only question to me was, ‘Do you think you can lease it?’ My answer was, ‘I think so.’ Part of the genius of my father is that he understood what he didn’t understand. The market had moved,” Shorenstein told the Business Times in 2012. (Walter passed away in 2010.)

As a long-term holder, the company could afford to wait. In 2011, Shorenstein bought the building for $110 million from ADCO, paying just $110 per square foot, along with around $220 per square foot in additional renovations.

Mid-Market comeback

The same year, Twitter Inc. leased the building for its headquarters and now occupies around 800,000 square feet. The subsequent office market boom enticed JPMorgan Asset Management to take a 98 percent stake in the building in a recapitalization last year that valued it at around $866 per square foot, or $937 million, more than double what Shorenstein invested. It was now one of the most valuable office buildings in the city.

“That building is one of the most well-executed creative office buildings I’ve ever seen,” said Jeffrey Weber, senior managing director of Eastdil Secured, who represented Shorenstein in the recapitalization.

Thanks to Shorenstein’s vision, investment discipline also spared the company from much of the pain of the 2008 downturn. The company shifted to provide debt, rather than equity, on deals before the crash, which protected it from the wave of foreclosures. Doug Shorenstein insisted on seeing each building that the firm bought and focused on individual value-add sites.

“We wanted to do deals that we thought were durably good pieces of real estate and where there were things that we could do at the property to create value, and on the downside, manage our risk,” said Shannon. “We didn’t want to be like a cork, bobbing on the ocean of momentum.”

When the subprime crisis hit, Shorenstein reassured his colleagues that the firm could thrive by taking advantage of new opportunities.

“One of the leadership traits that Doug had was sticking to our knitting and not panicking, recognizing that we’re in this for the long-term,” said Malet.

Strong legacy

Shorenstein is survived by his wife Lydia and their three children. Shorenstein’s son, Brandon, is an executive vice president at Shorenstein Properties after working at Eastdil Secured and Goldman Sachs. He will remain involved in the company, although it’s undecided if he will take the top leadership role, said Shannon. Doug Shorenstein’s keen dealmaking and emphasis on creating a durable organization mean that the company will thrive regardless of the firm’s succession, he added.

Shorenstein Properties is now onto its eleventh fund. It has also expanded to work on residential projects in Mid-Market, Berkeley and around the country. But Shorenstein’s legacy is as much his personal interactions as his real estate deals.

“He was somebody who would treat the CEO the same way he would treat the analyst,” said Weber of Eastdil Secured. “What always impressed me was how he was successful. He was obviously a tough, smart businessman, but he was incredibly fair. Relationships really mattered to him.”


Looking back at Doug Shorenstein’s legacy

1955: Doug Shorenstein is born to Walter Shorenstein and Phyllis Finley in San Francisco.

1980: Doug Shorenstein moves to New York to work at law firm Shearman & Sterling LLP, where he meets Glenn Shannon, who would eventually become Shorenstein Properties’ vice chairman.

1983: Doug Shorenstein moves back to San Francisco to join the family’s business.

1992: Shorenstein Properties starts its first fund of $148 million.

1995: Doug Shorenstein becomes chairman and CEO

2005: Shorenstein Properties buys a stake in the Starrett-Lehigh building in New York, its first major creative office project.

2007: Doug Shorenstein joins the board of the San Francisco Federal Reserve.

2010: Walter Shorenstein passes away.

2011: Doug Shorenstein buys 1355 Market St. and snags Twitter as the anchor tenant.

2015: Doug Shorenstein dies at the age of 60.

 


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Shorenstein Residential Contributes to the Tenderloin

Shorenstein Residential has expanded its philanthropic outreach in San Francisco’s Tenderloin district. These efforts include partnering with local aid organizations St. Anthony’s Foundation and Lava Mae in providing showers for the homeless. The developer also has contributed to the Tenderloin Community Benefit District (TLCBD) for growth and expansion plans.

S.F.-based philanthropic organization Lava Mae repurposes commuter buses with mobile shower units. These mobile hygiene units can serve dozens of homeless clients when supplied by a water source. Shorenstein contributed to the pilot project in partnership with St. Anthony’s by making space available at the proposed development site 1066 Market (which just received approval from the city’s planning department).

Shorenstein managing director Meg Spriggs hopes to make the pilot a regular program. “Lava Mae is a truly innovative and worthwhile organization bringing dignity and opportunity to San Francisco’s homeless,” Meg says. “We were delighted to be able to provide them with the ability to expand their One Shower at a Time program. We hope this program will help positively activate our site prior to construction starting on our proposed project.”

The developer also is contributing to expansion plans for the TLCBD, which provides maintenance, sidewalk cleaning and beautification services paid for by an assessment on Tenderloin properties.

Shorenstein contributed $25k to strengthen the organization’s leadership and oversight. This donation, along with $25k from St. Francis Foundation and $50k from S.F.’s Office of Economic and Workforce Development, marks a milestone in the group’s two-year fundraising goal of $325k.

Shorenstein Residential development manager Julie Burdick serves as board chair of the TLCBD. “A significant amount of work went into re-energizing the [TLCBD], and we are now seeing the results,” she says. “As a property owner in the district, Shorenstein sees the opportunity for the [TLCBD] to play a stronger leadership role in the community and create new partnerships and programs to improve the neighborhood for everyone.”


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Shorensteins get Planning Nod to Build Tenderloin Housing

Well-known San Francisco developers and Twitter landlords the Shorenstein family will try to build a 304-unit housing development in the Tenderloin, after receiving permission from the city’s Planning Commission late last week.

“This will be the first project that the Shorenstein family has ever developed for residential, and they intend to hold onto it forever,” said Shorenstein Managing Director Meg Spriggs told the San Francisco Chronicle.

The project will open onto Jones Street and Golden Gate Avenue, but will have a Market Street address for a small slice of it that fronts onto Market Street. The initial plans for the mid-rise development at 1066 Market St. call for 268 market-rate rentals and 36 below-market-rate units, which will reach the minimum amount of affordable housing currently required by law, at 12 percent.

But neighborhood opponents say that threshold is unrealistic in the Tenderloin, where the median income is $29,000 – far below the $40,000 for an individual or $56,000 for a family of four that qualifies a resident for affordable housing in the city.

“Existing Tenderloin residents must share in the benefits,” Alexandra Goldman, planning manager for the Tenderloin Neighborhood Development Corp., told the paper.“We can’t support a project with so few affordable units.”

The Shorenstein project has been in the planning pipeline for three years and will be built on the site of a parking lot the family has owned in the neighborhood for more than five decades.


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Wright Runstad & Company Announces 1.5 Acre Purchase within The Spring District by AMLI Residential

SEATTLE–()–Wright Runstad & Company, developer of the 36-acre Spring District in Bellevue, today announced that AMLI Residential Properties (“AMLI”) purchased Parcel 17, nearly 1.5-acres of land for residential development. The sale extends Wright Runstad & Company and Shorenstein Properties’ strategy to work with leading multifamily developers to construct the residential property in The Spring District.

“This is a strong endorsement of The Spring District as Bellevue’s emerging walkable neighborhood,” said Greg Johnson, Wright Runstad & Company President. “AMLI Residential is a national leader in luxury apartment construction and sustainable development.”

AMLI purchased 1.47 acres to develop a single residential building with approximately 220 units. The property is located in the southwest corner of The Spring District, just north of Security Properties’ first development phase, encompassing just over 300 units.

“The Spring District is the most exciting new development on the east side,” said Scott Koppelman, Senior Vice President at AMLI. “The progressive and environmentally conscious design matches our philosophy for building green and creating greater value for the larger community.”

AMLI is working with GGLO Architects and Rafn Construction to design and develop the site. Construction is expected to start in early 2017 with completion by early 2019.


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GlobeSt.com

 

Midtown Getting New Look and Feel with 1407 Broadway Renovation

By Rayna Katz

NEW YORK CITY—A single restoration and rebranding of an office and retail tower happening in the area some brokers have dubbed Times Square South—spanning from Sixth Avenue to Eighth Ave, and from 42nd to 34th streets —promises to breathe new life into the neighborhood. More broadly, combining this shift and some changes already underway in Midtown could transform the submarket.

Shorenstein Properties is doing a major renovation at 1407 Broadway following its acquisition of the building last Spring. The upgrades focus on both the expansive office and retail space, in keeping with the “tremendous amount of capital” being poured into area buildings, Peter Turchin, vice chairman, CBRE, who’s handling the agency for the office portion of the building, tells GlobeSt.com in this EXCLUSIVE story.

“The renovation of 1407 Broadway is completely transforming the appearance and appeal of one of the largest buildings in the Times Square South district,” he declares. “On Broadway between 34th and 42nd streets, you’ll see a bunch of buildings either that have been or will be redone, and not just lobby, also retail and facade. It’s because you’ve seen a big influx of tenants in the area.”

Adds Patrick Smith, vice chairman, JLL, who is marketing the retail space, “This corridor, which was the Garment district, has a streetscape not representative of the tenants in the building or those who want to be there. We have the ability to reposition an entire blockfront, with about eight spaces we can bring to the market at once. The building has a setback from the street so if you merchandise the ground floor with tenants that are more indicative of what office tenants want, you really can make an impact.”

Despite the upgrades taking place, Turchin asserts, office rents remain at levels indicative of the area’s current offerings, providing some surprising price breaks. “The average asking rent in Times Square South is more economical than every single submarket in Midtown South,” he declares.

“Usually within a market you have some pockets but Midtown South has become very horizontal in pricing so Times Square South has become a great spillover area,” Turchin adds. “People are seeing that—as well as an influx of tenants—and putting in capital.”

He elaborates, “So its not inferior to Midtown South but it’s less expensive. The average asking rent is $58.06, whereas the least expensive rent in Midtown South is $63 per square foot and the average is $70.”

Retail is on the rise too, asserts Smith. “It feels like the area’s office and retail are evolving at the same time. What was the garment district is evolving to become home to TAMI tenants so we’ve configured spaces that are commensurate with the demand from those occupiers.”

He continues, “Today’s tenants want apparel, fast casual food, convenience—such health and beauty business or drugstores. This is especially the case for TAMI tenant who may be working odd hours or on the weekend, because the base tenants in the area aren’t residential so those services aren’t widely available.”

The changes at 1407 Broadway, as well as those that already have been made or are in the works at the Grace Building, 7 Bryant Park and in the park itself, which is now home to yoga classes and the like, will give the area a new complexion.

“Times Square South is evolving into a vibrant retail corridor versus primarily a service area,” declares Smith.

Agrees Turchin, “All of the retail around the area is changing rapidly, so we will see several redevelopments and we will get some great users. It will be a much different area in the next few years.”


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Downtown Real Estate, Investments Confirm Pittsburgh’s Status as Hot Spot

By Mark Belko

Investors from Munich to San Francisco are paying big money to gobble up some of Pittsburgh’s most prestigious office towers and then pouring millions of dollars more into re-energizing them.

Since 2010, out-of-town real estate companies have paid more than $1 billion to acquire more than a dozen high-profile properties in or near Downtown, including such iconic gems as U.S. Steel Tower, PPG Place, One Oxford Centre, the Union Trust Building and the former Westinghouse Building.

And they aren’t just sitting on the properties. The firms have invested nearly a quarter of a billion dollars more to bring buildings up to 21st century standards and to add tenant-pleasing amenities.

It shows, local real estate experts say, that Pittsburgh is attracting the kind of big-time real estate investment that in the past has been reserved for more exclusive markets like New York, Boston, Chicago and San Francisco.

“I think it’s a sign that Pittsburgh is finally getting the recognition it deserves for being a very strong, stable market,” said Jonathan Kamin, a local real estate attorney.

But while the investments bring prestige and a shot of adrenaline to some tired-looking office towers, there could be a downside — possible rent increases.

Jonathan Bonime, senior vice president of Fischer and Co., a Downtown real estate firm that represents tenants, said it is unrealistic to expect investors to pour millions in without getting a payback. “No one is going to pay the price to come in, get involved in a new market and make upgrades if they don’t see the opportunity to make more money,” he said.

Jeffrey Ackerman, managing director of real estate services firm CBRE, said large institutional investors are being drawn to Pittsburgh in part because they can get better returns on buildings than in bigger markets where bidding wars have erupted. He said cities like Seattle; Nashville, Tenn.; and Austin, Texas, are experiencing the same phenomenon.

“Investors have a lot of confidence in these [smaller] markets because of how well the local economy is doing, the strong occupancy rates, high absorption and rising rental rates,” he said.

‘Great white shark’

The latest building to be grabbed by an out-of-town buyer is One Oxford, the distinctive 45-story Grant Street skyscraper bought by San Francisco-based Shorenstein Properties LLC last month for $148.7 million.

Shorenstein, one of the country’s oldest and most prestigious real estate investment firms, already has put its name on the tower’s glass doors. It is vowing to make “significant improvements to restore the iconic nature of the building,” including renovations to the lobby and other common areas.

While Shorenstein hasn’t said how much it will spend, it has invested plenty in properties acquired in other cities, including $30 million in 1407 Broadway, a 43-story office tower in New York, and $20 million into Center Plaza, a nine-story office and retail building in Boston.

“What’s really exciting is that Shorenstein is like the great white shark showing up. That says we’ve made it,” said Jeremy Kronman, a CBRE executive vice president.

It’s not the only one investing huge sums in Downtown real estate.

Since buying the iconic PPG Place complex for $179.4 million in 2011 and EQT Plaza for $99.2 million a year later, Raleigh, N.C.-based Highwoods Properties has spent more than $50 million bringing them up to its own internal standards or “Highwoodtizing” them, as it likes to say.

At PPG, that has included a larger ice rink; extensive renovations to the plaza’s jets and LED lighting; two new restaurants with a third under construction; and elevator, lobby and restroom improvements, as well as mechanical, electrical and safety upgrades. It also has completely remodeled the outdoor plaza at EQT Plaza.

A few blocks away, The Davis Companies of Boston is doing its own reclamation project on the historic Union Trust Building, an early 20th century architectural masterpiece built by industrialist Henry Clay Frick.

After buying the Grant Street building at sheriff sale for $14 million, Davis is spending another $60 million to $70 million on a massive overhaul, upgrading the office space to Class A levels, cleaning the exterior, restoring the building’s mansard roof, repolishing brass fixtures and doors, rejuvenating the retail space, and adding underground parking.

Other properties that have seen major outside investment include:

• 11 Stanwix, the former Westinghouse building bought by Munich-based GLL Real Estate Partners for $66.6 million in 2011. It has invested $15 million in improving the outdoor plazas and in upgrading the building’s green features to a LEED Gold rating, the second highest.

• Allegheny Center, which New York-based Faros Properties is turning into a tech hub after paying $48.7 million for it. The firm is spending about another $100 million to renovate it.

• The Koppers Building, which New Jersey-based Rugby Realty acquired for $17.2 million. It has invested another $4 million remodeling common areas, repolishing brass inside and out, adding a fitness center, modernizing elevators, bringing in a restaurant and cigar bar, and making other improvements.

Starting in the late 1980s, Rugby was one of the first outside investors to take a chance on Pittsburgh. Since then it has acquired Downtown jewels like the Gulf Tower, the Frick Building and Koppers, as well as a number of properties in the Cultural District. It also sold 11 Stanwix to GLL.

A more recent investor has been M&J Wilkow, which bought the Art Institute of Pittsburgh building for $9.9 million and 20 Stanwix for $38.1 million. It will spend at least $5 million renovating the latter’s plaza and lobby while adding a fitness center, a tenant lounge and possibly a rooftop deck.

Chicago-based Wilkow, which also owns the Waterfront in Homestead, was drawn here by the economy and the tech, medical, educational and energy sectors, all of which it sees as good job drivers, vice president Marty Sweeney said.

The company specializes in taking properties experiencing some level of distress and repositioning them. It then either sells the properties or enjoys “the cash flow from stabilizing the asset,” Mr. Sweeney said, adding Wilkow is committed to Pittsburgh long term.

Not quick flippers

Some of the building sales have not been without controversy.

No deed transfer taxes were paid in the acquisitions of U.S. Steel Tower, EQT Plaza, and Del Monte Center and the Equitable Resources building on the North Shore because of the way the sales were structured — costing the city, its school district and the state millions of dollars in revenue. With former state Sen. Jim Ferlo taking the lead, the law has since been changed to make it more difficult to structure deals that way.

Nonetheless, Mr. Ackerman said companies like Shorenstein and Highwoods represent upper-echelon investors that have not been active in markets like Pittsburgh until recently. They are known for coming into markets and making large investments to upgrade the quality of the buildings they buy.

“We’re going to get high-quality buildings with high-quality accouterments going in,” he said.

Such companies tend not to be quick flippers. They usually hold onto properties for at least five to 10 years, Mr. Ackerman said.

But for guys like Mr. Bonime, the investments can represent a double-edged sword. While they can do wonders for the buildings and the amenities provided, there could be a price to pay down the road.

“It shows that [Pittsburgh's] a healthy rental market and it’s great for landlords, and I think it’s good for the city in the long run. It’s our job to find the best deal we can for our clients,” he said. “Unfortunately, when rates go up, it’s harder on our clients.”


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Pittsburgh Exchanges Macy’s for Mixed-Use Giant

By Joe Gose

PITTSBURGH — A plan to convert Pittsburgh’s 12-story landmark Macy’s department store into a one-million-square-foot mixed-used behemoth has become one of the latest votes of confidence in the decade-long resurgence of the city’s downtown.

Core Realty, based in Philadelphia, in July paid $15 million for the property just months before Macy’s closed. The building, on the corner of Fifth Avenue and Smithfield Street, dates to the late 1800s and for years was the flagship of the Kaufmann’s department store chain. It went through several expansions and renovations, including a heralded Art Deco interior makeover of the first floor in 1930.

Randy Mineo, executive vice president of Core Realty and a Pittsburgh native, envisions a mix of retailers, restaurants and entertainment spots to complement a 155-room Even Hotel and 312 luxury apartments. Named the Grand at Fifth Avenue, the estimated $100 million project will feature an open-air atrium beginning on the fifth floor and 600 parking spaces, a sparse commodity downtown.

“I’ve always looked at Pittsburgh as a hidden gem; it’s a city that has been kind of ignored,” said Mr. Mineo, who with the owner of Core Realty, Michael Samschick, began hunting for properties in the city three years ago. “But you could tell that underneath the surface, Pittsburgh was bubbling.”

Developers, corporations, educators and others have pumped about $5 billion into the city’s downtown, also called the Golden Triangle, over the last decade, according to the Pittsburgh Downtown Partnership.

Investors have converted old office buildings into residential units, hotels and classrooms, constructed new office buildings, and built up the district’s restaurant and entertainment base, even while the state has overseen the city’s budget as a result of Pittsburgh’s near-bankruptcy early this century.

Among other projects, Millcraft Investments, a developer based in nearby Washington, Pa., which evolved from the industrialist Jack B. Piatt’s business interests, converted seven historic buildings in 2010 into Market Square Place, a $42 million project that houses a Y.M.C.A., retailers and 46 loft apartments.

And Millcraft is putting the final touches on its newly constructed $108 million Gardens at Market Square, a mixed-use development that offers a 197-room Hilton Garden Inn, office and retail space, and a garage for 330 cars.

“I’ve never seen so much activity in Pittsburgh,” said Lucas B. Piatt, president and chief operating officer of Millcraft. “It’s not down on itself anymore.”

About five years ago, national office investors for the first time took notice of the market after vacancies actually fell and rental rates grew amid the financial turbulence in 2008 and 2009, said Jason T. Stewart, an executive vice president with the brokerage firm Jones Lang LaSalle in Pittsburgh.

That was, in part, because of fortunate circumstances, Mr. Stewart said. The regulator-encouraged acquisition by PNC of the beleaguered National City Mortgage, as well as the merger between the Bank of New York and Mellon Financial, brought thousands of workers downtown.

“After the dust settled in 2010, the fundamentals in Pittsburgh looked very favorable,” he said. “Then in 2011, office trades started happening.”

Class A office space downtown now has an average vacancy rate of about 7.5 percent, although rental rates remained relatively flat in 2015 and coming lease expirations will put more space in older buildings on the market, according to Jones Lang.

Nevertheless, building conversions have cut into office supply and little new construction is underway or planned, which is fostering an environment for rent increases, said Dan Adamski, a managing director with the brokerage.

Shorenstein, an office landlord based in San Francisco, made its first acquisition in Pittsburgh last month, paying $149 million for the 45-story One Oxford Centre. It plans to update the property, which is about 20 percent vacant.

“In downtown Pittsburgh, 20 percent vacancy is considered high,” said Matthew M. Knisely, a managing director with Shorenstein. “Most Class A towers are very well leased, and we expect the same thing at One Oxford Centre.”

In addition to the promising office market conditions, the decisions of Google, Uber, Apple and Oculus, owned by Facebook, to put operations in Pittsburgh grabbed Shorenstein’s attention, as did the tech start-ups emerging from nearby Carnegie Mellon University, he said. Much of that activity stems from the city’s longstanding strategy to build up its academic, medical and technological base.

The growing population in the downtown area — up 10 percent to more than 12,300 residents since 2010 — also appealed to Shorenstein. The housing supply in the downtown area has ballooned nearly 50 percent to more than 5,300 units since 2000, and the average occupancy is about 95 percent, according to estimates by the downtown partnership group. An additional 3,875 units are under construction or planned.

Conversation among developers and civic leaders is increasingly focusing on how to improve the Golden Triangle’s shopping experience and whether the area population alone can support conventional retailers. Mr. Piatt, for example, doubts that suburbanites will trek downtown to frequent stores already situated close to home.

Restaurants, entertainment venues and boutiques have replaced four department stores as the Golden Triangle’s retail anchors, said Herky Pollock, executive vice president and northeast director of the retail services group for the brokerage company CBRE in the city. But he suggested that the bustling restaurant scene and the growing number of young workers living downtown was generating interest among a variety of operators, from discount retailers like T. J. Maxx to large fitness facilities.

“As long as we add unique offerings, downtown will prosper beyond where it’s ever been,” Mr. Pollock said.

Still, Macy’s closing in September left a gaping hole along Smithfield Street, once the city’s most vibrant retail corridor, and has put Core Realty’s redevelopment plan under a microscope. Arthur P. Ziegler Jr., president of the Pittsburgh History & Landmarks Foundation, wants to see retailing dominate Smithfield Street again.

His organization led opposition to the plan by a former mayor, Thomas J. Murphy Jr., to replace 64 buildings on 4.5 acres with a mall in the 1990s. In addition to initiatives like protecting old building facades, the foundation has renovated a handful of properties to create space for apartments, clothing stores, a grocer and other shops, generally charging rental rates below the market average.

“We’re concerned whether people will live downtown if they have to leave downtown to shop,” Mr. Ziegler said. “The Macy’s project is going to be very important. We need it full of shops or that street won’t come back for retail.”

Macy’s initially wanted to take part in the renovation and stay on four floors but couldn’t make it work financially, Mr. Mineo said. Instead, he is planning 100,000 square feet of shops, restaurants and entertainment on the first two floors, as well as a rooftop restaurant.

The inability to substantially increase the number of entrances into the landmark will require Core Realty to woo larger users, however, and junior apparel stores, supermarkets and entertainment concepts like Lucky Strike bowling are among his targets.

“We need people,” he said. “But I think that with all the apartments that are here and those that are coming, we’ll have enough to support the project.”


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Atlanta’s Tallest Tower Nets a Big New Tenant

By J. Scott Trubey

Atlanta’s tallest skyscraper just got a big dose of good news.

The CDC Foundation, the philanthropy associated with the Atlanta-based government health agency, has agreed to move its offices from a building near Woodruff Park to Bank of America Plaza.

It’s the first major new office lease for BofA Plaza in a number of years and follows the building’s recent purchase by San Francisco-based Shorenstein Properties.

BofA Plaza, where Midtown meets downtown, is an emblem both of Atlanta’s skyline and the arc of the region’s economy since the 1990s.

The tower’s construction was a symbol of Atlanta’s aspirations and rise as an international city in the 1980s and 1990s. It’s the trophy office tower that fetched a record price in the heady real estate boom of the 2000s. Then it became an emblem of the city’s economic fall when its former owner lost control four years ago.

The tower was nearly full when Atlanta’s Cousins Properties sold the tower during the boom, but the giant building is currently about half-empty.

In a blog on its website, the CDC Foundation said it focused on “proximity to CDC’s Atlanta campuses; a location near the airport for out-of-town guests; access to major interstates and public transportation for our staff who travel from throughout the Atlanta area to work; and space to accommodate expansion as needed.”

A new leasing team from CBRE that helped turn Atlantic Station into a bustling hub for creative companies was recently hired to do the same for BofA Plaza.

The strategy hinges on major corporate targets but also goes beyond them. The CBRE team also has marketed some of the space to creative firms.

While Midtown has become a hot market for relocations and business expansions – particularly among technology firms – BofA Plaza has failed to win their business.

But that is perhaps soon to change with CDC Foundation taking up residence. The foundation is expected to take about 35,000 square feet of space — which is about a floor and a half.

Pierce Nelson, a spokesman for the CDC Foundation, said the group will take up about a floor and a half of the 55-story tower for a term of 12 years. The foundation has about 150 employees, including about 50 to 60 stationed at its Atlanta offices.

The foundation was founded by Congress in the 1990s to help extend the mission of the Centers for Disease Control and Prevention and to help the CDC connect and work with nonprofit and private sector partners.

Major supporters of the CDC Foundation have included Robert Wood Johnson Foundation, the Bill and Melinda Gates Foundation and corporations including General Electric and UPS.

CBRE brokers Jeff Keppen and Elliott Grand represented Shorenstein. JLL brokers Ian Henderson and John Winter represented CDC Foundation.

Keppen said the building has gotten renewed attention with new ownership. Shorenstein, a well-known national real estate company, has the money to finance major building improvements and has big plans for the tower.

“Midtown is super hot right now,” Keppen said, citing innovation labs and corporate relocations happening in the area around Georgia Tech.

With space tightening, BofA Plaza is likely to get even more attention.

Matt Knisely, an executive with Shorenstein, said the firm is “delighted to welcome the CDC Foundation, a highly regarded nonprofit doing great work, to Bank of America Plaza so soon after acquiring the building.

“We think this is a location that more tenants will now want to be part of and we’re excited to follow through on our vision for this iconic building,” he said.


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Shorenstein Enters Pittsburgh Market with Acquisition of One Oxford Centre

Pittsburgh, PA – January 22, 2016 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, has acquired One Oxford Centre, a 45-story office and retail mixed-use complex and 840-stall parking garage at 301 Grant Street in the heart of downtown Pittsburgh.  It is the firm’s first acquisition in the western Pennsylvania city.

Built in 1983, One Oxford includes 879,000 square feet of Class A office space above 59,000 square feet of retail and is the third tallest building in the city.  The building also features the Rivers Club, a 73,000 square foot fitness, dining and social club.  The building is currently 81 percent leased with major tenants including the law firms of Buchan Ingersoll & Rooney and Clark Hill PLC. 

Shorenstein plans to implement a comprehensive capital improvement program to address mechanical and building systems upgrades and improve the lobby and common areas such as corridors and restrooms, to solidify the building’s position among the top tier of corporate addresses in downtown Pittsburgh.

This acquisition was made on behalf of Shorenstein Realty Investors Eleven, a $1.22 billion commingled fund formed in 2014.

About Shorenstein Properties LLC
Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 61.7 million square feet in transactions with a gross investment value in excess of $14.5 billion.


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One Oxford Centre

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Shorenstein Properties closes on purchase of One Oxford Centre

By Mark Belko

One of Downtown’s largest skyscrapers is under new ownership.

Shorenstein Properties LLC, a prominent San Francisco-based real estate investment company, closed today on its purchase of One Oxford Centre at 301 Grant Street with a vow to inject new energy into the 45-story tower.

The purchase price was believed to be about $149 million. It marks the first acquisition in Pittsburgh for Shorenstein, which holds [28] million square feet of real estate nationwide, with properties in San Francisco, Los Angeles, New York, Boston, Chicago, Philadelphia, Denver, Houston and other cities.

In a release announcing the sale, the company stated it is planning to embark on a wide ranging capital improvement program to address mechanical and building systems upgrades and improve the lobby and common areas such as corridors and restrooms “to solidify the building’s position among the top tier of corporate addresses” in the Golden Triangle.

The building, the third tallest Downtown, appears to be in need of some help. Its 879,000 square feet of office space currently is 19 percent vacant. Although One Oxford was once a prime upscale shopping destination, much of its 59,000 square feet of retail is empty.

Oxford Development Co., which built the distinctive aluminum and glass octagonal skyscraper in 1983 during the city’s second renaissance, put the building up for sale in August, attributing the decision to the strength of the Downtown real estate market and heightened interest in it by institutional investors.

“Oxford has been the proud owner of this iconic building since 1983,” said Steve Guy, President and CEO, Oxford Development Company. “By placing One Oxford Centre in the hands of a high-quality professional owner like Shorenstein, this sale allows us to realize the benefits of this over 30 year investment. We welcome Shorenstein to the Pittsburgh market.”

The complex was a joint venture between Oxford and the Edward J. DeBartolo Corp. It features a five-level atrium that includes a food court, the 73,000-square-foot Rivers Club and an 860-space parking garage.

Shorenstein has been eyeing a possible purchase since at least November. It is making the acquisition through Shorenstein Realty Investors Eleven, a $1.22 billion commingled fund formed in 2014.


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How Adaptive Reuse Revives History (and Demand)

By David Josker, Managing Director, Los Angeles North, CBRE

GLENDALE, CA—It’s January 1929. More than 2,500 masons and their guests are flocking into the first-floor auditorium of the Masonic Temple to attend a ball celebrating the opening of the nine-story white tower, the tallest building in Glendale. Eighty-seven years later, it is men and women—smart phones in hand—who are riding the building’s elevator to an open, glass-dominated office loft.

The Masonic Temple has seen several incarnations, from gathering place for Mason fraternity members, to housing the Fred Astaire dance studio in the 1950s, the Sopwith Camel nightclub in the seventies, a cinema and a classical repertory theater called “A Noise Within” to being the newest office in L.A. County for real estate giant CBRE Group Inc.

The demand from companies for repurposed and historic buildings has been soaring in recent years. While the residential sector embraced this trend early in places like New York’s Soho where abandoned warehouses have turned into pricey lofts, and was adopted by boutique hotel owners like Ian Schrager, it has since moved into the office segment.

In many instances, employers are following the workforce to urban centers and away from traditional office parks. Millennials—which now represent the largest living population segment—have been flocking to hip downtown neighborhoods to live and play—areas that had lost their popularity as baby boomers moved to the suburbs.

Examples of this creative office boom span the globe. In Los Angeles, local developer Ratkovich Co. renovated the hangar where Howard Hughes’ legendary Spruce Goose plane was built. The reimagined industrial space was quickly taken up by media and technology companies. The Pac Mutual property, a 1908-built Beaux Arts-style building owned by Ivanhoe Cambridge and Callahan Capital Properties, is now home to such tenants as online clothing retailer Nasty Gal. CBRE is currently marketing the revamped Ford Motor factory, which was originally built to manufacture Ford Model T automobiles, in the Arts District to possible tenants. Interest for the converted space, owned by San Francisco-based Shorenstein Properties, has dominantly been from creative, entertainment and technology companies but also from a more traditional consulting client.

The resurgence in popularity of historic and repurposed buildings is in part driven by employers’ desire to be considered forward-thinking front-runners in up-and-coming neighborhoods. Spruce Goose sits in Playa Vista, an area that has benefited from the increasing footprint of the Silicon Beach phenomenon. Downtown is being buoyed as big companies such as CBRE and architectural firm Gensler have moved in, encouraging a number of other businesses to venture into this long-neglected part of Los Angeles.

Equally, the area around the Masonic Temple in Glendale has blossomed since Caruso Affiliated opened the Americana at Brand outdoor shopping center across the street. It attracts thousands of people to the area each day and has resulted in the opening of such retailers as Apple and Nordstrom and restaurants such as Bourbon Steak by Michael Mina.

Whether it is in Los Angeles, New York or London, companies are eager to differentiate themselves from the ever-increasing competition to help attract and retain top talent.  Cool interiors featuring eclectic art, concrete floors and exposed pipes is one thing, but to convey your company has an edge through a unique facade that stands out in a sea of office towers takes this concept to a whole other level. Historic buildings can also provide a sense of connectedness to times past for companies operating in today’s fast-paced world.

Maybe Doug Marlow, EVP of CBRE’s L.A. North region, sums it up best: “The demand for this type of building is on fire. Companies are increasingly looking to present their identity through the buildings they occupy. It’s an extension of what we’ve been already seeing in office interiors for years. It started with ping pong tables and exposed brick and is now moving to the buildings themselves. CBRE is aiming for the same goal with our new office in Glendale as well as in other markets. The combination of structural elegance and historic relevance of the Masonic Temple will be a phenomenal calling card for the company.”


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JAMF Software Readies to Relocate to Shorenstein’s 100 Washington Square Building, Plans for more Growth Ahead

Minneapolis-based JAMF Software, the Apple device management firm that grew by 165 employees to 505 over the last year, will leave downtown’s Grain Exchange Building this spring for larger quarters in refurbished 100 Washington Square, part of the two-building complex in the Gateway District that’s being refurbished by owner Shorenstein Properties of San Francisco.

JAMF CEO Dean Hager said billings grew 35 percent last year to about $80 million, as well as 35 percent growth in the number of Apple devices managed by 14-year-old JAMF.

“We’re preparing for continued growth,” Hager said. “We have aggressive hiring plans. And we have very aggressive product development plans. Our R&D staff growth was 100 percent year over year. We’re trying to differentiate ourselves.

“The market is attractive, but not everybody is experiencing what we’re experiencing. We have a very focused strategy. Our mission is to help organizations succeed with Apple. And Apple is seeing success.”

JAMF said it added 1,900-plus global customers in 2015, up 45 percent.

Summit Partners of Boston invested $30 million in JAMF in 2013 for a minority stake. Hager said the company doesn’t require additional funding and is financing its growth out of cash flow.


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Bank of America Plaza Atlanta gets New Owner, New Direction, a Boost for Midtown

By Douglas Sams

Shorenstein Properties says it’s bought Atlanta’s 55-story Bank of America Plaza, the Southeast’s tallest office tower.

San Francisco-based Shorenstein is buying the tower under its Shorenstein Realty Investors Eleven LP, a $1.2 billion fund formed last year. Transaction details were not released, though Bank of America Plaza was appraised at $236.5 million, according to Morningstar Inc. The deal is expected to be close to that number, though some insiders familiar with the transaction say the price might be near $220 million, or $165 a square foot.

CW Capital was the seller. It was represented by a CBRE Inc. team of Will Yowell, Jay O’Meara, and Justin Parsonnet along with the firm’s national loan sale advisory group.

CBRE is expected to retain the leasing assignment.

The 1.3-million-square-foot tower is one of just a handful of bona-fide iconic buildings that make up the Atlanta skyline, but Shorenstein will have to figure out how to once again make it attractive to tenants. Bank of America Plaza stands at just 45 percent leased, though Shorenstein downplayed that number, suggesting it may be misleading. Historically the tower has maintained occupancy levels at greater than 90 percent.

Shorenstein says it wants to improve the building’s lobby and amenity areas immediately, and carry out other upgrades and deferred maintenance.

In a statement, Shorenstein managing director of capital transactions, Matt Knisely, said, “Bank of America Plaza is a top quality corporate location with exceptional transit access and close proximity to the campus of Georgia Tech, one of the country’s leading public research institutions. This acquisition affords us the opportunity to strategically invest capital and utilize our strong asset, leasing and property management expertise to reposition the building within its market and ultimately add value.”

New capital could give the tower a boost, and it needs one. At 600 Peachtree Street, where Bank of America Plaza sits amid the convergence of Midtown and downtown, the district has become a sort of a no-man’s land.

It’s cut off from all the investment and development surrounding it in other parts of Midtown. The building itself is often compared to an island, and it’s remained largely unoccupied over the past few years despite other towers filling up.

A few blocks north and west, Tech Square is a magnet for new development and the new headquarters for NCR Corp. Farther north on Peachtree, North American Properties plans to remake the aging Colony Square mixed-use project; apartment towers continue to rise; and plans for a new Whole Foods Market are under way.

Shorenstein has experience in making over large, urban towers that are primed for a recovery. In Manhattan, it’s putting $30 million into the 1.1-million square-foot 1407 Broadway, the Wall Street Journal reported in August.

Things started to turn south for Bank of America Plaza shortly after real estate investment company BentleyForbes Group bought the tower in 2006 for $436 million, or $348 a foot.

That was a record sales price, though it was quickly eclipsed by another tower — a sign of the times.

Bentley Forbes hoped to make Bank of America Plaza the southern-most retail anchor in the Midtown Mile, a planned 1 million square feet of retail on Peachtree Street.

By 2009, the nation’s economy was in a steep downturn and its financial sector was in turmoil. Bank of America renewed its lease at Bank of America Plaza but downsized from more than 500,000 square feet. It would eventually lease less than 200,000 square feet.

Bank of America Plaza’s rental rates, once close to $30 a square foot when BentleyForbes purchased it, fell closer to $25.

BentleyForbes sought new equity partners to help it restructure debt that financed its purchase of the tower, but the commercial real estate collapse and credit crunch undermined its efforts.

By 2012, Bank of America Plaza went into foreclosure and became the city’s highest-profile example of its commercial real estate boom — and bust.

The Shorenstein transaction means bondholders behind Bank of America Plaza took a $146.4 million loss on the commercial mortgage backed securities deal that financed the tower’s acquisition several years ago, according to the commercial real estate data provider Trepp.

Atlanta’s office building owners are enjoying a rare landlord’s market.

New data from commercial real estate firm Cushman & Wakefield helps tell that story. Consider the year-over-year percentage change in direct class A asking rents from 2014 to year-end 2015:

  • Buckhead: up 12.5 percent
  • Central Perimeter: up 10.1 percent
  • North Fulton: up 9.1 percent
  • Northwest/Cumberland: up 3.8 percent
  • Midtown: up 2.5 percent
  • Downtown: 1.8 percent
  • Northeast: up 1.2 percent

Those figures do not include concessions, which are dwindling. “As the Atlanta market continues to tighten, we are seeing landlords increasingly pull back on lease concessions,” said Logan Menne, research manager for Cushman & Wakefield — Atlanta.

This year, there may be more room for rent growth. Construction financing remains difficult for speculative office projects, and that’s limited development. More adaptive reuse projects are happening in walkable, heavily amenitized districts near the Beltline, or transit. In Buckhead, Atlanta Tech Village comes to mind. “Office is kind of lagging the overall economic [recovery],” Denver University real estate professor Glenn Mueller recently told Atlanta business leaders at Georgia State University’s Views from the Top event.

“Atlanta is doing a little better than the national average,” he said. “It is a city that millenials are interested in, and today companies have to go where the millenials want to be.”

ON THE RECORD

  • Pollack Shores Real Estate Group is planning a project along 14th Street in Home Park that could create a more walkable heart for the neighborhood near Georgia Tech. The Atlanta-based company plans to build a 275-unit apartment building with about 10,000 square feet of retail space. It would fill the block along 14th Street, between Mecaslin and State streets. Pollack Shores currently has the property under contract. It encompasses 11 parcels, including the former Bobby & June’s Kountry Kitchen that closed in 2010. The developer looks to break ground in July. Some of the existing retail, including the Jimmy John’s sandwich shop and Taste of New York pizzeria, would be relocated to the new project, said Tyler Gaines, development manager with Pollack Shores. With the adjacent “Kool Korners” retail strip that includes restaurants such as Better Half, the two projects start to create a more walkable area for the neighborhood. “Home Park doesn’t really have a downtown district,” Gaines said. “This will give Home Park a central core.” It also helps fill in the gap between Piedmont Park and the trendy shops and restaurants of West Midtown along 14th Street. Other projects are planned for the corridor, including a flagship Whole Foods Market at 14th and West Peachtree streets. Pollack Shores has a host of other projects around Atlanta, including one recently announced for the Buckhead Village.
  • A 121-acre Henry County project is heading toward a pivotal rezoning hearing. Developer Stafford Properties needs the go-ahead for its proposed Henry Promenade, which would include almost 892,000 square feet of new commercial space along Interstate 75 at Jonesboro and Mount Carmel roads. Stafford is seeking to rezone almost 89 acres of the site from currently allowing residential, agricultural and light manufacturing uses. Stafford needs a “highway commercial” zoning designation so it can move ahead with more retail, restaurants and two hotels on the site. Stafford also seeks to amend the future land-use designation for 70 acres of the project, a move that would clear the way for more commercial space. The project will have a zoning hearing Jan. 21. In December, Stafford Properties also filed plans with the state Department of Community Affairs. The project was large enough to go through the Development of Regional Impact program, which involves planners from different state agencies. In metro Atlanta, developers added close to 1.6 million square feet of new retail last year, according to data from real estate brokerage Marcus & Millichap. Wal-Mart, Sam’s Club and Sprouts were included among the most active retailers developing new stores. Overall vacancy hovered between 8 and 9 percent.
  • Atlanta developers are launching a 100-acre project in Dawsonville that will bring big-box retailers to a shopping destination in north Georgia’s foothills. Hendon Properties LLC and Blanchard Real Estate are developing the site along Georgia 400 next to North Georgia Premium Outlets. Called Dawson Marketplace, the new project will include Kroger and retail chains such as Marshall’s, Petco, Famous Footwear, Hobby Lobby and Ross Dress for Less. Iberia Bank and C&S Bank provided construction financing. New Market Properties LLC, a subsidiary of Preferred Apartment Communities Inc. (NYSE: APTS), is also a capital partner on the development. The project could open its first stores by first quarter 2017. Dawsonville and the outlet stores it’s known for continue to grow as a retail hub for areas on the northern edge of Atlanta’s suburbs, Hendon Properties President Charlie Hendon said. The area is also a draw for Atlanta’s conventions, whose participants will often take buses to the outlet stores. Even so, there are challenges for any new retail project, especially as the sector is still recovering from the downturn several years ago, analysts say. Regional malls are in a battle of the haves versus the have-nots. In metro Atlanta, malls such as Lenox Square in the wealthy neighborhood of Buckhead continue to perform well, while Gwinnett Place, once a thriving suburban mall in Duluth, Ga., is struggling. Today, it looks destined for a major overhaul that could include new residential projects connected to a more parks, sidewalks and trails. “Malls have had a better recovery than neighborhood and community centers up to this juncture, but neither has had a strong recovery on a widespread basis,” the analyst Reis said in its latest fourth quarter report. “Proliferation of relatively new retail subtypes such as town centers, lifestyle centers, and power centers over the last 20 or so years has provided consumers with shopping options that they previously did not have. Many of these new subtypes offer experiential shopping that is not to be found in more dull and drab neighborhood and community centers, where shopping occurs on a more perfunctory basis.”

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Atlanta’s Tallest Tower, Bank of America Plaza, Sold

By J. Scott Trubey

Atlanta’s tallest tower and reputedly the tallest building foreclosed in the wake of the real estate meltdown has been sold.

San Francisco-based Shorenstein Properties said in a news release this week it has completed its purchase of Bank of America Plaza, one of Atlanta’s skyline landmarks that ultimately became a symbol of the city’s real estate crisis. The skyscraper will be owned by one of its managed funds.

A unit of CWCapital, which took over the building after former owner BentleyForbes lost the tower to foreclosure in 2012, formerly controlled the building. A sales price was not disclosed.

In many ways, BofA Plaza’s history mirrors Atlanta’s recent economic arc.

The tower’s construction was a symbol of Atlanta’s aspirations and rise as an international city in the 1990s. It’s the trophy office tower that fetched a record price in the heady real estate boom of the 2000s. Then it became an emblem of the city’s economic fall when its former owner lost control four years ago.

The tower was nearly full when Atlanta’s Cousins Properties sold it during the boom, but now the giant building at the cusp of Midtown and downtown sits more than half-empty.

A high-flying leasing team from CBRE that turned Atlantic Station into a hive of tech and creative companies recently was hired to refill BofA Plaza. The strategy includes major corporate targets but also goes beyond them. The CBRE team also has marketed some of the space to startups and other creative firms, hoping that will generate buzz and draw bigger corporate tenants, too.

In a news release, Shorenstein said it plans to make improvements to the tower’s lobby and amenities, among other upgrades.

“Bank of America Plaza is a top quality corporate location with exceptional transit access and close proximity to the campus of Georgia Tech, one of the country’s leading public research institutions,” Matt Knisely, Shorenstein managing director of capital transactions, said in a news release. “This acquisition affords us the opportunity to strategically invest capital and utilize our strong asset, leasing and property management expertise to reposition the building within its market and ultimately add value.”

While Midtown has become a hot market for relocations and business expansions – particularly among technology firms – BofA Plaza has failed to win their business. That is likely in no small part to the dearth of activity on the streets surrounding it. The building is on a sort of island – not quite Midtown, not quite downtown.

The underdeveloped stretch of Peachtree Street lacks the restaurants and boutiques seen at Atlantic Station or near Peachtree and 14th streets.

 


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Shorenstein Buys Center City Tower

By Jacob Adelman

Shorenstein Properties LLC has acquired the 32-story 1700 Market Street office tower in Center City, the company said in a release.

Shorenstein closed Wednesday on its purchase of the 848,000-square-foot building from a partnership involving New York’s Nightingale Group and investor David Werner. The price was not disclosed.

Shorenstein said it plans to invest in improvements to the property, as it’s been doing at the nearby Beneficial Bank Place building that it purchased last year.


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1700 Market

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Shorenstein Completes Purchase of Second Center City Office Building

1700 Market Street offers tenants efficient, flexible space in Market Street West

Philadelphia, PA – January 6, 2016 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, has completed the purchase of 1700 Market Street, an 848,000 square foot Class A office tower in Philadelphia’s Center City submarket. 

This is the company’s second major purchase in Philadelphia and it now owns more than 1.8 million square feet of prime office space in Center City’s popular Market Street West submarket. Shorenstein recently began the initial phases of a renovation of 1818 Beneficial Bank Place, the Class A Market Street West office tower it acquired in April.

As with 1818 Beneficial Bank Place, Shorenstein plans to invest capital to further improve 1700 Market’s tenant appeal and make it one of the most desirable locations in the city for companies seeking highly efficient, differentiated space.

Located just one block east of Beneficial Bank Place on the corner of Market and 17th Streets, 1700 Market offers a broad range of tenants a great location, efficient 30,000 square foot floor plates, high ceiling heights, impressive window lines, and more than 675 dedicated parking spaces.

 

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 60.6 million square feet in transactions with a gross investment value in excess of $14.3 billion.


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Bank of America Plaza

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Shorenstein Acquires Atlanta’s Bank of America Plaza

Investor Sets New Course for Signature Midtown Asset 

Atlanta, GA – January 5, 2016 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, has acquired Bank of America Plaza, a 55-story Class A office building which dominates the skyline in Atlanta’s Midtown market. 

Built in 1992 and located at 600 Peachtree Street, NE, Bank of America Plaza totals 1.3 million square feet of Class A office space in column-free floor plates that range from 20,000 to 25,000 square feet. The building has a connected parking garage with more than 1,200 parking spaces and access to an additional 204 spaces in a nearby garage.

Bank of America Plaza currently stands 45 percent leased but has historically maintained occupancy levels above 90 percent. Shorenstein plans to invest additional capital to make immediate improvements to the lobby and amenity areas, as well as undertake additional cosmetic upgrades and deferred maintenance.

“Bank of America Plaza is a top quality corporate location with exceptional transit access and close proximity to the campus of Georgia Tech, one of the country’s leading public research institutions.  This acquisition affords us the opportunity to strategically invest capital and utilize our strong asset, leasing and property management expertise to reposition the building within its market and ultimately add value,” said Matt Knisely, managing director, capital transactions.

This acquisition was made on behalf of Shorenstein Realty Investors Eleven, a $1.22 billion commingled fund formed in 2014.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 59.8 million square feet in transactions with a gross investment value in excess of $14.1 billion.


Shorenstein Press Center

JLL Completes 8 Leases for Shorenstein at 850 Third Avenue in New York

Companies sign for a total of 129,194 SF in transactions at Class A, 600,000-SF office building; JLL leases nearly 20% of building in past three months

JLL has completed eight transactions, totaling 129,194 square feet, for building owner Shorenstein Properties LLC at 850 Third Avenue, leasing more than 20 percent of the building in the past three months. Shearman & Sterling LLP leased 40,100 square feet, Kaplan Fox & Kilsheimer LLP took 23,737 square feet, TouchTunes Music Corp. signed for 23,399 square feet, Pegasus Capital Advisors L.P leased 13,752 square feet, CIFG Holding Ltd. took 8,660 square feet, Hodes Weill & Associates signed for 8,645 square feet and ABG Sundal Collier Inc. leased 5,571 square feet and Options Information Technology LLC took 5,330 square feet at the600,000-square-foot, Class A office building.

Shorenstein was represented in all eight transactions by Matthew Astrachan, vice chairman, Mitchell Konsker, vice chairman, and Matthew Polhemus, vice president, all with JLL.

“Shorenstein has made significant investments into the redevelopment and modernization of 850 Third Avenue, and they run a Class A operation” said Astrachan. “As evidenced by the nearly complete lease-up of the building, tenants appreciate 850 Third Avenue’s efficient floor plates and expansive window line. In addition, 850 Third Avenue is located just a block away from the 53rd Street Subway Station, which offers direct access to Grand Central Terminal, Port Authority Bus Terminal and Penn Station, all from two subway lines.”

“We’ve invested significantly in improving this building to expand its image as a desirable corporate location for a broad range of tenants,” said Ronnie Ragoff, senior vice president of asset management, with Shorenstein.“We are delighted with the response our work has received.”

Shearman & Sterling LLP signed an extension for 40,100 square feet and will continue to occupy the entire fourth floor at 850 Third Avenue, which is located between East 51st and East 52nd streets in Midtown Manhattan. The law firm was represented by James Quinn, managing director, and Gary Youm, senior vice president, with JLL.

Kaplan Fox & Kilsheimer LLP completed an extension for 23,737 square feet and will continue to occupy the entire 14th floor at the office building. The law firm was represented by Michael Monahan and Mark Ravesloot, vice chairmen, with CBRE.

TouchTunes Music Corp. inkedan extension expansion for 23,399 square feet and will occupy the entire 15th floor at 850 Third Avenue. The interactive entertainment platform previously occupied a portion of the 15th floor. The tenant was represented by Neil King, senior vice president, with CBRE.

Pegasus Capital Advisors L.P signed a new lease for 13,752 square feet and will occupy the entire 18th floor at the office building. The private equity investment company is relocating to 850 Third Avenue from its previous offices at 505 Park Avenue. The tenant was represented by Keith Caggiano and Roshan Shah, senior vice presidents, with CBRE.

CIFG Holding Ltd. completed a lease renewal for 8,660 square feet and will continue to occupy a portion of the 10th floor at 850 Third Avenue. The insurance company was represented by Scott Vinett, executive vice president, with JLL.

Hodes Weill & Associates in kedan extension and expansion for 8,645 square feet and will occupy a portion of the 16th floor at the 850 Third Avenue. The boutique real estate advisory firm is relocating to its new space from its previous offices on the building’s 15th floor. The tenant was represented in-house.

ABG Sundal Collier Inc. signed a new lease for 5,571 square feet and will occupy a portion of the ninth floor at the office building. The investment banking firm is relocating to 850 Third Avenue from its previous offices at 535 Madison Avenue. The tenant was represented by Howard Hersch, managing director, and Justin Haber, associate, with JLL.

Options Information Technology LLC completed a lease for 5,330 square feet and will occupy a portion of the 13thfloor at 850 Third Avenue. The information technology service provider previously occupied a portion of the ninth floor. The tenant was represented by Sam Seiler, first vice president, with CBRE.

The 21-story office tower totals600,000 square feet, was designed by Emery Roth & Sons and constructed in 1961. Shorenstein recently completed a capital improvement program at the office building, with the work including a new lobby and upgraded elevators. The building owner also enhanced the property’s infrastructure to meet U.S. Green Building Council standards for Leadership in Energy and Environmental Design Gold Certification for Existing Building Operations and Maintenance. The office tower currently has 5,202 square feet that offers terrace access available on the top floor of the building.

JLL is a leader in the New York tri-state commercial real estate market, with more than 2,000 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2014, the New York tri-state team completed approximately 22.8 million square feet of lease transactions, arranged investment sales transactions valued at more than $5.4 billion, managed projects valued at $7.6 billion, and oversaw a property management, facilities management and agency leasing portfolio exceeding 163 million square feet.


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GlobeSt.com

 

Companies Take Sustainability Beyond a Slogan

by Lisa Brown

SAN FRANCISCO—The Global Real Estate Sustainability Benchmark (GRESB) assessment is an investor-driven sustainability assessment for real estate portfolios covering $2.3 trillion in assets globally. Shorenstein Properties LLC, a national private real estate investment firm and fund sponsor engaged in the ownership of office and mixed-use properties, has ranked in the top 15% of 707 global participants in this year’s survey.

The firm improved its sustainability performance in 2015, achieving an overall score of 78 out of 100. This score elevated Shorenstein Properties to second place among a peer group of 22 other major investors active in the ownership of US office properties and 14th among 155 North American investors in all commercial real estate sectors. The average score for Shorenstein’s peer group was 59 out of 100.

Stan Roualdes, executive vice president, Shorenstein Properties, tells Globest.com: “We are constantly looking for ways to raise the bar within our portfolio when it comes to overall sustainability. To rank so highly in this global benchmarking assessment is extremely gratifying and shows us that we are on the right path for our properties, our investors and the environment.”

Globally, Shorenstein ranked 27th out of 145 global investors in office properties and 82nd in the full ranking of 707 investors. This is the second year Shorenstein has participated in GRESB and in its first year, it received GRESB’s Green Star, the highest designation the group awards and a rating it retains in 2015.

Shorenstein believes that properties operated efficiently and deliver desired amenities perform better financially. Shorenstein’s sustainability program differentiates properties in the market, supporting tenant acquisition, satisfaction and retention. Its strategy includes a three-pronged approach to improvement, including smart operation, investment in efficiency and tenant engagement. The company publishes an annual sustainability report.

Shorenstein tracks the environmental impact of its properties and has established the following performance targets: 20% reduction in greenhouse gas emissions by 2020 and the actual results are a 14.8% reduction since 2008; a 20% reduction in energy use by 2020 and the actual results are a 16.2% reduction since 2008; and 60% waste recycling by 2016 and the actual results are 50% waste recycling in 2014.

“We take very seriously our responsibility as stewards of our buildings and the broader environment,” said Roualdes. “Sustainability is not just a competitive edge or an optional business strategy–it’s a collective obligation.”

As previously reported, Shorenstein is renovating an office campus in North San Jose, CA.


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Bisnow

 

Industry Vets Remember Doug Shorenstein for Integrity, Humility

Doug Shorenstein, whose death Nov. 24 leaves a hole in the industry, was a leader with integrity and humility who cared about his business, people and the environment. This past week, Bisnow caught up with some of the people who knew Doug to share what they most admired about him.

Shorenstein president Glenn Shannon says people always key in on the same attributes he recognized in Doug: his humility, great sense of humor, devotion to family, integrity and pursuit of excellence.

It doesn’t seem to matter how someone knew Doug. How he presented himself never changed, Glenn says.

“That authenticity, that’s the thing that I think is most powerful and drove a lot of his personal and professional success,” Glenn tells us. “He was just a person you felt good being around and being associated with.”

Glenn says Doug’s openness to engaging with others and carefully considering other points of view complemented an ability for leadership, vision and decisive action when it was needed.

Rising Realty Partners president Chris Rising tells us Doug was an “amazing person” who was unbelievably successful, but always humble and kind.

Doug certainly had his opinions, but he always sought collaboration when discussing issues, CEO of The Real Estate Roundtable Jeff DeBoer, tells us. Doug was in his 11th year on the organization’s board of directors. That’s Jeff and Doug above having one of those discussions.

Jeff says Doug allowed whoever was familiar with a policy agenda item to discuss it and he would listen, ask questions and then present a very well-informed point of view. “He was generally pretty open,” Jeff tells us. “He was very collegial, very calm and very informed.”

Doug wanted to know how a policy agenda item would affect not only his company and the real estate industry, but also how local communities would be affected if proposals would create more jobs or better communities in general, Jeff tells us.

Jeff says Doug always had a very positive, can-do perspective. “I always found him extremely enjoyable to be around,” Jeff tells us. “The energy level went up when he was in the conversation. He’ll be missed terribly.”

During his time serving as chairman of the Federal Reserve Bank of San Francisco, Doug changed the structure of board meetings to encourage more active and open dialogue while keeping discussions focused on the economic and financial issues at hand, says John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco. John called Doug a “bright beacon” during the financial crisis and economic downturn, always providing valuable insights even after his time on the board.

In 2011, Doug was inducted into the Bay Area Council’s Bay Area Business Hall of Fame (photo below) for building a local, very successful real estate operation into a national success story, but also because he was a very civically engaged and civically motivated individual, says Jim Wunderman, president and CEO of the Bay Area Council, where Doug had also served as a member of the executive committee.

“He demonstrated in many ways his love for San Francisco and the Bay Area,” Jim tells us.

Jim says Doug was very straightforward and clear, quickly cutting to the heart of the matter. He asked good questions, gave good advice and would stand up for the things he believed in, Jim tells us.

Jim recalls the Bay Area Council discussing what position it should take on the state’s Global Warming Solutions Act back in 2006. It wasn’t universally accepted that the business community should get behind the reduction of greenhouse gases, Jim says.

“But he really stood up and said we need to get behind this movement,” Jim recalls. “So we endorsed it. What he had to say was what really moved the group.”

Doug’s passion for sustainability and the environment brought him to his involvement with the Environmental Defense Fund, where he served as a board member. He often shared with others in the industry what Shorenstein Properties was doing to advance sustainability. (Of the company’s properties, 31 have achieved LEED Gold certification, including Shorenstein’s Russ Building HQ in San Francisco, above).

EDF president Fred Krupp tells us Doug had rare integrity, and the way he treated everyone in a welcoming, warm way showed he valued each person and each point of view.

“The example of how he lived his life and how he related to people is one that I have no doubt will have a deep and long-lasting effect on those he came in contact with,” Fred tells us.

Doug listened and approached each conversation as an opportunity to learn though he always had expertise and insight to offer, Fred says. “Because he wasn’t insisting we do something a certain way, it almost made me and others listen to him all the more carefully,” Fred tells us.

That’s Doug, right, with his father, company founder Walter Shorenstein, above.

Doug’s ability to connect with others was a key part in Shorenstein Properties’ expansion, building strong relationships across the industry, Glenn tells us. It also created a culture within the company of open, unfiltered engagement where good ideas percolated up.

“That was a very positive environment in terms of feeding the health and the growth of the company,” Glenn says.

That corporate culture remains as Doug’s legacy. “He leaves a legacy of what you do, how you do it and why you do it that’s really pervasive within the company,” Glenn tells us. Those fundamentals of diligence, integrity and pursuit of excellence will continue, he says.


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Breaking Energy

 

Energy Management Tools Boost Older Buildings’ Efficiency and Bottom Lines

By Ellen Bell

Buildings use nearly 40 percent of all energy in the U.S. and account for a third of our greenhouse gases. Today, a growing number of commercial real estate leaders are looking for opportunities to upgrade what they’ve already got “rather than starting from scratch” to save money and lessen their environmental impact. These commercial real estate leaders know there is a great deal of potential in starting small, and in focusing on what best serves their bottom line.

Organizations that need a more tailored approach to making their real estate energy-efficient have a myriad of opportunities that are now being pioneered by property owners across the country. Leading companies are applying outside-the-box energy management solutions to buildings constructed before the green-building boom.

Here are two examples of companies that enlisted Environmental Defense Fund’s Climate Corps program to accelerate clean energy projects in their facilities and meet their corporate energy goals:

  • 77 West Wacker, a JLL-managed property in Chicago, had already tackled its base-building operations and found ways to reduce 32 percent of its energy use through certification under LEED (short for Leadership in Energy and Environmental Design) and other measures before deciding there was more to do. The building is now advancing new approaches to both comprehensive energy management and tenant engagement with the goal of cutting an additional 26.5 percent of its energy use by 2018.
  • Shorenstein Properties, based in San Francisco, has one of the industry’s most respected sustainability programs with 15 million square feet of its portfolio LEED-certified and an average ENERGY STAR score of 82 out of 100 points. For the last two years, Shorenstein has earned the Global Real Estate Sustainability Benchmark Green Star, the highest rating, by focusing its sustainability strategy on smart operation, investment in efficiency, and tenant engagement.

Moreover, retrofitted buildings can earn LEED certification through a path designed specifically for existing buildings, and they are greatly expanding the market of energy-efficient buildings.

Over the next three years, new LEED-certified construction will contribute more than $303 billion to the United States’ economy, a recent study concluded. This year alone, the industry will generate 2.3 million jobs. By 2018, this new construction is expected to save more than $1 billion in energy usage and more than $100 million in water use.

The trend isn’t limited to the U.S. Leading global brands are also making energy-efficiency a priority.


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San Francisco Real Estate Giant Douglas Shorenstein Dies

By J.K. Dineen

Douglas Shorenstein, the second-generation leader of one of San Francisco’s most prominent real estate development families, has died of cancer. He was 60.

Mr. Shorenstein, who was also a past chairman of the board of the Federal Reserve Bank of San Francisco, transformed Shorenstein Properties from a local developer to a national real estate group that raised money from large investors, including pension funds, and put it in office projects across the country. Over the past 20 years, the company has raised and invested $7.9 billion in almost 60 million square feet of property in 24 markets, including iconic properties like Chicago’s John Hancock Tower and New York’s Park Avenue Tower.

Prior to joining the family business, founded by his father Walter Shorenstein, Mr. Shorenstein worked as a real estate attorney with the law firm of Shearman & Sterling in New York. He joined his father in 1983 and became chairman and chief executive officer in 1995. Walter Shorenstein died in 2010.

For decades, the Shorenstein family was the biggest landlord in San Francisco’s Financial District — in the mid-1980s it controlled 25 percent of the city’s Class A office space. It built blue-chip office towers like the Bank of America building at 555 California St., 1 California St. and 50 California St., and was known for keeping its buildings full of tenants, even if it meant charging slightly less in rent than some of its competitors.

Mid-Market catalyst

In the past five years, Mr. Shorenstein pushed the company to invest heavily in tech-friendly warehouse-style buildings, such as the vacant former Western Furniture Exchange and Merchandise Mart in San Francisco, which the group bought in March 2011. The gamble on the furniture mart building paid off when Twitter agreed to lease most of the building — today, the ground floor is bustling with a mix of restaurants, cafes and gourmet markets.

Mr. Shorenstein’s decision to buy the furniture mart, which had been mostly empty for a decade, is often cited as an early catalyst for revival of the Mid-Market and the Civic Center neighborhoods, a boom which has brought thousands of new housing units and lured major employers like Square and Dolby.

“The decision to invest in rehabbing the Furniture Mart during the depth of the recession, when virtually all sources of capital were frozen and unavailable, was incredibly important and the kind of decision that very few people could have made,” said Gabriel Metcalf, the executive director of SPUR, an urban think tank.

In a 2012 interview with the San Francisco Business Times, Mr. Shorenstein said he was trying to respond to what tech tenants want in the current era, much as his father had catered to the tastes of the bankers and white-shoe lawyers with marble towers like the Bank of America building.

“My father started off as a leasing broker, and the essence of what he did was build and acquire properties that he could keep leased. That is our guiding principle today,” Mr. Shorenstein said at the time. “Everything we do today and everything we have done revolves around that concept. If we can’t lease it, it’s not going to be a good deal. If we can lease it and keep it leased through cycles, we’ll be fine. That was lesson No. 1 through 101.”

In addition, Shorenstein Properties has branched out into rental apartments in recent years. His family is currently building apartment towers in Denver and New York, as well as one on the 1000 block of Market Street. His firm built one of the first biotech buildings in Mission Bay and leased it to Fibrogen.

“Doug was part of one of the great San Francisco families that contributed as much as anyone has to the built environment of San Francisco that we know and love,” Metcalf said.

Mr. Shorenstein, who divided his time between San Francisco and New York, was a hands-on CEO who personally toured every building the company made an offer on. He loved to travel and collected Southeast Asian and Nepalese art with an emphasis on Khmer and Cambodian pieces.

‘Instinctive intelligence’

Len Baker, a partner with financial consultants Sutter Hill Ventures, a Shorenstein Properties board member and friend of 20 years, said that Mr. Shorenstein “had this unbelievable instinctive intelligence for real estate.” He also held “great dinner parties with some really smart people” and was a staunch environmentalist who was a key player in shaping the nonprofit Environmental Defense Fund.

“It was the two sides of him that made him such an interesting man,” Baker said. “He was a guy who wanted to do good for the world, but he wanted to do it in a very practical way.”

Walter and Douglas Shorenstein were leaders in the successful effort to keep the Giants in San Francisco, forming the group of investors in the early days of the effort, according to Giants President Larry Baer. In 1992, as the push to keep the Giants gained momentum, all the meetings took place in Shorenstein’s offices at 555 California St.

“It was Shorenstein’s lawyers and Shorenstein’s bankers,” said Baer. “There was an absolute devotion from Douglas and Walter not to let a San Francisco institution like the Giants leave. They played a huge, galvanizing role in bringing it all together. They were baseball fans but they were San Francisco fans beyond the baseball.”

Mr. Shorenstein graduated from UC at Berkeley and from the UC Hastings College of the Law. He was a board member of the Environmental Defense Fund, executive council of the UCSF Medical Center and on the advisory board of the Shorenstein Center on Media, Politics and Public Policy at Harvard’s Kennedy School of Government.

In a statement, his family said: “We are all deeply saddened by the passing of our beloved husband and father, Doug Shorenstein. As many of you know, Doug had been ill for some time, and he fought a courageous battle with his illness. Through it all, he maintained a positive and hopeful outlook, and he remained steadfastly focused on serving his family, his colleagues and his community. We miss him dearly already.”

Mr. Shorenstein is survived by his wife, Lydia; his children, Brandon, Sandra and Danielle Shorenstein; and sister, local theatrical producer Carol Shorenstein Hays.

Funeral services will be held at 1 p.m., Sunday at Congregation Emanu-El, 2 Lake Street in San Francisco. The family suggests donations be made to the Helen Diller Family Comprehensive Cancer Center at UCSF: UCSF Foundation, P.O. Box 45339, San Francisco, Calif., 94145.


Shorenstein Press Center

Philadelphia’s Office Buildings Increasingly Attract Out-of-Town Investors

by Jacob Adelman

Philadelphia office buildings are drawing some of the strongest interest in decades from out-of-town investors, lured by rising demand for Center City space and a dearth of good real estate buys in more established markets.

Of the office floor space that has changed hands this year, a bigger portion has gone to out-of-town entities than at any time since 2009, according to an Inquirer analysis based on data compiled by Colliers International, a commercial real estate services firm.

With some major office properties still in play, the city could be on track to see its biggest share of transfers to out-of-towners in 17 years, according to the analysis, which does not include foreclosures or partial acquisitions of under 50 percent.

“You have tenants moving back downtown, you have a residential market doing very well,” said Caitlin Simon, a vice president at San Francisco-based Shorenstein Properties, which returned to Philadelphia this year after a 10-year hiatus by dropping $184.2 million on Market Street’s 1818 Beneficial Bank Place. “It’s a market that we think is very dynamic and has a lot to offer.”

So far in 2015, seventy-four percent of the office square footage to change hands has been bought by investors based outside the Philadelphia region, such as Shorenstein and Los Angeles-based CBRE Global Investors, the data show.

That’s almost as much as in 2007, when 75 percent of the city’s office property transfers went to out-of-towners.

Philadelphia’s homegrown commercial-property buyers don’t seem to mind the increased competition – attention from outsiders increases the value of their investments and makes it easier to find backers for new development.

“It’s a real validation of the fundamentals of Philadelphia,” said Jerry Sweeney, chief executive of Brandywine Realty Trust, the city’s biggest office landlord.

There’s still time this year for out-of-town buyers to snap up even more office real estate here. Five major commercial properties are listed for sale, including 1700 Market St. and the Bourse at Independence Mall.

If outside investors snap those up before New Year’s, 80 percent of all 2015 transactions will have involved buyers from beyond this region’s borders, the most since 1998.

“There still remains a plethora of capital to invest in commercial real estate,” said Bill Luff, executive managing director for Colliers in Philadelphia.”They see us as being an undervalued market.”

Susan Wachter, a real estate professor at University of Pennsylvania’s Wharton School, said Philadelphia is getting attention from out-of-town investors because it’s seen as a relative bargain compared to the cities that have traditionally attracted the most institutional money.

In the three months that ended in June, Philadelphia office properties sold at $187 per square foot, according to Colliers’ most recent national roundup. Prices in midtown New York City, by comparison, were close to $1,600 a square foot, while Washington, D.C.’s offices were selling at $625 a square foot and San Francisco’s sold at $465.

“There is a perception that prices have gone very far relative to the fundamentals,” said Wachter. “There’s a closer look at stable, growing markets that are not in the first tier of global tech cities, and we qualify.”

Buyers are emboldened by growing demand for office space in Center City. Vacancy rates are at 8.2 percent, their lowest since 2000, according to Colliers, as companies open offices downtown to tap a labor pool drawn by the city’s cultural and educational offerings.

“You have all these amazing educational institutions, all the medical institutions, the historical sites, and the tourism,” said Abdi Mahamedi, chief executive of Purchase, N.Y.-based Carlyle Development Group, which this year bought the Public Ledger building at Sixth and Chestnut Streets. “All of that together has the potential to compete with Boston and Washington and New York.”

Shorenstein’s Simon, meanwhile, said her company continues to monitor the Philadelphia market for additional investments as it revamps part of 1818 Beneficial Bank Place into open spaces with exposed concrete ceilings, to appeal to Center City’s increasingly youthful workforce.

“It’s a market we really like, and we’re always interested in finding the right opportunity,” she said.


Shorenstein Press Center

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Buildings Magazine

 

Collaborate with Tenants to Secure Energy Success

Learn how Shorenstein Properties engages occupants with competitions

by Jennie Morton

With over 24 million square feet across the country, Shorenstein Properties is partnering with tenants to find shared energy efficiency. The real estate firm has rolled out a number of programs that encourage occupants to conserve power and prioritize sustainability, notes Jaxon Love, Sustainability Program Manager.  

Watt Watchers is a friendly competition that launched this year. In order to support the Better Buildings 20% goal, individual facility teams are challenged to achieve as much energy savings below the previous year as possible. “Five properties have already realized over 4% improvement over 2014. It’s encouraging to see what the spirit of competition can do,” says Love.

One success story comes from 50 California Street, a 36-story office in San Francisco (pictured). While the building already has an ENERGY STAR score of 94 and LEED Gold certification, Property Manager Sheila Murphy and Chief Engineer Dennis Cornish continued to hunt for improvements. They upgraded to a direct digital control (DDC) system that controls the HVAC system at a more granular level. Once this retrofit was complete, a strategy was developed to control the 60-plus supply air return fans and automate them at an individual level. This functionality produced a 5.8% reduction over 2014 in the first six months of this year, notes Love.

The company also has a traveling Flip the Switch program, which provides tools, knowledge and technical support to help tenants improve their building’s energy efficiency by targeting plug loads. According to Shorenstein’s 2014 Sustainability Report, the tenant energy challenge “I Will if You Will” has saved an average of 27% from office equipment and computers.

Multiply Savings with the Better Buildings Challenge

Shorenstein Properties is one of over 250 organizations participating in the Better Buildings Challenge.

Though facility executives are often engaged in friendly competition across the portfolio, they are also encouraged to share their best practices. “In 2010, we held an Energy World Tour where our engineering managers visited all of our properties to examine energy opportunities. The outcome of this idea exchange was $1.7 million in annual savings, which was 5% of our portfolio’s energy costs at the time and the equivalent of taking 1,000 homes off the grid,” Love says. “As part of our corporate efficiency strategy, we are replicating this event again this year.”


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Under Construction: Shorenstein Dressing Up Midtown Building for TAMI and Fashion Tenants

by Liam La Guerre

It’s not uncommon to find Midtown buildings adjusting for new technology, advertising, media and information (TAMI) tenants, but Shorenstein Properties has begun a $30 million revitalization of 1407 Broadway with an eye on traditional fashion firms that have called the building home for decades, while also making itself more attractive to TAMI businesses.

Shorenstein has begun to move some existing fashion and apparel companies to different floors in the 43-story building between West 38th and West 39th Streets, to free up some of the larger floor plates (up to 40,000 square feet on some lower floors and 16,000 at the top). According to a company spokesman, the consolidation of the fashion tenants has been well received by the tenants, because it also makes an easier customer experience since some need to visit multiple designers.

“We like the fashion tenants, too. They are good tenants,” Mark Portner, a managing director at Shorenstein, told Commercial Observer. The building is at the center of the fashion market. I think there is room for both in the building, and having all those tenants gives you lots of flexibility.

Shorenstein purchased the 34-year master lease for the property from Abraham Kamber & Company and a sub-ground lease from the Lightstone Group for a combined $330 million in April. (Solil Management owns the ground under the property.) The 1.1-million-square-foot building is currently about 80 percent leased with about 260 tenants. Shorenstein is currently marketing about 120,000 square feet of available space in the building. Asking rents for office and showroom spaces start in the $60s-per-square-foot range. Peter Turchin and Gregg Rothkin of CBRE are marketing the office space.

The building is “at the center of the fashion market. I think there is room for both in the building,” says Mark Portner

The Fogarty Finger-designed renovations, which started in late September, are expected to be completed next year, and include refreshing the exterior, modernizing the lobby, improving the elevators and adding an awning to make the entrance of the building standout. The chevrons on the property will be repainted and a new electric blue logo will be put on the building to reflect its future technology tenants. And there will also be infrastructure updates.

“One of the issues with this building is that you really can’t find the entrance of the building, because it’s so big,” Mr. Portner said. “There will be an awning that will identify the entrance to the building and we will improve the tenant experience by enhancing the lobby.”

The first floor of the property has about 33,000 square feet of retail space, which will also get a facelift. Glatt kosher restaurant Abigael’s on Broadway has a 12,000-square-foot slot on the ground floor with a lease that expires in 2021. Capital One has a 5,000-square-foot retail branch on the street level with a lease until 2023, and Wells Fargo occupies a 7,000-square-foot retail space until 2020.

SRS Real Estate Partners‘ Corey Zolcinski and Matt Ogle are leasing the remaining retail space, which is more than 9,000 square feet, but could be up to 19,000 square feet if tenants opt for space in the basement. Shorenstein hopes to find retail tenants that could offer amenities to the tenants, such as a coffee shop or a gym. The company declined to disclose asking rents for retail space in the building. Ground-floor retail asking rents in the area are in the high $200s to low $300s per square foot, according to a Shorenstein spokesman.


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Andrew Neilly

T 925.930.9848

 

Shorenstein Highly Ranked in 2015 GRESB Assessment

San Francisco firm maintains ‘Green Star’ rating, ranks 2nd among U.S. peers in Office investment sector and in top echelon of all global participants

 

San Francisco, CA – October 21, 2015 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, has been ranked in the top 15 percent of 707 global participants in this year’s GRESB (Global Real Estate Sustainability Benchmark) assessment

The firm improved its sustainability performance in 2015, achieving an overall score of 78/100 and elevating it to second place among a peer group of 22 other major investors active in the ownership of U.S. office properties and 14th among 155 North American investors in all commercial real estate sectors.  The average score for Shorenstein’s peer group was 59/100. 

 “We take very seriously our responsibility as stewards of our buildings and the broader environment,” said Stan Roualdes, Executive Vice President, Shorenstein Properties.  “Sustainability is not just a competitive edge or an optional business strategy – it’s a collective obligation,” he added.

Globally, Shorenstein ranked 27th out of 145 global investors in office properties and 82nd in the full ranking of 707 investors.

GRESB is an investor-driven sustainability assessment for real estate portfolios covering $2.3 trillion in assets globally.  This is the second year Shorenstein has participated in GRESB and, in its first year it received GRESB’s Green Star, the highest designation the group awards and a rating it retains in 2015. 

For more information about Shorenstein’s sustainability program, visit: www.shorenstein.com/sustainability.

 

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 56.7 million square feet in transactions with a gross investment value in excess of $13.4 billion.


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The New York Times

 

A San Francisco Street Transformed by Food

By Kim Severson

SAN FRANCISCO — For decades, as this city polished its reputation as an essential food destination, a stretch of Market Street just a short stroll from the groundbreaking Zuni Café remained stubbornly unchanged, an odd wasteland of check-cashing stores and weed dealers punctuated by the whiff of urine.

A city survey last year declared that Market Street between Seventh and 11th Streets was San Francisco’s dirtiest commercial strip. While nearby Union Square and the South of Market district blossomed, these half-dozen broad blocks remained something people rushed through on their way to more charming neighborhoods.

But in a city consumed by a tech boom that has left no inch of its roughly 47 square miles unnoticed by developers, the neighborhood now called Mid-Market is undergoing a transformation that would render it nearly unrecognizable to anyone who hasn’t braved its sidewalks for a few years.

A new culinary scene has been born seemingly overnight, the child of a three-way love affair among real estate developers, tech workers and food professionals that many say is unprecedented.

“It’s like the Wild West here, and it’s bringing these partnerships you would have never seen before,” said Traci Des Jardins, whose restaurant Jardinière helped revitalize the adjacent Hayes Valley neighborhood 18 years ago when it was still recovering from the Loma Prieta earthquake.

“Some developers are starting to see that food creates its own sort of movement in a neighborhood,” she added. “Restaurants make their own weather.”

Companies like Square, Uber and Dolby have moved in. At the epicenter is Twitter, which took over what had been a decaying Art Deco building in 2012. Early in its rehabilitation, the developer Shorenstein Properties decided to integrate food.

At the base of the building is the Market, a gleaming 22,000-square-foot food emporium that opened in January. A shopper can buy a pound of ground grass-fed beef and some Gravenstein apples, carry out a squash blossom pizza, or eat pristine oysters at a marble-topped sushi bar.

Bon Marché, a French brasserie, and Dirty Water, a spot for craft cocktails and dishes like axis deer tartare and grilled quail, recently opened in the lobby, too. Other restaurants and bars continue to sprout close by.

The chef and writer Daniel Patterson, who owns the acclaimed Coi and three other Bay Area restaurants, opened Alta CA across the street from Twitter in late 2013. The restaurant, designed to feel like someone’s first grown-up apartment, is a blur of backpacks, Negronis and iPhones. It stays open until 2 a.m., serving California cuisine as viewed through an Eastern European lens.

Mr. Patterson wasn’t looking to invest in the desolate-feeling neighborhood, but Ryan Sarver, an early Twitter employee turned venture capitalist, asked him to. “He wanted us to open a restaurant because there was nothing nearby,” Mr. Patterson said, though it is worth noting that in Twitter’s free cafeteria, pigs are roasted whole and wild king salmon is served on avocado toast.

Four blocks away, in September 2014, an old billiard parlor became the Hall. Envisioned as a culinary placeholder to keep the area lively until the buildings nearby can be developed, the Hall has seven street-food stalls, with communal tables, murals and music that spills into the street. Once construction begins, the stands selling samosas, shrimp Louie and Vietnamese beef noodle soup will be replaced by apartments, shops and a more permanent set of restaurants.

“A pop-up food hall as a way to renovate a neighborhood?” Ms. Des Jardins said. “It doesn’t get any better than that.”

Even the marketing material for the new Nema towers, a 754-unit luxury apartment complex with monthly rents topping out at close to $8,000 for a two-bedroom, uses food as a selling point. Apartments feature “intelligently designed kitchens” that “let you make the most of Nema’s organic farm deliveries.”

Suvir Saran, the chef whose Manhattan restaurant, Dévi, earned a Michelin star before it closed in 2007, had planned to put his new restaurant, American Masala, in the apartment building. Delays arising from a conflict between the developers and the city forced him to look for another space in the area, he said.

Mr. Saran said food is powerful tool to help develop the neighborhood, which is still home to some of San Francisco’s poorest residents, but is attracting thousands of tech workers with annual incomes well over $100,000. “Restaurants play as important a part as a church,” he said. “Food can bring these sides together in ways that are very important.”

But in San Francisco, where battles over gentrification have a special intensity, that quest can seem quixotic.

During an early visit to the Market, Mr. Saran recalled that he was appalled by the prices and told the managers. “I said, ‘If you want my business you need to be almost ecumenical about this,’ ” he said. “We need a little happy medium here, where there is a little salt of the earth and the chic living together, like Manhattan or New Delhi or Bombay.”

The Market has made adjustments both in pricing and in its stock, although figuring out the right mix of inventory to serve people trying to cook dinner and those looking for an interesting snack has been challenging.

“People aren’t buying canned food or staples like toilet paper,” said Ken Turner, a former chef at Zuni who recently left his position as the Market’s vice president for food to open a small restaurant in the Mission District. “They’re like, ‘Oh, look at the five different brands of coconut waters or the pickles or chocolate.’ ”

The Market tries to hire from the neighborhood, which is so close to the Tenderloin — one of the city’s first gay neighborhoods and home to waves of immigrants, musicians and the noir novelist Dashiell Hammett — that people have taken to calling it the Twitterloin. About 15 percent of its employees are referred by the Office of Economic Workforce Development here, and another 10 percent are hired through Goodwill Industries International, said Grace Cha, the human resources manager for the company.

But jobs aren’t the only solution in a town where the riches of the tech world are rolling through poorer neighborhoods and pricing out people who work in the businesses that have sprung to serve the newcomers. Affordable health care and other services should be funded, too, Ms. Des Jardins said.

Mr. Patterson, the Coi chef, says there is only so much a restaurant can do to assure a balance between gentrification and social responsibility. “I definitely think restaurants have a powerful impact on the culture around them and the neighborhood,” he said, “but what can we do? No one gave me any political power.”

Charles Buntjer, 75, has lived in a rent-controlled apartment across from the Twitter building for 22 years. San Francisco has always been a boom town, he said, with neighborhoods changing as wealth and immigrants flooded in.

“There wasn’t much to lose in this neighborhood anyway,” Mr. Buntjer said as he shopped for groceries at the Market. “At least now I don’t have to go down to Safeway to get dinner.”


Shorenstein Press Center

San Francisco’s Benchmarking Ordinance Requiring Commercial Buildings to Disclose Energy Data Shows Major Reduction in Energy Use and an Opportunity to Save Millions in Energy Costs

A New Report looking at 5 Years of Data Suggests Strong Impact of Broader Adoption of Energy and Carbon Reduction Measures

SAN FRANCISCO (Oct. 5, 2015) – Energy consumption by commercial properties in San Francisco has declined significantly since 2011 after the implementation of San Francisco’s Existing Commercial Buildings Energy Performance Ordinance, according to a new report released today from the Urban Land Institute Greenprint Center for Building Performance (Greenprint). The report is the result of a collaboration between Greenprint and the San Francisco Department of the Environment.

The San Francisco Existing Commercial Buildings Performance Report shows a 7.9-percent reduction in energy use across a cohort of 176 properties consistently tracked since 2010. A review of a broader group of 817 buildings found that the implementation of energy reduction measures could save tens of millions of dollars in costs over the lifetime of the projects, adding significantly to the properties’ value.

The San Francisco report bolsters a larger effort being conducted by Greenprint to work with jurisdictions throughout the U.S., including cities, counties and states seeking to cut building energy use and of emissions; and it suggests that significant economic and environmental benefits can be realized through broad adoption measures similar to San Francisco’s program. The report points out that the collaborative effort between the city and Greenprint is a good model for other cities to follow, because it shows the positive results achieved through a combination of voluntary private-sector efforts and public-sector regulatory efforts to minimize the environmental impact of the real estate sector.

In San Francisco, just over half of all greenhouse gas emissions come from energy used in the city’s 197,000 residential and commercial buildings. Energy use is also the largest controllable cost in building operations, representing “low hanging fruit” in reducing resource use and expense. The report points to voluntary market leadership as is demonstrated through Greenprint, incentive programs, and major upgrades to building codes as major factors contributing to the energy reduction experienced in San Francisco.

“The reduction in energy use in San Francisco shows real progress in our commitment to respond to climate change, and we commend those property owners who have already stepped up to do their part. But there’s also more to be done, and we look forward to working with businesses, property owners and the community to accelerate that progress for our residents today, and for the future,” said San Francisco Mayor Edwin M. Lee.

“The ULI Greenprint/City of San Francisco benchmarking report offers a proven approach to real estate benchmarking, which can help inform jurisdictions all over the country in reducing greenhouse gases,” said ULI Global Chief Executive Officer Patrick L. Phillips. “It’s critical for government agencies and the real estate industry to work together to accommodate sensible, sustainable urban growth. Given the local nature of construction practices and codes, developing localized benchmarks can help inform how the private sector manages their properties and how the public sector supports meaningful change.”

San Francisco City Ordinance as Catalyst for Public-Private Effort

The findings in energy reduction and millions of dollars in cost savings and value-enhancement are the result of a public-private partnering approach catalyzed by San Francisco’s Existing Commercial Buildings Energy Performance Ordinance (ECB Ordinance). Passed in 2011, it established requirements for building owners to benchmark energy use with a goal of reducing energy and emissions throughout San Francisco. Building performance data collected by the San Francisco Department of the Environment was analyzed in collaboration with ULI Greenprint Center, which represents a global collective of real estate owners and investors committed to voluntary energy benchmarking since 2009. This collaboration aims to analyze data trends, share lessons learned and best practices between mandatory and voluntary benchmarking and provide recommendations for future efforts. Another objective of the program is to enable decision-makers to make peer comparisons and develop a plan for cost-effective improvements, which is something that Greenprint and its members have been examining over the past five years. . The just-issued report represents the first major analysis of the ECB Ordinance data.

Dramatic Benefit for Building Owners: $170 Million in Avoidable Energy Costs

Researchers found significant cost savings, both in new construction where developers have options to use advanced materials and systems, and in retrofitting existing buildings where energy audits recommend changes.

“When San Francisco passed the benchmarking ordinance our policy goal was simple, establish a baseline, measure against it and require energy audits and the results may incentivize a market for energy upgrades,” said Debbie Raphael, Director San Francisco Department of the Environment. “Nearly $61 million in cost effective energy efficiency investment opportunities have been identified by local engineers which if completed will result in $170 million in net present value.  Now we need building owners to take the next step and make these cost effective investments.”

In fact, notes the report, San Francisco could achieve dramatic, further reductions in energy use if the thousands of mid-to-smaller properties lagging in compliance with the ECB ordinance step up their reporting, and participate in energy audits to ascertain potential savings.

“The green building movement got a significant boost when property owners saw evidence that tenants would seek out energy efficient properties as preferred locations. The ULI Greenprint/ San Francisco benchmarking report provides essential evidence that the San Francisco market is moving towards more efficient properties. Opportunities to support city-specific benchmarking in other markets should further sustainability in the real estate industry,” said Jaxon Love, Sustainability Program Manager, Shorenstein Realty Services, L.P.

“Cushman Wakefield manages buildings for thousands of owners-investors around the world, and we are keenly interested in research results like this that point to market-wide value from reducing energy expenditures. The gains and opportunity in San Francisco should motivate everyone in the industry to examine it for themselves,” said Steven M. Ring, CPM, RPA, LEED-AP, Managing Director of Cushman Wakefield.

 

About The San Francisco Department of the Environment
The Department creates visionary policies and innovative programs to improve, enhance, and preserve San Francisco’s urban and natural environment, leading the way toward a sustainable future by developing wide-ranging environmental programs, fostering groundbreaking legislation, working collaboratively with key partners, and educating the public on comprehensive sustainability practices. For more information, visit www.sfenvironment.org.

About the Urban Land Institute:
The Urban Land Institute is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in sustaining and creating thriving communities worldwide. Established in 1936, the Institute has more than 36,000 members representing all aspects of land use and development disciplines.

About the ULI Greenprint Center for Building Performance: The ULI Greenprint Center is a worldwide alliance of leading real estate owners, investors, and strategic partners committed to improving the environmental performance of the global real estate industry, utilizing voluntary measurement, benchmarking, knowledge sharing, and education. For more information, visit uli.org/research/centers-initiatives/greenprint-center/.


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Real Estate Weekly

 

Shorenstein to Spend $30M Upgrading 1407 Broadway

Shorenstein Properties has launched a $30 million renovation at 1407 Broadway, the 1.1 million square foot tower it bought for $330 million in the spring.

Shorenstein acquired the 1407 Broadway ground lease from Abraham Kamber Associates and the sublease from Lightstone in April 2015.

In a press release, the company said the capital improvement program will enhance 1407 Broadway’s position as a dynamic office and retail location for both fashion and TAMI tenants.

New York architecture firm Fogarty Finger will lead the renovation, which will include a new lobby and building entrance, facade improvements, elevator cab upgrades, and updated retail storefronts.

Shorenstein has retained CBRE as the exclusive office space leasing agent and contracted SRS Real Estate Partners to lead all retail brokerage.

Kevin Kuzemchak, senior vice president, Asset Management at Shorenstein, said, Shorenstein has a successful track record of repositioning properties across the country into top tenant destinations in their respective markets. We are confident that our enhancement plan will solidify 1407 Broadway as a premier property in the Times Square South market.

Shorenstein plans to offer mid-to-large blocks of space at the base of the building consolidating floors of 42,000 s/f to provide enhanced growth and flexibility for new tenants.

We are thrilled to continue to serve as agents for 1407 Broadway, said Peter Turchin, vice chairman at CBRE.

We are confident that the building’s loft-like feel, incredible sightlines, and refreshed mid-century, Modern style will continue to attract tenants seeking quality space and an address in the heart of Manhattan.  Located between 38th and 39th streets, near Bryant Park, Times Square, Penn Station, Herald Square, and the Port Authority, 1407 Broadway features 33,000 s/f of retail.


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The Registry

 

BNBT Builders Wins ENR Best Projects Award for Twitter HQ’s

San Francisco, CA – BNBT Builders is honored to announce that their 1 TENth project – home to Twitter headquarters in San Francisco – received Engineering News-Record’s (ENR) Best Projects Award for Best Renovation/Restoration.

The ENR Best Projects Awards celebrate and honor the building teams that created the best projects of 2015 nationwide. These extraordinary projects are selected by juries of local prominent industry professionals. Nearly 120 projects located throughout California and Hawaii were submitted to ENR this year.

The 1 TENth renovation project that Architectural Record deemed an “urban game changer” was a collaboration with BNBT Builders, RMW architecture & interiors, and building owner Shorenstein. Symbolizing San Francisco’s unique synergy of history and high tech, 1 TENth is part of the former art deco icon Market Square, which spans an entire block in the city’s Mid-Market area. The renovation transformed two furniture warehouses into over 1.2 million square feet of Class-A creative office space.

As a whole, the project creates a new kind of tech campus that has revitalized part of San Francisco and its urban environment. Built in the 1970′s, with very small windows and no front door, the 400,790 square foot building at 1 TENth was gutted, re-skinned with glass, and modernized to fit in the newest live/work/play destination in San Francisco. In addition to 10 floors now full of light, dropped ceilings were eliminated, exposing the waffle slab construction and emphasizing the long, lean span of the 80,000 square foot floor plates.

“It’s been incredibly satisfying to see the transformation of these buildings into a magnet for creative workers to help revitalize the neighborhood,” said Terry Kwik, principal at RMW architecture & interiors and the lead designer for Market Square and 1 TENth. “We had our challenges, including complex phasing and permitting, but the team worked tirelessly and collaboratively to make the project a success.”

At the ground level, a spacious new lobby features 16-foot-high panels of frameless glass, allowing views into the interior and displaying the building’s delicate waffle slab ceiling and concrete panels. Inside, the lobby houses six new destination-style elevators and backlit reclaimed brass filigree, along with Twitter’s signature blue logo. The complete renovation included a full seismic upgrade, and a state-of-the-art HVAC system to accommodate today’s high-density office occupancy.

“It is amazing to see the transformation that took place at 1 TENth, and it is a lot of fun to be part of a truly collaborative team. It took vision and guts by Shorenstein and a great design concept by RMW to make this project a success,“ said Sean Truesdale, Principal of BNBT Builders.

On December 3rd ENR will honor BNBT Builders and the entire project team at their awards banquet at the Julia Morgan Ballroom in San Francisco. This is the second consecutive year BNBT Builders has received ENR Best Projects Awards – last year for Mozilla Headquarters and GitHub Headquarters.


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Tech-Market Hot Spots Fetch High Prices

Warehouse spaces attract big investors, vie with skyscrapers for top rents

by Eliot Brown

The hulking art deco structure at 1355 Market St. in San Francisco is an 11-story former wholesale furniture mart in the gritty Mid-Market neighborhood, where drug addicts and homeless people dot the sidewalks.

So how is it among the most valuable office buildings ever sold in the city?

The property known as Market Square, home to Twitter Inc. TWTR -1.79%’s headquarters, is one of a growing handful of low-slung former industrial buildings that are fetching prices on par with top-quality office towers. Now filled with fast-growing technology and media companies, these offbeat buildings are challenging the notion of the downtown skyscraper as the dominant symbol of corporate real estate.

Big investors and banks are piling in, sending prices skyward in big U.S. markets, for two simple reasons: The rents are high and the buildings are full.

A fund run by the Shorenstein Co. in recent weeks sold a 98% interest in Market Square to a venture led by J.P. Morgan Chase JPM -0.29% & Co.’s asset-management arm for about $835 per square foot, valuing it at about $920 million, people familiar with the deal said. That would be the highest price per square foot paid for a large office building in the city since 2007, according to Real Capital Analytics LLC.

Less than a mile away, a five-story former jewelry mart where Airbnb Inc. has its headquarters is being sold by Beacon Capital Partners to asset manager TIAA-CREF for about $735 per square foot. The price of the building, nestled below a set of elevated highway ramps far from the BART subway, is near the $770 per square foot Salesforce.com Inc. CRM -0.23% paid earlier this year for a giant office tower downtown.

Further down Interstate 5 in Los Angeles, a 464,000-square-foot century-old office building sold last week for $200 million, in what the seller said was a record price per square foot for downtown Los Angeles. Before selling it, developer Rising Realty stripped out its offices and carpeting, filling it up with startups.

Nearby, Shorenstein is nearing another big deal. The company is in talks with online media startup BuzzFeed Inc. to rent a century-old former Ford Motor Co. F 0.51% factory for which it paid $37 million last year, according to people familiar with the matter.

Ever since the recession, the market for office space has been shifting, with technology companies and media organizations showing a preference for office space with character. Often referred to loosely as creative space, it usually entails vast swaths of open space, low or nonexistent cubicle walls, exposed brick walls and bare ceilings. Couches, foosball tables and even beer kegs are commonplace.

Corporate towers, by contrast, are often viewed as sterile offices of a past generation, the province of those who must wear suits and ties to the office.

But because there are only so many brick warehouses to go around, demand has outstripped supply, pushing rents up near those typically paid by private-equity firms or banks.

Take the Playa Vista neighborhood of Los Angeles, where tech companies including Google Inc. GOOG -0.40% have offices. Asking rents in the area for such creative space average about $41 per square foot, well above the $24 per square foot sought for traditional office buildings in the area, according to real-estate services firm JLL.

These tenants are paying the rent, said Carl Muhlstein, a Los Angeles-based broker with JLL who has focused on creative office space. Mr. Muhlstein helped fill up a former U.S. Postal Service sorting facility in the neighborhood that was converted to an office building aimed at media and tech companies. After it was leased with tenants such as Sony Corp. SNE -0.76% ‘s PlayStation division, it sold earlier this year to Invesco Ltd. for more than $800 per square foot. By comparison, the 24-story tower at 801 S. Figueroa St. in downtown Los Angeles sold late last year for $430 per square foot, according to Real Capital Analytics.

Shorenstein was early in capitalizing on the trend. The San Francisco company, known in prior generations for its holdings of skyscrapers, bought the building at 1355 Market for $110 million in 2011 and embarked on a renovation dazzling enough to lure Twitter. As the tech industry took off, the neighborhood began to transform, with companies like Uber Technologies Inc. gobbling up space. Rents rose, Twitter expanded, and the building filled up.

Warehouse-like spaces are catching on even in New York, where rents topping $100 were once reserved for trophy towers in Manhattan on the edge of Central Park. Now buildings in former manufacturing areas like the Meatpacking District and the area south of Union Square are fetching such rents as available space is filled up by companies including Google and Facebook Inc. FB 0.28% A handful of boxy new buildings planned for these neighborhoods are aiming for rents as high as $150 per square foot.

Vornado Realty Trust, VNO -0.42% a major owner of trophy New York towers, is also making a big push into offbeat office districts. The company recently announced a $190 million deal to buy a building in the West Chelsea neighborhood north of the Meatpacking District, where it has become one of the largest landlords.

Nontraditional buildings are incredibly high demand by the class of tenant that doesn’t want to work in a ‘Class A’ building with a lot of old guys that wear ties, said Steven Roth, chief executive of Vornado.


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Boston Herald

 

Localytics moving in to Center Plaza

Localytics, a Boston tech company, will move its 250 employees to Center Plaza early next year, after signing a lease for 55,000 square feet in the 1960s-era property, which will get a major makeover.

By Jordan Graham

Center Plaza, the hulking curved building opposite City Hall, has signed its first tenant for what it says will be a renovated office building catering to tech companies.

“We couldn’t imagine a location that was more desirable,” said Raj Aggarwal, chief executive of Localytics, which signed a lease for 55,000 square feet at Center Plaza. “As we look to the future, we’re looking for a place that will accommodate our current and future growth.”

Localytics, which makes software for mobile marketing, will move its 250 employees at the beginning of next year, Aggarwal said.

Shorenstein Properties, the owner of Center Plaza, plans to overhaul the office building to attract potential tech companies. The construction will include more outdoor space and a bike room for commuting workers, as well as open space and tech-friendly floor-plans.

“Technology players are accounting for 20-40 percent of the demand of the last year,” said John Butterworth, executive vice president and partner at CBRE/New England, the brokerage firm for Center Plaza. “Our goal is to position that space to the technology sector.”

The renovations must still undergo BRA approval, but Kevin Kuzemchak, senior vice president of Shorenstein, said that is expected by the end of the year.

Catering to tech companies is a smart strategy for buildings that are not traditional office towers, said David Begelfer, chief executive at NAIOP Massachusetts, a commercial real estate association.

“Tech companies are gravitating to Boston, but not just Boston, but they are only interested in properties where they are close to ground,” Begelfer said. “Center Plaza is perfect for that.”


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ULI Case Studies: Market Square – San Francisco

Click here for story.


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At 100 Washington, more than a fresh coat of paint

By Kristin Leigh Painter

More than just a new coat of paint

The 22-story office tower at 100 Washington Av. S. is the latest downtown Minneapolis high-rise to receive significant cosmetic upgrades as property owners compete for businesses looking for fresh, hip office space.

Owner Shorenstein Properties is moving forward with its plans to overhaul the outdoor plaza that serves as a connection between 100 Washington and two other buildings — 20 and 111 Washington — all part of the Washington Square complex. Shorenstein will also renovate the lobby entrance and several of the interior amenity areas.

“We are doing a lot to make it warmer, greener, more inviting, because it’s currently a very cold plaza. The planters don’t do much for it,” said Ronnie Ragoff, senior vice president of asset management for Shorenstein.

A Zen garden, pergola, bocce ball court and outdoor seating will be added to the plaza. There will be two other gardens, including a rock garden using slate, that will emulate the landscaping outside the Minneapolis Central Library.

The company is installing new LED lighting in the lobby and has ordered 40-foot glass sheets to create an open, light-filled lobby entrance.

The San Francisco-based real estate investment company purchased the properties in downtown’s Gateway District last August, knowing the 1980s-era office complex needed a refresh. It has hired Minneapolis-based interior design firm Shea Inc. and the Telos Group, a Chicago-based real estate marketing and consulting firm, to design a new strategy for the property.

“We are really making a big push to make it more of a tech building, more of a creative space,” said Ragoff, based in New York. “We think this is an up-and-coming market.”

The company recently completed the fitness center and is now working on the cafeteria and lounge areas. It is also finishing a major waterproofing effort on the entire structure to repair considerable leaks in the parking garage.

When Shorenstein bought the property, it was about 72 percent occupied. Two recent lease signings will bring the occupancy up to 85 percent. JAMF Software, currently located in the Grain Exchange, signed a lease for 52,000 square feet, and advertising agency Little will be taking over 16,000 square feet. Ragoff said both are expected to move into the building by the end of the year.

“We are really focused on creating a more forward-thinking workplace for progressive companies looking to attract top talent,” said Erin Wendorf, vice president of Transwestern Minneapolis, and the property’s leasing agent.

Despite the heavy concentration of construction cranes moving into the north end of the central business district, Wendorf said there is still a perception by prospective tenants that Washington Square and the Gateway District are dead zones of activity.

“We have had to drag people down there to help them see that it is really the “T” that connects the North Loop, the CBD and Downtown East,” Wendorf said. “In 24 months, this is going to be a dramatically changed district.”

As for the other structures in the complex, Shorenstein had looked at selling the 15-story tower at 111 Washington to a hotel operator. A new plan has emerged. Wendorf said, “Now with the leasing success we are seeing at 100, we are looking at renovating that building to the same level.”


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Shorenstein Properties is Planning a $30 Million Renovation of 1407 Broadway

Shorenstein Properties is investing $30 million to make over a Garment District office building.

The San Francisco-based company plans to revamp the 1.1-million-square-foot tower at 1407 Broadway, between West 38th and West 39th streets, renovating the retail storefronts, facade and interior lobby as well as redesigning the building’s entrances. The company also will renovate available spaces with modern touches such as exposed ceilings and polished concrete floors, to give it a clean, fresh, modern look, said Charlie Malet, chief investment officer at Shorenstein Realty Services.

We think that this part of Broadway, and the Times Square submarket should in the future begin to see a demand from tenants that have been pushed out of Midtown South, said Mr. Malet. As the popular and expensive Midtown South market continues to tighten, the Garment District and Times Square office submarkets will benefit from tenants looking for a release valve, he said.

Shorenstein secured the office tower this spring, paying $330 million for a long-term ground lease. As part of the deal, Shorenstein bought the master lease from Abraham Kamber & Co. and the operating sublease from Lightstone Group. Solil Management owns the land beneath the building.

The building, which has 33,000 square feet of retail space, is 81% occupied and houses both apparel companies and tech companies such as startup accelerator Techstars.

Annual asking rents are in the upper $50s and low $60s a square foot, Mr. Malet said. Over the next few years, Shorenstein hopes to see rental rates increase 10% to 15%, he said.


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Citybizlist Boston

 

Shorenstein Properties Unveils Pop-Up Art Gallery at Center Plaza in Boston, MA

Lobby of prominent Downtown building transformed into art exhibition space throughout Summer of 2015

Shorenstein Properties, LLC (Shorenstein), a privately-owned real estate firm, active nationally in the ownership and management of Class-A office properties, recently unveiled its inaugural #CenterOfItAll Pop-Up Art Gallery on August 5th at 2 Center Plaza in Boston, MA. Showcasing original pieces from 12 of Boston’s most talented artists, the gallery has transformed expansive lobby wall space at the prominent building into a temporary art exhibition running throughout the Summer of 2015.

“I am thrilled to make use of such a unique space at Center Plaza,” said Jeremy Goucher, Art Preparator.“The high ceilings in the lobby draw the focus to the artwork, and the white expansive walls provide the perfect backsplash. There are very few places in the city where a pop-up gallery can work, and Center Plaza offers a creative, highly-accessible, and centralized location.”

Running from 5:30pm – 7:30pm, the Pop-Up Art Gallery “launch party” provided a great opportunity for numerous local artists, including Wendy Gonick, Margarette Mattos, Blake Brasher,and Jim Kociuba, to display their works. Throughout the evening, guests viewed and discussed the featured pieces and enjoyed a VIP Wine & Cheese assortment, while a portion of the respective artists were on-site to offer additional insight into their creative backgrounds and inspiration.

“The Center Plaza Pop-Up Art Gallery was an appealing opportunity for me as an artist,” commented Gonick. “I was excited at the prospect of having my artwork hang in a premier downtown Boston location for an extended period of time. The selected pieces bring a certain artistic impact to the space that all will recognize and enjoy. I am thrilled to have my artwork displayed.”

Notably, the Gallery is accessible 24 hours/day due to its lobby location and is open to public viewing free of charge. The featured pieces within the gallery were selected by a committee comprising Shorenstein, Nickerson, and CBT Architects. The displayed works were chosen from a pool of over 300 original submissions.

“Events like our inaugural Pop-Up Art Gallery and semi-annual “Center Of It All” Boston Calling party are active steps in changing the persona of Center Plaza,” added Jonathan Martin, Managing Director at Newmark Grubb Knight Frank. “By taking advantage of the building’s premier location in the heart of the city, we have been able to successfully engage tenants, neighbors, and artists alike.”

Center Plaza is a 720,000 square-foot, mixed-use complex situated at the intersection of Beacon, Cambridge, and Somerset Streets. Boasting high ceilings, natural lighting, and captivating views, the facility not only serves as a premier office and retail building, but also as an ideal event space. Since taking ownership of Center Plaza in 2013, Shorenstein has planned a significant building renovation campaign that will include enhancements to the street-level interior lobbies, exterior walkway/breezeway areas, a rebranded identity campaign, new exterior building signage, and rooftop upgrades.


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GlobeSt.com

 

Shorenstein Completes First Phase of 1818 Market Rehab

By Steve Lubetkin

PHILADELPHIA, PA—Shorenstein Properties has completed the initial phase of a renovation of 1818 Beneficial Bank Place, the class A Market Street West office tower it acquired earlier this year.

In the initial phase, a large portion of the 30th floor has been returned to a state not seen since the building was constructed in the early seventies, with exposed concrete decking and the removal of interior walls to open up more of the space for use as a traditional office or an open-plan collaborative environment. Shorenstein has doubled the window line for the space to create more natural light and increase the floor’s city views. 

Approximately 10,700 square feet of white-boxed space is now immediately available to tenants.  The landlord plans to make similar improvements to other tenant space as it becomes available.

Future phases of the multimillion dollar capital improvement plan will include cleanup and renovation of the 37-story building’s façade, modernization of the 1980s-era elevator cabs and the addition of LED lighting throughout the garage as well as lobbies and common areas.  Façade renovation will begin later this year.

Located on the corner of Market and 19th Streets, the building, also known as 1818 Market, includes efficient 30,000 square foot floor plates, high ceiling heights, and above-standard parking. The property offers ground-floor retail, including the popular Marathon Grill with outdoor seating in its plaza.  

The property has a 408-stall parking garage on floors 2-6 and is convenient to public transit.


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Shorenstein Completes First Phase of 1818 Beneficial Bank Place’s New Look

Tower offering tenants efficient, flexible space in Market Street West undergoes multimillion dollar makeover.

Philadelphia, PA – August 10, 2015 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, has completed the initial phase of a renovation of 1818 Beneficial Bank Place, the Class A Market Street West office tower it acquired earlier this year.

The initial phase results in a large portion of the 30th floor being returned to a state not seen since the building was constructed in the early seventies, with exposed concrete decking and the removal of interior walls to open up more of the space for use as a traditional office or an open-plan collaborative environment. Shorenstein has doubled the window line for the space to create more natural light and increase the floor’s city views. 

Approximately 10,700 square feet of white-boxed space is now immediately available to tenants.  The landlord plans to make similar improvements to other tenant space as it becomes available.

Future phases of the landlord’s multimillion dollar capital improvement plan will address a clean up and renovation of the 37-story building’s façade, modernization of the 1980s-era elevator cabs and the addition of LED lighting throughout the garage as well as lobbies and common areas.  Façade renovation will begin later this year.

Located on the corner of Market and 19th Streets, 1818 Market offers a great location, efficient 30,000 square foot floor plates, high ceiling heights, impressive window lines, and above-standard parking. The property offers ground-floor retail including the popular Marathon Grill with outdoor seating in its plaza.   Just a short walk from the property are renowned restaurants, high fashion boutiques, salons/spa, five diamond/national historic landmark hotels, Rittenhouse Square, and premier cultural venues including the Kimmel Center.  The property has a 408-stall parking garage on floors 2-6 and is central for public transit rail, Amtrak, PATCO and bus lines.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 56.7 million square feet in transactions with a gross investment value in excess of $13.4 billion.


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GlobeSt.com

 

33 South Sixth Street Gets Gold

By Brian Rogal

MINNEAPOLIS—Shorenstein Properties LLC has just secured a LEED Gold recertification for 33 South Sixth Street, a 1.6 million square foot mixed-use property located in downtown Minneapolis that it bought in 2012. The US Green Building Council requires a recertification every five years to maintain the LEED designation. The 51-story building earned an initial silver certification in 2010.

Shorenstein Properties bought 33 S. Sixth St. in 2012 for more than $200 million and according to recent press reports had come to an agreement to sell it to CIM Group for about $280 million. But for reasons Shorenstein did not explain, the deal fell through and the company has decided to take the property off the market.

Designed by Skidmore Owings and Merrill, the building, the fourth tallest building in Minneapolis, was constructed and opened in 1983.  Major tenants include Target, Meagher & Geer PLLP, Korn Ferry and many others.

As reported in GlobeSt.com, the San Francisco-based company has focused on repositioning and re-tenanting the complex’s three-level retail space, known as Minneapolis City Center. It recently signed Saks Fifth Avenue OFF 5th to 40,321 square feet at the center and in February, secured a lease with Sports Authority for 21,877 square feet, bringing total retail occupancy up to 86%.

Some sustainability highlights of 33 South Sixth includes:

  • State-of-the-art building automation system
  • Advanced lighting control system with occupancy sensors
  • Variable frequency drives (VFD) on mechanical equipment for energy savings
  • Heat Recovery System utilizing a closed loop condenser water system
  • Window film to reduce solar load
  • Low flow restroom fixtures and automatic faucets to reduce domestic water consumption

Shorenstein currently owns thirty-one LEED-certified buildings totaling thirteen million square feet, with the majority certified at the Gold level, company officials say.


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Shorenstein Receives LEED Gold Recertification for 33 South Sixth in Minneapolis

Minneapolis, MN – August 6, 2015 – Shorenstein Properties LLC announced the LEED Gold recertification of 33 South Sixth Street, a 1.6 million square foot mixed-use property located in downtown Minneapolis.  The building achieved Gold as part of a recertification, which is required by the U.S. Green Building Council every five years to maintain the LEED for Existing Buildings designation.  The building earned an initial certification in 2010 at the silver level.

Shorenstein Properties acquired 33 South Sixth Street in November 2012 on behalf of its tenth investment fund. 33 South Sixth Street is a 51 story office building located in the heart of the Minneapolis 64 square block skyway system.   Designed by world class architects Skidmore Owings and Merrill, the building was constructed and opened in 1983 and is presently the fourth tallest building in Minneapolis.  Major tenants include Target, Meagher & Geer PLLP, Korn Ferry and many other prominent organizations. Adjoining 33 South Sixth Street tower is a three-level retail mall known as City Center, or Minneapolis City Center, along with the Minneapolis Marriott, a 583-room first class hotel. This complex comprises nearly two city blocks in the center of downtown Minneapolis.

LEED for Existing Buildings: Operations and Maintenance (LEED EB O&M) addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  LEED EB O&M helps building owners and operators measure operations, improvements, and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

Some sustainability highlights of 33 South Sixth includes:

  • State-of-the-art building automation system
  • Advanced lighting control system with occupancy sensors
  • Variable frequency drives (VFD) on mechanical equipment for energy savings
  • Heat Recovery System utilizing a closed loop condenser water system
  • Window film to reduce solar load
  • Low flow restroom fixtures and automatic faucets to reduce domestic water consumption
  • Low Mercury, high-efficiency fluorescent lighting standard
  • Motion sensor lighting with dimmable ballasts in all stairwells and maintenance common corridors
  • LED lighting in the mall common area and building exterior
  • Recycling program – cans & bottles, e-waste, food waste composting, construction materials.
  • Biannual e-waste collection and recycling for computers and other large electronics
  • Annual waste audit to ensure effectiveness of recycling program
  • Quarterly green cleaning audit
  • Onsite bike parking provided
  • Construction standards require use of low-VOC products & recycling of demolished materials

Shorenstein currently owns thirty-one LEED-certified buildings totaling thirteen million square feet, with the majority certified at the Gold level.  The company has been a firm advocate for sustainability within the real estate industry.  Shorenstein is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20% by 2020 and to sharing energy efficiency best practices with industry peers, as well as a Platinum-level corporate member of the U.S. Green Building Council and an Environmental Protection Agency’s ENERGY STAR for commercial buildings partner.  www.shorenstein.com/sustainability.

 

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About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 58.2 million square feet; the company’s current portfolio totals 24.8 million square feet.


Shorenstein Press Center

Shorenstein’s planned $25M renovation of Center Plaza in downtown Boston

By Catherine Carlock

After acquiring the expansive Center Plaza in downtown Boston last year, Shorenstein Co. is planning an up to $25 million renovation of the complex.

The renovation includes enhancements to street-level interior lobbies and exterior walkway/breezeway areas, a rebranding for the complex, rootop upgrades and new retail tenants.

Center Plaza is a 720,000-square-foot, nine-story mixed-use complex developed in the mid-1960s by visionary Boston real estate developer Norman Leventhal.

The complex is located at 1-3 Center Plaza and spans three office buildings, street-level retail and a 575-space parking garage across from City Hall in downtown Boston. Shorenstein acquired Center Plaza last January for $307 million.

“Our plans are to take what’s there and improve upon it,” said Kevin Kuzemchak, senior vice president of asset management at Shorenstein Properties. Kuzemchak said Shorenstein would look to “add some new buzz” to the property by targeting tech tenants and innovative companies.

“The big floorplates are attractive for technology companies because they all generally want to build in expansion space,” Kuzemchak said.

Shorenstein is the latest in a long list of companies targeting the area in and around City Hall for redevelopment, including Related Beal’s plans for Congress Square, Ashkenazy Acquisition Corp.’s vision plan for Faneuil Hall Marketplace and HYM Investment Group’s One Congress project, among others.

“We really like how all these different investment firms bought into downtown and are improving existing properties there,” Kuzemchak said. “We’re all participating in what’s kind of a rebirth for downtown Boston.”

Shorenstein hopes to receive final approval from the BRA this fall and start construction later this year. The project’s architect is CBT Architects. CBRE/New England is the office leasing agent, and Newmark Grubb Knight Frank is the retail leasing agent.


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Andrew Neilly

T 925.930.9848

 

Shorenstein Receives LEED Platinum Recertification and BOMA International TOBY Finalist for 707 Wilshire in Los Angeles

Los Angeles, CA – July 8, 2015 – Shorenstein Properties LLC announced the LEED Platinum recertification of Aon Center at 707 Wilshire, a 1.1 million square foot Class A office building located in the heart of the financial district in Downtown Los Angeles.  The building achieved Platinum as part of a recertification, which is required by the U.S. Green Building Council every five years to maintain the LEED designation.  The building earned an initial LEED Gold certification in 2010.  707 Wilshire was also recognized as a 2015 BOMA International TOBY (The Outstanding Building of the Year) Finalist in the over one million square feet category. 

Shorenstein Properties acquired 707 Wilshire in October 2014 on behalf of its tenth investment fund. Defining the Los Angeles skyline, 707 Wilshire is one of the tallest, most recognizable buildings on the West Coast.  The iconic structure stands at 62 stories offering tenants unobstructed views in all directions.  Major tenants include Aon Risk Services, Morrison & Foerster, Wells Fargo, and several international banking and engineering companies.  With the emerging growth in commerce and pedestrian activity in Downtown Los Angeles, the Property is conveniently located one block from the Metro and within walking distance of the best restaurants, hotels, shopping centers and city parks urban Los Angeles has to offer.

LEED for Existing Buildings: Operations and Maintenance (LEED EB O&M) addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  LEED EB O&M helps building owners and operators measure operations, improvements, and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

Some sustainability highlights of 707 Wilshire include:

  • State-of-the-art Delta digital lighting controls and building automation system
  • Direct Digital Control (DDC) of the HVAC systems
  • Heat Recovery System utilizing a closed loop condenser water system to replace electric strip heating for twenty floors
  • Low flow restroom fixtures and automatic faucets to reduce domestic water consumption
  • “Daylight Harvesting” with dimmable ballasts installed in all perimeter offices and open areas
  • Motion sensor lighting with dimmable ballasts in all stairwells and maintenance common corridors
  • Electric Vehicle Charging Stations
  • Recycling program – cans & bottles, e-waste, food waste composting, construction materials, etc.
  • Quarterly Green Cleaning Audit
  • Drip irrigation system with drought resistant plantings
  • Tenant Participation – Wells Fargo, LEED Gold; Morrison Foerster, LEED Silver; Glumac, participating in the Living Building Challenge to have net-zero energy office space.

BOMA International’s The Outstanding Building of the Year® (TOBY) Awards honor the best in class commercial buildings in fifteen categories.  These Awards are the most prestigious and comprehensive programs of their kind in the commercial real estate industry recognizing quality in buildings and rewarding excellence in building management.  All facets of a building’s operations are thoroughly evaluated during the competitions.  Buildings are judged on everything from community involvement and site management to environmental and “green” policies and procedures.

The competition consists of three levels.  Beginning at the BOMA local association level, winning entries advance from there to the regional level and, finally, regional winners advance to the international level. The international TOBY Awards were presented at the BOMA International Conference in Los Angeles, California on June 30th, 2015.

Shorenstein currently owns thirty-five LEED-certified buildings totaling more than fifteen million square feet, with the majority certified at the Gold level.  The company has been a firm advocate for sustainability within the real estate industry.  Shorenstein is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20% by 2020 and to sharing energy efficiency best practices with industry peers, as well as a Platinum-level corporate member of the U.S. Green Building Council and an Environmental Protection Agency’s ENERGY STAR for commercial buildings partner.  www.shorenstein.com/sustainability.

 

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About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 58.1 million square feet in transactions with a gross investment value in excess of $13.8 billion.


Shorenstein Press Center

The Greening of Leasing

By Susan Piperato

“Green leasing” is becoming more common, with many major commercial property owners and managers embracing the concept—and being recognized for it.

Earlier this month, for instance, “Green Lease Leaders” were recognized by the U.S. Department of Energy at its Better Buildings Summit in Washington, D.C. The program was established by the DOE Better Buildings Alliance and the Institute for Market Transformation to acknowledge property owners, tenants and brokers who are effectively using green leases to drive energy and water savings in commercial buildings, which offers substantial benefits to both businesses and the environmental.

So far this year, Green Lease Leaders have signed leases for 415 million sq. ft., with the cumulative square footage totaling 800 million.

A green lease encourages collaboration between landlords and tenants to take action to improve efficiency. On average, green leasing saves tenants and building owners 10 percent to 20 percent each month on a building’s energy and water bills. In fact, a study released by IMT this month shows that green leases could deliver nearly $3 billion in annual savings for the U.S. office sector alone.

San Francisco-based Shorenstein Properties was among this year’s recipients of the Green Lease Leader title. Since 2008, Shorenstein has been committed to sustainability on behalf of its properties, tenants, employees and local communities. Sustainability measures have reduced the company’s energy use by 16.2 percent and cut its carbon emissions by 14.8 percent. NREI spoke with Jonathan Salzberg, who is Shorenstein’s asset management associate, and Jaxon Love, the firm’s sustainability program director, about how green leases work.

NREI: How does a green lease differ from a regular lease?

Jonathan Salzberg: It includes specific provisions that address energy efficiency and building environmental performance. It’s not more complicated at all. There is very little difference, just a few key provisions that can have a big impact.

NREI: Can a building that’s not green have a green lease?

Jaxon Love: Yes. Green leasing is separate from LEED certification. The provisions support LEED certification, but are not a prerequisite.

NREI: Do tenants know and understand green leases? Are you finding that they expect them more often?

Jaxon Love: We have found that, in many cases, tenants aren’t familiar with green leasing. Larger tenants are more up to speed on these leasing provisions, but generally I’d say that it has been pretty quiet in terms of hearing from tenants about these specific provisions. It’s a little bit under the radar.

NREI: What are some of the lease provisions that are included to address barriers to resource conservation and pollution prevention?

Jonathan Salzberg: We met the award criteria based on having a minimum of four green lease clauses. Our five clauses are: Energy alignment, i.e., a cost-saving capital expenditures clause; tenant submetering, which we don’t do everywhere, but which we are advancing in those markets where leasing standards are amenable, and we are pushing it wherever we can; energy information sharing to meet the requirements of disclosure laws; building performance certifications, which is a tenant requirement to comply with LEED/Energy Star guidelines for certification of the building; and green building standards.

NREI: How have green lease provisions helped Shorenstein as a landlord, your tenants, and the environment?

Jaxon Love: It has allowed us to overcome some traditional barriers to energy efficiency. For example, we are submetering tenants in some of our recently redeveloped San Francisco properties, which gives the tenant direct responsibility for and control over their energy cost. The economic incentive to save energy is a powerful motivator.

Jonathan Salzberg: In cities where we have benchmarking—San Francisco; Washington, D.C.; New York City; Philadelphia; Boston; Minneapolis; Chicago; and Austin, Texas—the provisions give the landlord the authority to gather the necessary information from tenants, which is a critical prerequisite for regulatory compliance.

Jaxon Love: Green leasing makes sustainability part of the landlord/tenant relationship from the outset. Setting the tone at the beginning of the relationship should make conversations about environmental impact easier down the road.

NREI: Do you find that green leases, which are by their nature more collaborative, improve landlord-tenant relations?

Jonathan Salzberg: We find that green leases overcome barriers and create the right incentives for better collaboration on efficiency and environmental impact. Submetering is a perfect example, and our redevelopment projects in San Francisco highlight this. Tenant submetering is in both parties’ interests because it gives tenant direct control of operating expense and landlords end up with a more efficient asset.

NREI: How predominant are green leases with Shorenstein tenants?

Jaxon Love: We have been using green lease provisions for several years now. As of October 2014, we are using the provisions mentioned earlier in all leases nationally.

NREI: Shorenstein has been committed to sustainability since 2008. How did committing to green leases enhance or deepen that commitment?

Jaxon Love: Green leasing makes sustainability part of the landlord-and-tenant relationship from the outset. Setting the tone at the beginning of the relationship should make conversations about environmental impact easier down the road.

Jonathan Salzberg: Sustainability is a way of doing business. It’s not a separate task or stand-alone process. It’s integrated into all aspects of real estate operation. Leasing is a central part of our business operation and green leasing integrates sustainability into that business process.

NREI: Any final takeaways on green leases?

Jaxon Love: We survey our tenants annually on sustainability and track interest and satisfaction with our program. In 2014, 66 percent of our tenants indicated that green building operation is important or very important to their company; 68 percent of tenants indicated that our green building operation is good or excellent.

Jonathan Salzberg: As part of the recently passed Tenant Star legislation, the Government Services Administration will be considering green leasing requirements for federal leasing. We expect green lease provisions to become more commonplace in the market over the next few years.


Shorenstein Press Center

Source

GlobeSt.com

 

Shorenstein has Plans for 18-Acre Campus

By Lisa Brown

NORTH SAN JOSE, CA–A five-building office campus at 110-180 Rose Orchard Way has been purchased by Shorenstein Properties LLC. Terms of the transaction were not disclosed. Shorenstein made the acquisition on behalf of its 11th real estate investment fund, formed in 2014 with $1.22 billion in committed capital from Shorenstein and its investors. Erik Doyle, Will Connors, Michael Seifer and Rob Hielscher of JLL Capital Markets handled the sale.

John Boynton, vice president, Shorenstein Properties, tells GlobeSt.com: “We plan to complete significant improvements to this property soon and re-introduce it to the market with a new name and look. We have a great opportunity to create a premier corporate campus in this terrific location.”

The 18-acre office campus offers a large contiguous block of space. It was completed in 1985 and is currently 30% occupied.  Shorenstein plans a multi-million-dollar renovation and repositioning of the property to market 220,000 square feet of space to a variety of corporate users. The campus has been renamed Rose Orchard and, in the coming months, Shorenstein will create additional outdoor collaborative areas that will allow tenants to expand workspace beyond the interior walls. It will also renovate vacant interior space to provide larger users with a distinctive work environment that is in move-in-ready condition.

“This property provides one of the largest contiguous blocks of vacancy in the midst of the Golden Triangle, arguably one of the most hotly contested locations in the country,” said Douglas W. Shorenstein, chairman and CEO, Shorenstein Properties. “By deploying our in-house asset management and operational expertise and investing the appropriate capital, we plan to make Rose Orchard a highly desirable location for tenants seeking to announce or reinforce their presence in Silicon Valley.”

Rose Orchard is in close proximity to all the Valley’s major arterial highways, including SR 237, access to which is just minutes away. The property is also in a highly walkable location with easy access to retail and leisure amenities. @First Retail Center, a 10-acre retail village anchored by Target, is within two blocks. The property is just two miles from Levi’s Stadium, home of the San Francisco 49ers, and Santa Clara City Center, a 230-acre mixed-use development featuring retail, dining, residential, office and park uses. There are an estimated 4,500 high-density residential units surrounding Rose Orchard.

This is Shorenstein’s second major investment in the Golden Triangle for Fund 11 in the last 12 months.  Last year, the company acquired Champion Station, a 426,000-square-foot office campus just a 10-minute walk from Rose Orchard on Tasman Drive in San Jose.

Founded in 1924, Shorenstein Properties LLC is a privately owned, real estate firm engaged in the ownership and management of office properties, with offices in San Francisco and New York.  As of 1992, Shorenstein had sponsored 11 closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million. Investments have included ground-up developments, asset repositioning and stabilized assets. Investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures. These funds have invested in properties totaling 58.1 million square feet in transactions with a gross investment value in excess of $13.8 billion. As previously reported, Shorenstein was named a 2015 Green Lease Leader at the US Department of Energy‘s Better Buildings Summit.


Shorenstein Press Center

Source

The Registry

 

Shorenstein Buys 5-Building North San Jose Campus for $70.25MM

Rose Orchard Offers Large Contiguous Block of Space in Highly Desired North San Jose

(EDITOR’S NOTE: According to sources familiar with the details of the transaction, the roughly 314,000 square foot campus sold for approximately $230 per square foot, or approximately $70.25 million.)

North San Jose, CA – June 25, 2015 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, today confirmed the purchase of a five-building office campus at 110-180 Rose Orchard Way in North San Jose.

The 18-acre office campus completed in 1985 is currently 30 percent occupied. Shorenstein intends to undertake a multi-million dollar renovation and repositioning of the property and market 220,000 square feet of space to a variety of corporate users. The campus has been renamed Rose Orchard and, in the coming months, Shorenstein will create additional outdoor collaborative areas that will allow tenants to expand their workspace beyond the interior walls. It will also renovate vacant interior space to provide larger users with a distinctive work environment that is in move-in-ready condition.

“This property provides one of the largest contiguous blocks of vacancy in the midst of the Golden Triangle, arguably one of the most hotly contested locations in the country,” Douglas W. Shorenstein, Chairman & CEO, Shorenstein Properties. “By deploying our in house asset management and operational expertise and investing the appropriate capital we plan to make Rose Orchard a highly desirable location for tenants seeking to announce or reinforce their presence in Silicon Valley,” he added.

Rose Orchard sits in a superior location close to all the Valley’s major arterial highways, including SR 237, access to which is just minutes away. The property is also in a highly walkable location with easy access to retail and leisure amenities. @First Retail Center, a 10-acre retail village anchored by Target, is within two blocks. The property is just two miles from Levi’s Stadium, home of the San Francisco 49ers, and Santa Clara City Center, a 230-acre mixed-use development now under construction and featuring retail, dining, residential, office and park uses. There are an estimated 4,500 high-density residential units surrounding Rose Orchard.

Terms of the transaction were not disclosed. Shorenstein made the acquisition on behalf of its eleventh real estate investment fund, formed in 2014 with $1.22 billion in committed capital from Shorenstein and its investors.

This is Shorenstein’s second major investment in the Golden Triangle for Fund 11 in the last 12 months. Last year, the company acquired Champion Station, a 426,000 square foot office campus just a ten minute walk from Rose Orchard on Tasman Drive in San Jose.

 


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Press Contacts

Andrew Neilly

T 925.930.9848

 

Shorenstein Completes Purchase of Silicon Valley Office Campus

Rose Orchard Offers Large Contiguous Block of Space in Highly Desired North San Jose

North San Jose, CA – June 23, 2015 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, today confirmed the purchase of a five-building office campus at 110-180 Rose Orchard Way in North San Jose. 
 
The 18-acre office campus completed in 1985 is currently 30 percent occupied.  Shorenstein intends to undertake a multi-million dollar renovation and repositioning of the property and market 220,000 square feet of space to a variety of corporate users.  The campus has been renamed Rose Orchard and, in the coming months, Shorenstein will create additional outdoor collaborative areas that will allow tenants to expand their workspace beyond the interior walls.  It will also renovate vacant interior space to provide larger users with a distinctive work environment that is in move-in-ready condition.
 
“This property provides one of the largest contiguous blocks of vacancy in the midst of the Golden Triangle, arguably one of the most hotly contested locations in the country,” Douglas W. Shorenstein, Chairman & CEO, Shorenstein Properties.  “By deploying our in house asset management and operational expertise and investing the appropriate capital we plan to make Rose Orchard a highly desirable location for tenants seeking to announce or reinforce their presence in Silicon Valley,” he added. 
 
Rose Orchard sits in a superior location close to all the Valley’s major arterial highways, including SR 237, access to which is just minutes away.  The property is also in a highly walkable location with easy access to retail and leisure amenities. @First Retail Center, a 10-acre retail village anchored by Target, is within two blocks. The property is just two miles from Levi’s Stadium, home of the San Francisco 49ers, and Santa Clara City Center, a 230-acre mixed-use development now under construction and featuring retail, dining, residential, office and park uses.  There are an estimated 4,500 high-density residential units surrounding Rose Orchard.
 
Terms of the transaction were not disclosed.  Shorenstein made the acquisition on behalf of its eleventh real estate investment fund, formed in 2014 with $1.22 billion in committed capital from Shorenstein and its investors.
 
This is Shorenstein’s second major investment in the Golden Triangle for Fund 11 in the last 12 months.  Last year, the company acquired Champion Station, a 426,000 square foot office campus just a ten minute walk from Rose Orchard on Tasman Drive in San Jose.
 
 
About Shorenstein Properties LLC
 
Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 58.1 million square feet in transactions with a gross investment value in excess of $13.8 billion.

Shorenstein Press Center

Source

GlobeSt.com

 

Shorenstein Slashes Energy and Water Use

By Lisa Brown

SAN FRANCISCO–Shorenstein Properties LLC was named a 2015 Green Lease Leader at the US Department of Energy’s (DOE) Better Buildings Summit in Washington D.C. Green Lease Leaders signed leases representing 415 million square feet this year, with the cumulated square footage now totaling 800 million square feet. The recognition was established by the Institute for Market Transformation (IMT) and the DOE Better Buildings Alliance to recognize property owners, tenants and brokers who are effectively using the lease to drive energy and water savings in commercial buildings—offering substantial business and environmental benefits.

Jaxon Love, sustainability program manager for Shorenstein Properties tells GlobeSt.com: “Shorenstein Properties has long been committed to finding the most efficient and sustainable ways to run our portfolio of prime office and mixed use assets.  It’s an endeavor that permeates our overall operations and we welcome opportunities such as the green lease to work with our tenants to continue to drive sustainability throughout our properties.”

A green lease encourages collaboration to take action to improve efficiency, saving tenants and building owners on average 10% to 20% each month on a building’s energy and water bills. A study released by IMT showed that green leases could deliver nearly $3 billion in annual savings for the US office sector alone.

“Lease provisions that address barriers to resource conservation and pollution prevention benefit all parties. These mechanisms save money for landlords and tenants, improve building performance and facilitate regulatory compliance – not to mention the positive environment impacts,” said Love.

Shorenstein earned the Green Lease Leader title based on national lease provisions addressing capital improvements that result in energy savings, tenant submetering, energy information sharing between tenant and landlord, building performance certifications including Energy Star and LEED, and green construction standards. Since 2008, Shorenstein has reduced energy use by 16.2% and cut carbon emissions by 14.8%.

“Because of this recognition program, brokers, landlords and tenants now have a blueprint for writing leases that remove impediments to efficiency and align interests so landlords and tenants both benefit from improving building performance. IMT and the Better Buildings Alliance are proud to see that many of today’s Green Lease Leaders are using the lease transaction to lay the foundation for working together to boost sustainability on a major scale,” said Cliff Majersik, executive director for IMT.

Historically, real estate owners and tenants have had difficulty integrating sustainability into the lease process due to tension between owners and tenants over responsibilities and cost-sharing arrangements. The Green Lease Leaders program is helping to shine a light on replicable solutions that can be employed by others to get past this split incentive.

“I’m pleased to announce the continued success of the Green Lease Leaders program,” said Dr. Kathleen Hogan, deputy assistant secretary for energy efficiency at DOE. “This effort is showing that cooperation on energy efficiency is no longer just a niche practice.”

Founded in 1924, Shorenstein Properties LLC is a privately owned real estate firm active nationally in the ownership and management of office properties. In addition to the Green Lease Leaders honor, Shorenstein has achieved the global real estate sustainability benchmark’s (GRESB) highest rating–Green Star. GRESB is an industry-driven survey for assessing the sustainability performance of investment portfolios. Shorenstein drives LEED-certified property totaling 15 million square feet, with the majority certified at the Gold level. These efforts have realized $500,000 in annual energy cost savings that will avoid 1,800 metric tons of carbon dioxide per year – the equivalent of taking 400 cars off the road. Shorenstein was featured in a recent issue of Real Estate Forum that discussed pioneering projects.


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Rose Orchard

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Bellevue’s Mega Spring District Lands Microsoft/UW Venture GIX as First Major Tenant

The Spring District in Bellevue will be the permanent home of GIX. Located east of Interstate 405, the $2.3 district will be made up of office, residential and other buildings, shown in the foreground of this rendering. There will also be parks and a light-rail stop.

By Marc Stiles and Jacob Demmitt

Among the biggest winners of the decision to site the Global Innovation Exchange, or GIX, in Bellevue are two Seattle firms: Wright Runstad & Co., and Security Properties.

Wright Runstad, in conjunction with Shorenstein Properties of San Francisco, is developing the 36-acre Spring District, a mixed-use development that will be GIX’s permanent home. Security Properties is developing a 309-unit apartment project in the district east of Interstate 405 in the Bel-Red corridor, and now plans to start building the second phase with more than 275 units in the summer of 2016, Security President Tim Overland said Thursday.

Initially, GIX will be housed in roughly 100,000 square feet in one office tower, according to Wright Runstad President Greg Johnson, who expects the international tech training institute to expand over time. He added the first building will be done within 18 to 24 months, allowing GIX to open in the Spring District in 2017.

The decision to put GIX in the $2.3 billion Spring District is a godsend for the project with an audacious goal: turn an industrial area into a walkable, urban neighborhood of office towers, residential buildings, parks and a light-rail stop. Wright Runstad aspires to make its project similar to Portland’s Pearl District, formerly a warehouse district that’s now an urban oasis of housing and commercial buildings.

Construction of The Spring District’s streets and other infrastructure began last year, and Security Properties started building the first phase of the apartments earlier this month.

Now the district has its first big technology tenant: GIX, a Microsoft (Nasdaq: MFST)-supported project that the University of Washington is jointly establishing with Tsinghua University of China. Within a decade, the project partners expect that more than 3,000 students will be studying at GIX.

“I clearly do think that GIX will help be a launching pad for all this new development,” Microsoft General Counsel Brad Smith said Thursday.

Having a stop along the future light-rail line that will run from near Microsoft’s headquarters in Redmond to Seattle was important in the siting decision, Smith added. In Seattle, riders will be able to transfer to trains that will run to the UW. The Seattle-to-Redmond line is scheduled to open in 2023, and next year a station on the UW’s campus will open.

Connecting the UW with GIX will be “hugely helpful,” Smith said, adding the GIX team needed a place with ample land. Ten years ago, the campus likely would have been built in Seattle’s South Lake Union, but today there’s no parcel large enough.

“I think one of the things that’s not yet completely appreciated in our region is just what a unique opportunity the Bel-Red corridor offers,” Smith said. “Here is an area of land that’s larger than Central Park in New York that has been completely rezoned for development. Yet it is also land that is connected to technology corridors and is part of a thriving metropolitan area.”

He said it became clear “fairly quickly that the Bel-Red corridor was the Bel-Red corridor was a good place to look.”

He added that GIX chose the Spring District due to “the sterling reputation of Wright Runstad,” which has close ties to the UW and Microsoft. The UW’s real estate school is named for Wright Runstad co-founder and CEO Jon Runstad and his wife Judy Runstad, an attorney, and Wright Runstad developed Microsoft’s headquarters.

 


Shorenstein Press Center

Press Contacts

Andrew Neilly

T 925.930.9848

 

Shorenstein Recognized as a 2015 Green Lease Leader by IMT and DOE Better Buildings Alliance

SHORENSTEIN PROPERTIES JOINS BROKERS AND COMPANIES IN RECEIVING TOP HONORS FOR USING THE LEASE TO SLASH ENERGY AND WATER USE IN ITS BUILDINGS.

SAN FRANCISCO, JUNE 3, 2015 – Shorenstein Properties was named a 2015 Green Lease Leader at the U.S. Department of Energy’s (DOE) Better Buildings Summit in Washington, DC last week. The recognition was established by the Institute for Market Transformation (IMT) and the DOE Better Buildings Alliance to recognize property owners, tenants, and brokers who are effectively using the lease to drive energy and water savings in commercial buildings—offering substantial business and environmental benefits.

Green Lease Leaders signed leases representing 415 million square feet this year, with the cumulated square footage now totaling 800 million square feet.

“Lease provisions that address barriers to resource conservation and pollution prevention benefit all parties” said Jaxon Love, Sustainability Program Manager for Shorenstein.  “These mechanisms save money for landlords and tenants, improve building performance, and facilitate regulatory compliance – not to mention the positive environment impacts.”

Shorenstein earned the Green Lease Leader title based on national lease provisions addressing:

•    Capital improvements that result in energy savings
•    Tenant submetering
•    Energy information sharing between tenant and landlord
•    Building performance certifications, including ENERGY STAR and LEED
•    Green construction standards

Shorenstein is committed to sustainability for the benefit of its properties, tenants, and employees, as well as the communities in which the company operates and, since 2008, has reduced energy use by 16.2% and cut carbon emissions by 14.8%.

Among the company’s recent accomplishments:  

  • The Global Real Estate Sustainability Benchmark’s (GRESB) highest rating – Green Star.  GRESB is an industry-driven survey for assessing the sustainability performance of investment portfolios.
  • LEED certified property totaling 15 million square feet, with the majority certified at the Gold level.
  • Realized $500,000 in annual energy cost savings that will avoid 1,800 metric tons of carbon dioxide per year – the equivalent of taking 400 cars off the road.

A green lease encourages collaboration to take action to improve efficiency, saving tenants and building owners on average, 10-20 percent each month on a building’s energy and water bills. A study released by IMT last week showed that green leases could deliver nearly $3 billion in annual savings for the U.S. office sector alone.

“Because of this recognition program, brokers, landlords, and tenants now have a blueprint for writing leases that remove impediments to efficiency and align interests so landlords and tenants both benefit from improving building performance. IMT and the Better Buildings Alliance are proud to see that many of today’s Green Lease Leaders are using the lease transaction to lay the foundation for working together to boost sustainability on a major scale,” said Cliff Majersik, Executive Director for IMT.

Historically, real estate owners and tenants have had difficulty integrating sustainability into the lease process due to tension between owners and tenants over responsibilities and cost-sharing arrangements. The Green Lease Leaders program is helping to shine a light on replicable solutions that can be employed by others to get past this split incentive.

“Today I’m pleased to announce the continued success of the Green Lease Leaders program,” said Dr. Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency at DOE, during a presentation at the Better Buildings Summit. “This effort is showing that cooperation on energy efficiency is no longer just a niche practice.”

For more information on the Green Lease Leaders program, visit greenleaseleaders.com, and to learn more about the benefits of green leases, visit the Green Lease Library at greenleaselibrary.com.

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About Shorenstein Properties LLC
Founded in 1924, Shorenstein Properties LLC is a privately-owned real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Since 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 56.7 million square feet in transactions with a gross investment value in excess of $13.4 billion.


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GlobeSt.com

 

Shorenstein Planning $20M+ Renovation of Center Plaza

By John Jordan

Center Plaza is a mixed-use complex totaling 717,128 square feet in Downtown Boston.

BOSTON—Shorenstein Properties, LLC is hoping to start by year’s-end on a $20-million to $25-million renovation, upgrade and repositioning of the Center Plaza office complex in Downtown Boston.

The 717,128-square-foot office property is currently 82% leased. The renovation program is being undertaken in anticipation of its major tenant—the FBI—relocating operations to a new building in Chelsea by 2017. The agency is the complex’s largest tenant leasing 160,000 square feet in One Center Plaza.

Kevin Kuzemchak, senior vice president of asset management of Shorenstein Properties, tells Globest.com that the firm intends to begin the capital improvement project at the property by the end of this year.

“The plan is a rather comprehensive renovation and repositioning,” he says. In light of the fact that the building is 40 years old, he says it was time to make a significant investment. Among the planned improvements will focus on the Center Plaza’s six lobbies (three on the Cambridge Street side of the complex and three ore on the Pemberton Square side).

“We are going to make improvements to them (lobbies) and give them more a sense of place,” Kuzemchak says. “How we are going to do that is by bringing up the glass lines of the lobby so that they are much more noticeable from the street.”

Center Plaza is a mixed-use complex totaling 717,128 square feet in downtown Boston. Built between 1965 and 1969, the property is comprised of three interconnected buildings—One, Two, and Three Center Plaza—that are arranged in a crescent shape along Cambridge Street between Somerset and Beacon streets across from Boston City Hall and adjacent to the Government Center MBTA station.

Another significant component of the renovation at Center Plaza will be improvements to the 900-foot long retail arcade that currently suffers from poor lighting and no landscaping. “We are going to make some really big improvements to the retail arcade by adding significant landscaping, new lighting and kind of a new street scape so it becomes much more attractive,” he says. The capital program will basically improve all significant aspects of the building, including rooftop upgrades, Kuzemchak adds. The renovation of the building is to be completed about the time that the FBI is scheduled to vacate the property in 2017.

Kuzemchak says that a leasing campaign will be waged during the renovation with the goal of landing a new tenant or tenants that will fill the agency’s space upon its exit from the building. He says that building’s prime downtown location, combined with the completion of the building upgrades, will help make the building more competitive and attract some businesses in the city’s high-growth sectors such as the high-tech and creative industries. Currently, in addition to the FBI, a majority of the complex’s tenants are state and city government agencies and local and regional law firms.

Shorenstein acquired the building in 2013 for $307 million from Blackstone. Earlier this month Shorenstein signed a lease with the Institute of Applied Network Security, a leading provider of in-depth security insights and decision support, for 9,602 square feet at Center Plaza. IANS will be relocating to its new Center Plaza space from 15 Court Square in Boston.

While he would not identify the tenants, Kuzemchak says that the company is in negotiations with a number of prospective tenants at Center Plaza, including a “fitness concept” that could lease 18,000 square feet of space on the street level of the building and a number of office prospects, whose requirements range in size from 10,000 to more than 55,000 square feet.


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Curbed LA

 

First Look at the Mixed-use Makeover for the Arts District’s 1913 Ford Factory

By Bianca Barragan

The stretch of Santa Fe Avenue in the southern Arts District where the old Ford Factory sits has already changed a lot since developer Shorenstein Properties bought the property and announced that they were converting it into creative offices and retail storefronts. Since we last heard from the lovely 1913 factory, SoHo House has revealed plans to open a location a few blocks to the south and announcements have been made about a to-be-decided development on a SoHo-adjacent site and live/work lofts just a block away from that. A fitting gateway to all that action, the buffed-up former factory (for cars, then toys) will soon be showing off a stunning brick façade instead of that old blue paint, plus a rooftop with Downtown views and outdoor spaces with fire pits and basketball hoops.

Figuring prominently in the renderings from architecture firm Shubin + Donaldson are a rooftop hangout zone with decorative water tower, some space for coworkers to show of their basketball skills, and tree-lined pedestrian walkways between the buildings. (One of the buildings in the complex is supposed to be razed for a parking garage, probably that one that says “The Factory” on it in the images.) The project is still aiming for completion in early 2016, according to the developer’s website.


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1407 Broadway

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Shorenstein Completes Purchase of 1818 Beneficial Bank Place in Philadelphia’s Center City

37-story urban highrise offers efficient, large-block space for wide range of tenants

Philadelphia, PA – April 23, 2015 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, today confirmed it completed the purchase of 1818 Beneficial Bank Place (also known as 1818 Market Street), a 988,000 square foot commercial office tower in the city’s Market Street West submarket.
 
The Class A office building includes ground floor retail space, parking for more than 400 vehicles and is the headquarters location for both Beneficial Bank and retailer Five Below.  It sits close to Comcast Corporation’s 1.5M s.f. Innovation and Technology Center, a 59-story mixed-use tower now under construction adjacent to Comcast’s current headquarters, and is surrounded by new residential development designed to appeal to a growing population of young professionals choosing to live and work in Philadelphia’s Center City area.
 
“This is an extremely well located asset in an area which is undergoing a revitalization and will continue to appeal to tenants seeking to recruit and retain young professionals,” said Douglas W. Shorenstein, Chairman & CEO, Shorenstein Properties.  “1818 Market Street offers the kind of flexible, large blocks space that appeals to broad swath of growth tenants,” he added.
 
Terms of the transaction were not disclosed.  Shorenstein made the acquisition on behalf of its eleventh real estate investment fund, formed in 2014 with $1.22 billion in committed capital from Shorenstein and its investors.

About Shorenstein Properties LLC
Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take  advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 56.7 million square feet in transactions with a gross investment value in excess of $13.4 billion.


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Shorenstein Releases 2014 Sustainability Report

San Francisco, CA – April 22, 2015 – Shorenstein Properties LLC announced the release of its 2014 Sustainability Report:  Building a Sustainable Future.  The report describes progress in the company’s long-standing commitment to corporate responsibility and to reducing the environmental footprint of its real estate operations.

Shorenstein is committed to sustainability for the benefit of its properties, tenants, and employees, as well as the communities in which the company operates and, since 2008, has reduced energy use by 16.2% and cut carbon emissions by 14.8%.

Among the company’s accomplishments in 2014: 

  • The Global Real Estate Sustainability Benchmark’s highest rating (Green Star).  GRESB is an industry-driven survey for assessing the sustainability performance of investment portfolios
  • LEED certified property totaling 15 million square feet, with the majority certified at the Gold level
  • Realized $500,000 in annual energy cost savings that will avoid 1,800 metric tons of carbon dioxide per year – the equivalent of taking 400 cars off the road
  • A new chapter in the company’s signature Flip the Switch tenant engagement program that yielded 27% average energy savings from computers and office equipment
  • Inaugural Partner of the Year recognition from Aim High, a San Francisco Bay Area organization focused on educational advancement for low-income youth.  Shorenstein’s long-time partnership with Aim High is part of the company’s commitment to serving the communities in which it operates.
  • Continued support of the Environmental Defense Fund’s (EDF) Chicago Building Energy Initiative, which brought EDF’s Climate Corps program to 25 Chicago-area buildings and identified $1.6 million in energy efficiency opportunities

Shorenstein has been a firm advocate for sustainability within the real estate industry.  The company is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20% by 2020 and to sharing energy efficiency best practices with industry peers.  Shorenstein is a Platinum-level corporate member of the U.S. Green Building Council and a member of the Environmental Protection Agency’s ENERGY STAR program for commercial buildings.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Since 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 56.7 million square feet in transactions with a gross investment value in excess of $13.4 billion.


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1818 Market

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The Registry

 

Shorenstein Plans Apartment Developments in San Francisco and Berkeley

By Jon Peterson

San Francisco-based Shorenstein Properties has plans in mind to develop new apartment complexes in San Francisco and Berkeley over the next few years totaling 474 units. The project in San Francisco is located at 1066 Market Street, and the Berkeley asset stands at 1500 San Pablo Avenue.
“San Francisco is a fundamentally supply-constrained market while jobs and population continue to grow. It is hard to find the cracks in demand in San Francisco,” says Meg Spriggs, managing director of the Multifamily Investments Group for Shorenstein.

The project in San Francisco will total 304 apartments. Shorenstein submitted its application to the city of San Francisco for the project over a year ago. “We are now working through the CEQA process and hope to be approved at the end of this year. Our plan would be to start construction in 2016 and deliver the units to the marketplace in 2018,” said Spriggs.

Shorenstein and 4Terra Investments have signed a development agreement to jointly build the project in Berkeley. 4Terra is an apartment development firm with three regional offices in California. Its San Francisco operation is located at 95 Federal Street, and the company also has offices in Orange County and Los Angeles.

Spriggs declined to comment at this time on the development cost for the project in Berkeley, which is planned as a mixed-use project. Overall, the project will provide a combination of 170 apartment units and approximately 10,000 square feet of retail space.

“For this development, we submitted our application with the city on March 5th. We hope to be approved within the next year. The start of construction could be sometime in 2017 with the units delivered by 2019,” said Spriggs.

She said there are many things to like about the Berkeley apartment market. “Berkeley is a vibrant and diverse community where people want to live. At the same time, Berkeley is a community that has very little available housing to meet this desire. The northern stretch of San Pablo Avenue has long been a destination for the locals. Places like Fanny, now known as Bartavelle, ACME, Kermit Lynch and Tokyo Fish are integral to the city’s food culture and sense of community. Our housing proposal here is an effort to bring more people to within walking distance of these institutions,” said Spriggs.

The apartment markets in Berkeley and San Francisco remain very tight. According to data from RealFacts, a Novato-based apartment data firm, the apartment market in Berkeley had no change in its occupancy from the end of 2013 to the end of 2014. It remained at 98.4 percent. Over the same time period, average asking rents for apartments in Berkeley increased by 12.6 percent from $2,502 per month to $2,819.

The occupancy for apartments in San Francisco almost did not change in that time span. The increase was 0.1 percent to 95.6 percent at the end of last year. Average asking rent was up 11 percent in San Francisco to $3,392 per month.

Shorenstein is building these projects and seeking out more apartment development opportunities in the San Francisco Bay Area for the Shorenstein family private fund. None of these projects would be financially backed by the investment funds that Shorenstein corporately has raised in the past.

The company’s most recent investment fund was Shorenstein Realty Investors Eleven. It raised $1.22 billion of equity for the fund. Most of the transactions for the fund will involve office buildings. There will be some mixed-use assets with office and a small component of retail or residential.

Spriggs joined Shorenstein in 2013. She previously was a vice president of development for AvalonBay Communities and was responsible for the San Francisco Bay Area region.


Shorenstein Press Center

Real Estate Deals 2015: Shorenstein’s $300 Million Bet on Mid-Market’s Renaissance Pays Off

When Jim Collins began working on Market Square shortly after Shorenstein bought the hulking property in March 2011, he knew he faced a huge challenge.

There were hardly any tenants in the 1.08 million-square-foot, two-building complex, and even fewer signs that businesses would move to Mid-Market.
“There was controversy in the real estate community about whether or not a project of its size in its downtrodden location would succeed,” said Collins.

Not to be deterred, Shorenstein put everything it had into the plan. Work began on a $300 million renovation of the property from showroom use to office and retail space. The first tenant took occupancy in 1355 Market in the summer of 2012, and construction at 1 Tenth was completed last spring.

The way the project ended up, with a 97 percent occupancy rate and the luring of companies like Twitter and Yammer, put those doubts to rest.
“The complete lease-up of the buildings and the rebirth of the neighborhood as a live/work destination has resolved that controversy,” said Collins.
Built in 1937 and known as the Furniture Mart, it had long been the destination for wholesale furnishings showrooms. The property appealed to Shorenstein because it offered art deco architecture, large floor plates and proximity to transit.

“The project was one of the few, existing options in San Francisco where big office tenants could lease contiguous space,” said Collins.
Todd Sklar, senior vice president of Shorenstein, said the city was committed to promoting Mid-Market, but “at the time we entered the deal street people outnumbered office workers and prospective tenants were wary of moving there.”

Work included full seismic upgrades, replacing all plumbing and electrical systems, restoring a roof deck and creating appealing retail space.

“A renovation of this size, including a significant historic preservation component, had not been undertaken before in San Francisco,” said Sklar. “At the time of our acquisition, the office vacancy rate in that part of town was over 30 percent and we took the project on as a speculative development while the national economy was still in recovery mode following the last recession.”

Within months of the Twitter lease being signed, residential developers built over 1,000 luxury apartments on sites adjacent to the property.

“Results have been better than expected,” said Collins. The submarket vacancy rate has dropped from 33 percent to 5.6 percent, retail leasing anchored by a grocery store and a full service health club. Three restaurants are opening. First Republic Bank has also opened a branch.

For Sklar, seeing the change the project has wrought in the neighborhood has been incredibly rewarding.

Location: 1355 Market St. and 1 Tenth St., San Francisco
Size: 1.08 million square feet in two buildings
Cost:$300 million
Landlord: Shorenstein Properties
Contractor: BN Builders
Lead Architect: RMW architecture & interiors; BCV Architects (retail), Page and Turnbull
Engineers: Murphy Burr Curry (structural engineers); Taylor Engineering (mechanical/electrical engineers); CSW (civil engineers)


Shorenstein Press Center

How, and why, public art enriches our urban landscape

By John King

Visit one short stretch of Market Street and you’ll come away convinced that San Francisco’s public art scene these days is all over the map.

Which is a good thing, for the record.

At 10th and Market there’s a pocket plaza of granite outcrops with cartographic carvings at your feet. Over on Ninth Street, glass pianos with red metal bones are lashed to an all-glass slab 17 stories high. The block in between is filled by a 1937 structure now home to Twitter, where two interior walls are adorned by 540 bronze mailboxes scavenged from the building’s early life.

The scales and styles are as different as can be. Each work pushes different buttons. What the three pieces have in common is a shared determination to avoid the innocuous abstraction once conjured by the phrase “public art,” instead prodding us to look at where we are with sharper, smarter eyes.

The one-two-three punch was not planned; each piece was commissioned and paid for as part of one of the development projects fueling the revival of a stretch of Market long considered distant from the action, even the dubious action a few blocks to the east. The pianos bundled tight above the sidewalk are attached to AVA 55 Ninth, a sleek box of 273 apartments. Twitter is the main tenant of Market Square, a renovation of the one-time San Francisco Merchandise Mart. The rock-hard landscape is notched into the base of NEMA, a 35-story apartment tower.

My favorite of the three is the latter, “Promised Land,” a sublime yet muscular counterpoint to the super-sized architectural terrain.

Amid the dark metal drama of NEMA and the terra-cotta hulk of Market Square, the small realm crafted by Delaney + Chin holds its own. The space is set apart from the sidewalk by three large planter beds within slicing walls of light or dark gray concrete. In between each planter is a flat cut leading into the plaza, paving engraved with archaic excerpts from topographic maps of the Sacramento River and the California coast. Within stand two 20-foot-high posts of rough granite.

Dramatic impact

There’s nothing bucolic about this oasis, which includes such mannered landscape touches as five statuesque bonsai and seven enormous round cacti that seem to grow from a granite plank. Quite the opposite. It’s as if geological forces were rearing up from the Earth, shrugging off the sheen of nearby buildings, and including a space of such provocative intimacy in the project is a credit to Handel Architects and developer Crescent Heights.

One block away, AVA 55 Ninth developer Avalon Bay deserves credit as well for selecting artists Brian Goggin and Dorka Keehn to conceive an installation of 13 gravity-defying pianos — even if the result isn’t nearly so successful.

Goggin is best-known for “Defenestration,” the startling assemblage of furniture that spilled over the exterior of an empty residential hotel at Sixth and Howard streets from 1997 until last year. It was intended as a short-term thing; instead, deservedly, it was embraced as a visual symbol of South of Market’s freewheeling element of surprise.

The new piece is a variation on the theme, and the title alone sends a signal that something is off: “… And My Room Still Rocks Like a Boat on the Sea … (Caruso’s Dream).”

So much for the concise intrigue of “Defenestration.” And so much for the blithe dissonance of a colorful shower of secondhand furniture above one of the city’s saddest corners. The “pianos” of “Caruso’s Dream” (the name refers to opera singer Enrico Caruso, who was in San Francisco during the 1906 earthquake) weigh 1 ton each and consist of salvaged pieces of chicken-wire-reinforced glass set within frames of red steel. They’re then attached to the second floor of the building by thick wooden struts and thick smooth rope.

I like the way the contorted assemblage shatters the divisions between building, sidewalk and street. The illumination at night within the pianos adds an element of surprise. But there’s an overall sense of sweat and strain; you’re not sure what you see, but you knew that it took a lot of work.

By comparison to these two pieces, the installation by Chris Edmunds at Market Square, developed by the Shorenstein Co., is as simple as can be: 18 rows of the small bronze boxes that lined the mailroom of the old Merchandise Mart, 15 boxes to each row. Some jab forward as far as they seemingly can go; others nestle deep into the wall. The one visual alteration is that some have tiny panels of reflective dichroic glass where a tenant’s office number would have gone.

Thought-provoking

As simple as this sounds, a second look stops you in your tracks. Is there a pattern to the staggered depths or the colored labels? And what was it like in the 1930s to live in a society that took for granted the everyday artisanal craft of such details as each mailbox door’s cast eagle and prim combination lock?

None of these pieces would exist without the city’s decree that 1 percent of a major project’s construction budget be reserved for public art. It’s an easy mandate to mock when you’re confront by some abstract blob on a pedestal. But when the artwork reframes our surroundings, even for a moment, it’s a requirement that pays benefits to us all.


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GlobeSt.com

 

Shorenstein Scores Another Top Retailer

By Brian J. Rogal

MINNEAPOLIS—Shorenstein Properties LLC bought 33 S. Sixth St. in 2012 for more than $200 million and has focused on repositioning and re-tenanting the retail space, known as Minneapolis City Center. And the San Francisco-based company just signed up Sports Authority, one of the largest sporting goods retailers in the US, for a 21,877-square-foot ground-floor space on the Nicollet Mall and 7th St. side of the property. Sports Authority has ten stores in the Twin Cities region but this marks the company’s first store in downtown Minneapolis. Company officials expect to open the store in fall 2015.

“We’re excited to bring our passion for sports and our unparalleled selection of sporting goods and apparel to the Minneapolis City Center, and we look forward to being part of the vibrant retail and lifestyle atmosphere in downtown,” says Michael Foss, chief executive officer of Sports Authority.

As reported in GlobeSt.com, Shorenstein recently scored a bit of a coup by signing Saks Fifth Avenue OFF 5th to 40,321-square-feet at the center. Saks had just decided to close its location at 655 Nicollet Mall after a 25-year run. The luxury retailer plans to open in April 2016. And by signing up Sports Authority, Shorenstein has brought total retail occupancy at the center up to 86%.

“With a strong community of office users in our building and downtown, we’re delighted to now see the traction taking place within the retail component of Minneapolis City Center and the positive effect it is already having on the community,” says Glenn Shannon, president, Shorenstein Properties.

In addition to the two-story Minneapolis City Center, the 1.6-million-square-foot, mixed-use property includes a 50-story office tower as well as a three-story parking garage and a long-term ground lease for the adjacent 583-room Marriott City Center Hotel.


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GlobeSt.com

 

Blanchard Plaza Changes Hands

By David Phillips

SEATTLE—JLL’s regional capital markets team has closed on the sale of Blanchard Plaza to an institutional investor. The seller was Shorenstein Properties, which initiated an interior renovation of the property positioning it as a first-class trophy asset located adjacent to Amazon’s 4.1 million square foot downtown campus expansion.  The building is fully leased to Amazon on a long-term basis.

“Situated at the nexus of three of Seattle’s most desirable submarkets, this building was a solid performer in a great location, but after undergoing careful repositioning of the asset itself by the seller, it has now become a truly core investment which attracted a tremendous amount of investor interest,” said Lori Hill, managing director, JLL.

The 15-story, 255,818 s.f. class A office building is located at 2201 Sixth Avenue in the center of Seattle’s tech office market.  The building offers sweeping 360 degree views including Puget Sound, the Olympic Mountains, Lake Union and downtown Seattle. The JLL team included Hill, Stuart Williams, Michel Seifer and David Otis.

Coming off a very active fourth quarter which pushed sales of Seattle office buildings to $1.5 billion in 2014, there is little sign of the office investment market slowing down in 2015, JLL says.

Fuelled by solid positive job growth, unemployment in the Puget Sound metro area is well below the national average at 4.7%. The strong regional economy led to continued office demand as Seattle experienced more than 2.1 million square feet of positive net absorption in 2014.  Coupled with low vacancy rates approaching the single digits, several new office projects are now underway to supply anticipated future demand among tenants, JLL added.


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The Check is in the Mail: Shorenstein Cashes out of LA Postal Warehouse

By Eliot Brown

Four years ago, a venture of Shorenstein Properties and a company controlled by Los Angeles investor Jeff Worthe paid $44 million for an empty former U.S. Postal Service distribution center in western Los Angeles, betting it could make the cavernous space into a thriving, hip hub of companies in the media and tech sector.

It worked.

The companies last week sold the property known as the Reserve—now fully leased—for about $300 million to real estate funds run by Invesco Ltd.IVZ +0.94% That comes out to around $800 per square foot—a high number for Los Angeles, let alone for a former mail warehouse in the emerging Playa Vista neighborhood, just north of Los Angeles International Airport.

“This one worked out extremely well, there’s no two ways about it,” said Charles Malet, a top executive at Shorenstein. “The timing of the buy probably couldn’t have been better.”

Helping achieve the high price was a surprisingly high demand from tech and gaming tenants. The owners and their brokers at JLL rapidly leased up the property at rates higher than expected, with tenants including Sony Corp.’s PlayStation unit and celebrity-gossip website TMZ.

Shorenstein and Mr. Worthe are among a growing roster of landlords who successfully leased up renovated buildings to so-called “creative” tenants in the area. Others include Vantage Property Investors, which remade an ATM service center, and the Ratkovich Co., which remade the former Hughes Aircraft headquarters into a home for YouTube and other tech firms.


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1066 Market

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The ALF-CIO just became Amazon’s Landlord

Blanchard Plaza, an Amazon-leased office building in downtown Seattle, sold Thursday for nearly $122.7 million. The AFL-CIO Building Investment Trust bought the building.

By Marc Stiles

Blanchard Plaza, an office tower in downtown Seattle, sold Thursday for $122.66 million, or nearly twice what the property sold for in 2006.

The reason the value of the 1983 building increased so much is because Amazon.com leased the building last spring. The lease runs for approximately 11 years, according to an agreement that was recorded with King County.

In an ironic twist, the virulently anti-union Amazon has a very union-friendly new landlord: the AFL-CIO Building Investment Trust. The AFL-CIO is the largest federation of unions in the United States. Shorenstein Properties of San Francisco sold the building at 2201 Sixth Ave., kitty-corner from the high-rise campus that Amazon is developing.

There are several examples of Amazon’s bias against unions. The company’s contracted security guards, for instance, have unsuccessfully tried to unionize. Time published a story a year ago with the headline How Amazon Crushed the Union Movement. Just last month, some of Amazon’s workers in Germany went on strike, the latest in a string of walkouts.


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Leading Organizations Tap EDF Climate Corps to Save Energy in 2015

NEW YORK, Jan. 22, 2015 /PRNewswire-USNewswire/ – Environmental Defense Fund (EDF) today announced that its popular EDF Climate Corps fellowship program, now in its eighth year, has already attracted leading-edge organizations – many from states with particularly high energy consumption—to host 2015 EDF Climate Corps fellows who will help cut costs and carbon emissions through improved energy management.

As registration for 2015 EDF Climate Corps continues, leaders in high technology, consumer products, property management and the public sector that have participated in recent years have already re-enrolled to find deeper energy savings. New host organizations are requesting fellows to map out their energy reduction strategies among a wide range of other projects.

EDF Climate Corps transforms the way organizations use energy by pairing fellows—top graduate students from the nation’s leading universities—with companies, cities, schools and public institutions to identify, measure and implement high-value ways to save energy, carbon emissions and money. EDF Climate Corps has worked with over 300 organizations since the program’s launch in 2008, finding an average of $1 million in energy savings for each participating organization. Collectively, the program has uncovered enough energy savings to power 260,000 homes each year and save $1.4 billion in energy costs.

“As our network grows, new participants benefit from the accumulated knowledge held by our veteran organizations and fellows,” said EDF Managing Director Victoria Mills. “That knowledge, combined with the expertise of EDF staff, enables us to create value for participants through a wide range of energy management strategies that are both cost-effective and scalable.”

Many of 2015′s EDF Climate Corps host organizations are headquartered in the nine states with the nation’s highest energy use: California, Florida, Illinois, Ohio, New Jersey, New York, North Carolina, Pennsylvania and Texas.

“Our EDF Climate Corps host organizations are taking a leadership role not only in their internal operations, but in each of their communities,” said Michael Regan, EDF’s senior director of State Strategic Implementation. “By lowering their own energy use, these organizations not only save money and slash pollution, they also lower their neighboring regions’ energy usage and carbon emissions. Our hope is that these organizations inspire others in their sectors to follow suit.”

Companies that have previously hosted EDF Climate Corps fellows know first-hand the technical expertise required to successfully implement energy savings—which is why they’re grateful for the help. “Identifying effective energy control solutions can be complex. It takes special knowledge and dedicated time to build the business case for investment,” said Jaxon Love, sustainability manager at Shorenstein Properties, a San Francisco-based commercial real estate developer and operator. “Every year, EDF Climate Corps fellows bring fresh eyes and sharp skills to move our energy initiatives forward, which is why we’ve been a Climate Corps host each year since 2009.”

New York-based Hill+Knowlton Strategies, a leading international communications consultancy, will host its first EDF Climate Corps fellow in 2015 as an integral component of its sustainability program. ”Over the last year, we have turned the microscope on ourselves to take a closer look at our sustainability, including our environmental impact,” said Robert Ludke, executive vice president, Governance+Sustainability. “We know that our environmental footprint is important to employees and clients alike, and we will welcome our fellow’s help to assess our current performance and establish the structure, metrics and goals needed to improve over time.”

Participating organizations benefit from EDF Climate Corps’ well-known expertise in product distribution strategies, demand response, energy data analysis, project financing, renewables, greenhouse gas reporting, energy-efficiency opportunity assessments and employee engagement campaigns.

New Jersey-based Verizon has taken advantage of the diverse range of project types, from HVAC, to data centers, to chiller efficiency, to renewables and the water-energy nexus. “We’re hosting our fifth EDF Climate Corps fellow,” said Verizon’s Chief Sustainability Officer James Gowen. “As a result, we have not only found real savings to the bottom line, but have also benefited from the goodwill we’ve generated with our many stakeholders—employees, shareholders and communities—for reducing our carbon footprint.” 

The list of 2015 host organizations confirmed to date includes: Alamo Colleges, Avaya, Bentall Kennedy, Blue Shield of California, Boston Scientific Corporation, Caesars Entertainment, Massachusetts Division of Capital Asset Management and Maintenance, Dunkin’ Brands, New Jersey Energy Resilience Bank, Hill+Knowlton Strategies, Iron Mountain, JLL, Legrand, MP2 Energy, NJ TRANSIT, Pharmavite, Shorenstein Properties, Sustainable Jersey, Urban Innovations, US Army, Fort Bragg and Verizon Communications.

EDF Climate Corps is still accepting applications for organizations interested in achieving energy wins in 2015. To sign up for EDF Climate Corps, visit edfclimatecorps.org or e-mail info@edfclimatecorps.org.

About EDF Climate Corps
EDF Climate Corps (edfclimatecorps.org) taps the talents of tomorrow’s leaders to save energy, money and the environment by placing specially trained EDF fellows in companies, cities and universities as dedicated energy problem solvers. Working with hundreds of leading organizations, EDF Climate Corps has uncovered $1.4 billion in energy savings. For more information, visit edfclimatecorps.org. Read our blog at edfclimatecorps.org/blog. Follow us on Twitter at twitter.com/edfbiz and on Facebook at facebook.com/EDFClimateCorps.

About Environmental Defense Fund
Environmental Defense Fund (edf.org), a leading international nonprofit organization, creates transformational solutions to the most serious environmental problems. EDF links science, economics, law and innovative private-sector partnerships. Connect with us on EDF Voices, Twitter and Facebook.

Note to Editors:

EDF Climate Corps is releasing the first four case studies in an on-going series, enabling organizations to read in great detail about the problems, solutions and outcomes that have emerged in earlier quests for energy management solutions (see related release). These first case studies, featuring energy data analyses and cost-savings programs for Class A and Class B buildings in Chicago, efficiency standards at an adidas Group distribution center and a solar installation project at the Housing Authority of the City and County of Denver can be found here.

Contact: Rick Velleu, 212-616-1360, rvelleu@edf.org
Joyce Radnor, 617-787-5192, jradnor@comcast.net


Shorenstein Press Center

Source

Curbed SF

 

Inside the Fancy Food Market Now Open in the Twitter Building

By Lamar Anderson

The transformation of the Art Deco behemoth at 1355 Market, the old San Francisco Furniture Mart now more commonly known as the Twitter Building, has been a long time coming. Though Twitter moved into the Shorenstein-owned property in June 2012, the shell renovation was still very much under way. RMW Architecture & Interiors and BCV Architects brought new life to the building’s excellent architectural bones, sandblasting concrete columns and redoing much of the ground floor with Douglas fir panels reclaimed from another part of the complex. But for the past year or so, much of that ground floor has remained empty—save for the comings and goings of Twitter employees and Shorenstein’s other office tenants—awaiting the arrival of the building’s public components. Today, a new food market with a storefront café and several restaurant and retail stalls opened in the building’s ground floor.

First of three Market groceries from Bruce and Tom >>

Dubbed the Market, it’s the first of a series of Market-branded groceries from retail architects–turned–gourmand shopkeepers Bruce Slesinger and Tom Collom (a.k.a., Bruce and Tom, or BAT) and parters Richard Hoff and Chris Foley. The next shop, Market on Polk, will open in the old Big Apple grocery store later this year, and a third will open on the ground floor of Lumina under the moniker Market on Main.

With in-house stations like a pizzeria, an oyster bar, and a tapas bar—with subtenants including Azalina’s Malaysian food, Blue Bottle, and Nuubia chocolate—plus a storefront café slinging Four Barrel coffee, the vibe is a bit like a Whole Foods populated by local purveyors, with boutique retail scattered around the perimeter in mini-outposts somewhat reminiscent of Ferry Building stalls. Our sister site Eater has the full report on the culinary offerings, by the way.

With 1355 Market’s full retail program still taking shape—a restaurant from the AQ folk is going in on the Ninth Street side—the Market offers an early glimpse at how the public portions of the mixed-use complex are shaping up. Design-wise, the grocery takes a page from restaurants rather than your run-of-the-mill Safeway. “It’s not so common to do a food store and do something architecturally interesting with it,” says Slesinger. “Restaurants, yes, but not in retail food.” The architects were inspired by RMW and BCV’s work on the lobby, and their design mixes in lots of wood and shows off the concrete columns. “When we first came through here, we noticed the double-height space and how they expressed bones of the building,” says Collom. “It was the intent to bring that feeling into the Market space.”

Plus, there will be seating outside; the back of the Market opens up onto Stevenson Commons, the CMG Landscape Architecture-designed alley-turned-pedestrian park.


Shorenstein Press Center

How EDF and Chicago are Leading the Way to Energy-Efficient Buildings

By Ellen Bell

One degree Fahrenheit.

Yes, that was Friday’s temperature in Chicago.

But instead of thinking about jetting off to a sandy beach in the Caribbean, my thoughts instead turn to a more practical matter. As I look across the Chicago skyline, I wonder how many of these buildings have old, inefficient heating systems.

The good news is that right here in Chicago, some building owners are finding better, more efficient ways to heat — and in balmier times, cool — their properties.

Over the past year, EDF, the City of Chicago, and some of the city’s leading building owners have teamed up to make real progress in cutting energy use and costs. 

The results of this partnership have helped Chicago move closer to the goal of the city’s Retrofit Chicago initiative: reduce commercial energy use in participating buildings by 20 percent in five years. The Mayor’s office has set the bar for energy savings, and EDF Climate Corps is providing boots on the ground to get it done. And Chicago’s leading building owners and operators are showing creativity and innovation in taking their energy management to the next level.

Let me tell you a little more about the buildings that are driving energy efficiency in Chicago:

77 West Wacker, an all-electric JLL property, is a shining model of energy management in Class A buildings. In ten years, 77 West Wacker has gone from working toward LEED certification to being one of Chicago’s most energy-efficient buildings.

By collecting and analyzing building data, 77 West Wacker was able to find energy-saving opportunities through customizations to its Building Automation System (BAS). So when last year’s polar vortex hit Chicago and energy prices spiked for a 12-hour period, 77 West Wacker was able to preheat the building and reduce energy consumption by over 1,000 kWh per hour during the cold spell.

325 West Huron is located in one of Chicago’s hottest neighborhoods. A Class B building owned by Urban Innovations, this property has a steam boiler that’s over 100 years old. But thanks to Jason Szczur, Urban Innovations’ chief engineer, the boiler is now an environmental asset. By installing new igniters, tubes, heating elements, and insulation, Jason was able to improve the energy efficiency of the building.

Both 77 West Wacker and Urban Innovations joined Retrofit Chicago in 2014, with help from the energy-saving strategies developed by their EDF Climate Corps fellows.

Shorenstein Properties’ River North Point is 1.2 million square feet of office and creative space originally built in the 1970s. Now, it is LEED Gold certified and modeling sustainability through consistent improvements since 2009. In 2014, EDF Climate Corps worked with River North Point to take advantage of ComEd’s Retro-Commissioning program and expand tenant engagement in energy efficiency.

Chicago’s Merchandise Mart, one of the largest commercial buildings in the world, continues to find energy savings for their property and their tenants. Through good old-fashioned data collection, EDF Climate Corps was able to identify 520,000 kWh of electricity that could be saved annually by reducing after-hours use.

There’s still work to be done. But take inspiration from the progress that EDF Climate Corps, the City of Chicago, and leading businesses have made in reducing energy use in Chicago. We’re just getting warmed up!


Shorenstein Press Center

Repositioning Yesterday’s Buildings for Today’s Changing Workforce

NAIOP’s Development Magazine

The following article, written by Cushman’s Head of Americas Research Maria Sicola, is adapted from one that originally appeared as the cover story in the winter 2014 issue of Development magazine, published by NAIOP, the Commercial Real Estate Development Association.

NAIOP is a leading commercial real estate industry provider of unparalleled networking opportunities, educational programs, research on trends and innovations and strong legislative representation. NAIOP represents commercial real estate developers, owners and investors of office, industrial, retail and mixed-use properties. It provides strong advocacy, education and business opportunities, and connects its members through a powerful North American network.

By Maria Sicola

Head of Americas Research

Repositioning Yesterday’s Buildings for Today’s Changing Workforce

When completed next fall, One Soho Square, in New York’s booming Midtown South neighborhood, will provide cool, creative Class A office space in two existing historic buildings (161 Avenue of the Americas and 233 Spring Street) as well as three new penthouse levels. It will feature renovated, highly efficient floor plates and new elevators, building mechanical systems and restrooms, and was designed to appeal to TAMI (technology, advertising, media and information) tenants.

Major retrofits and the repurposing of older buildings have become leading trends as urbanism and millennials drive transformative change.

As we begin 2015, we find the real estate industry in the throes of transformative change thanks to economic recovery and a fast evolving workforce that continues to redefine corporate space requirements. For companies with ambitious recruiting and expansion plans — and for real estate owners, developers and investors faced with thepressing need to upgrade older holdings to meet next-generation demand — this is a pivotal time.

All stakeholders must focus on positioning themselves for long-term growth, change and competitiveness. The challenge is accentuated by the fact that much of the existing office inventory is antiquated, with decades-old features designed to accommodate a different generation of users who had different priorities and work habits. Why the sense of urgency? Economic and related real estate recoveries are on track to accelerate over the next 24 months. Already, the office market is gaining solid traction. In the first three quarters of 2014, central business district (CBD) leasing and absorption reached the pre-recession levels of 2008, and overall vacancy fell to its lowest level in five years. Rents are creeping up in hot markets like San Francisco, New York and Chicago.

With projections looking positive as we head toward 2015, the demand divide between older and new buildings is growing as tenants seek space that accommodates new workplace models.
The questions on many minds are 1) how will older buildings compete and 2) is a bifurcated market emerging in which new towers will ultimately outperform older Class A stock? Here is a look at some of the trends and issues behind this transformative period.

Demographics & Demand

Two well-documented shifts related to human capital are having profound impacts on the office market.

First, the sudden rise of urbanism over the last 10 years has resulted in explosive growth in many central urban markets. The exodus of millennials and empty nesters from suburban to urban markets shows no signs of letting up and, in turn,companies are seeking modern space as close as possible to this concentration of intellectual capital. A shortage of modern office product has ramped up competition for Class A space and is triggering new office development cycles.

Second, the labor pool is shrinking as baby boomers retire. By 2022, millennials — who today represent a much smaller population of workers — will make up more than 40 percent of the workforce.

Such influences are converging and are major reasons why companies are moving quickly to position themselves to compete for talent in central urban markets. Senior managers know that in order to attract and retain a millennial-based workforce they must offer updated workplaces that support collaboration and offer ample lifestyle amenities.

Today’s custom-designed environments provide lots of light and fresh air, supporting employee work habits with both open and private work areas. Never before have workplaces played a more important role in reinforcing brand,culture, employee morale, productivity,corporate social responsibility and retention/recruiting objectives.

New efficiencies are also being delivered and, as always, cost control remains a priority. As labor costs rise, companies will work to lower other major line items — including real estate, effectively switching focus from cost per square foot to cost per seat.
To that end, and also because of changed work habits that have rendered large offices unnecessary, average square footage per employee continues to decrease.

There are many examples of firms growing with less space, but one major accounting firm comes to mind. It reduced its space at a premier Class A office tower by 22 percent and incorporated a “virtual office” hoteling concept. This enabled it to increase its head count by 36 percent and support its larger staff in just 75 square feet per employee.

Aging Inventory, Modern Environment

The majority — 82 percent — of Class A office buildings in U.S. CBDs were constructed prior to 1990, and 53 percent were built before 1980. Can yesterday’s buildings support today’s workplaces? The answer, in most cases, is no, which raises the question: What can be done with that product? In a growing number of cases, owners are extensively retrofitting buildings and/or converting them to other uses. Others are being taken down altogether and rebuilt to suit the needs of specific tenants.

Within these projects, the traditional layout of cubicle farms surrounded by corner offices is disappearing in favor of open architecture and collaborative work areas. Formal glass and steel finishes are being replaced with exposed brick and timber. Technology and systems are being upgraded to the latest, fastest and most efficient standards.

New office designs are also blurring the lines between work and play. When it comes to lifestyle amenities, companies are incorporating bars, game rooms, rooftop gardens, gyms and more. It all comes down to corporate branding and the fight for talent. Adobe, which focuses on giving employees an “awesome experience,” is a well-known leader in this area. Its major sites incorporate bistro restaurants, locker rooms, basketball courts, fitness classes, dental and other health care facilities, hair stylists, dry cleaning and ATMs.

Some of these more “extreme” lifestyle amenities may stay within the technology industry and creative sectors. However, even law, financial services and insurance firms are being influenced by new workspace trends. While there may never be a pingpong table in the break room at a large law practice, we are seeing more open floor plans and collaborative areas, as well as careful consideration of locations near areas with amenities and urban context. Again, all of these shifts are aimed at attracting and retaining younger professionals.

CBD Renovations On the Rise

As more companies buy into updated workplace models, renovations to older buildings have skyrocketed. In New York City during 2013 and 2014, 24 buildings totaling 8.3 million square feet were or are being renovated. This compares to nine new construction projects totaling 7.5 million square feet that were built during the same period.

The burgeoning Midtown South submarket in New York City, which is home to 10 of these property renovations, is a direct beneficiary of this trend. Long considered a residential part of the city, as well as home to smaller and less traditional office space users, Midtown South is now drawing household-name corporate tenants.

The famously quirky office of one of its best-known occupants, Google, serves as a prototype for the office meets-company-culture movement.

Examples of the renovation/conversion trend in Chicago include 1000 West Fulton (now known as 1K Fulton), a former cold storage building that Sterling Bay is converting to creative office space. Nearby, Shorenstein is renovating a 64,000-square-foot former meat packing facility at 210 North Green Street. Shorenstein also recently completed the 1.2-millionsquare-foot River Point North (formerly the windowless Apparel Center), which caters to tech tenants.

In 2013, 3.3 million square feet of space was renovated in Chicago and, as of late 2014, an additional 735,000 square feet of space is under renovation/conversion.

San Francisco
In San Francisco in the last two years alone, more than 3.1 million square feet of space has been renovated and upgraded to meet the demands of the region’s robust tech growth. Shorenstein’s 2012 renovation of the former Furniture Mart, which became the home of Twitter, helped gentrify the Mid-Market area and attracted additional tech companies, including Yammer, One King’s Lane, Square and Uber.

Another noteworthy renovation involved the transformation of 680 Folsom from a vacant former PacBell building into the home of Macys.com and Riverbed Technologies.

Not Just an Urban Phenomenon
The renovation craze is not confined to central urban markets. In fact, the country’s suburban markets — particularly those outside major urban hubs — are home to some of the most creative property reinventions. These projects are bringing urban lifestyle amenities to non-CBD markets.

In New Jersey, corporate downsizing,aging inventory and the growing popularity of new workplaceshave left sprawling suburban campuses vacant or struggling. At the same time, however, many are finding new life as mixed-use, “live,work, play” environments. A great example is the 472-acre, 1.8 million-square-foot former Bell Labs research facility in Holmdel, where Somerset Development is planning an indoor “town center” featuring a pedestrian promenade and a blend of uses. Foremost in the plan is a health and wellness component, including an ambulatory surgery center, doctors’ offices and assisted living and skilled nursing facilities. The balance of the space is being marketed to include retail and dining outlets, office space, a hotel and conference center, educational facilities and an upscale spa.

Across the country in El Segundo, California, Pacific Corporate Towers is a 1.6-million-square-foot, three building office complex.  A recently completed renovation positioned the 1970’s-era property as a lifestyle-rich, multi-tenant campus. The ownership, an investment management client of BlackRock, converted indoor and outdoor areas into lively communal gathering spaces with a contemporary design aesthetic. This included the addition of breakout rooms with lounge seating, flat screens and high-top tables, as well as outdoor decks with heaters for seasonal comfort and electrical outlets for computer use.

New outdoor recreational amenities include bicycles, a pingpong table and an outdoor exercise area adjacent to a full-service gym. Today, the complex is home to a community of 80 tenants ranging from creative start-ups to Fortune 500 companies.

In the Chicago suburb of Northfield,Kraft Foods Group wanted to create an open workspace that would spark innovation and reflect its “startup” spirit following the company’s launch as a new, independent Kraft in October 2012. Renovation of its 715,000-square-foot, 88-acre suburban campus eliminated private offices and incorporated a new collaborative office layout. The company added amenities like shuttle service, massages, retail, health care and pet care. Kraft has proudly exceeded its talent and recruiting objectives.

Silicon Valley: Live, Work, Play
In Silicon Valley, Google is using innovative ways to retain and attract talent to the suburbs while competing directly with tech companies expanding in San Francisco’s urban hot spots. The company transformed a more traditional 525,000-square-foot, four-building campus into a mini-urban environment known as “the Googleplex,” a 2.3 million-square-foot campus that now spans a large portion of Mountain View.

In addition to providing a dense concentration of complimentary amenities, Google is pioneering a “version 2.0” of the live, work, play concept. Cutting-edge flexible internal space is supplemented with outdoor cafeterias that serve food prepared by renowned chefs, organic gardens, sporting venues, sculpture parks, fitness facilities, massage rooms and even sleeping quarters known as “nap pods.”

Google is also tackling one of the broader challenges many suburban areas face: undersupplied mass transit. In addition to providing bikes that workers can use to navigate the sprawling campus, the company offers electric car charging stations and Google buses equipped with Wi-Fi and workstations to foster a working environment while employees commute from San Francisco and Oakland.

Google continues to think ahead of the curve, acquiring additional property rumored to be as diverse as corporate housing to offset the lack of affordable housing near the campus. The functionality of real estate at the Google plex is an essential element in the company’s plan to “captivate” employees,elevating their standard of living by blurring traditional work/life barriers and dwarfing a typical employer’s competitive advantage.


Looking Ahead
Simply put, retrofit activity in both urban centers and suburbs responds directly to demographic and technological change. It is happening in places where the people who make up the evolving labor pool want to live and work. How developers respond will have a direct impact on asset pricing and value. In turn, the investment community will be paying increasingly close attention to these shifts. Investors are already altering allocations for certain markets and property types. In the short term, this will translate into some fairly notable transformations.

As for the long-term outlook, it is safe to say that this is not a passing phase and that these trends will continue to redefine the office real estate landscape for the next 10 years or more.

Home of Cushman & Wakefield’s Northern California Regional offices, 425 Market Street in San Francisco features interiors that exemplify the contemporary design and communal gathering spaces that appeal to today’s office tenants. Designed by Gensler Architects, this CBD Class A space recently won the prestigious Interior Design Best of Year Award.

For more information, please contact Ms. Julie D. Stern, Managing Editor, Publications for NAIOP. Email: Stern@naiop.org
www.naiop.org


Shorenstein Press Center

Ford Building on Seventh Street Would Hold Retail and Office Space Big Plans for a Huge Arts District Building

San Francisco’s Shorenstein Properties has purchased the 1912 Ford Motor Factory Building in the Arts District and plans to market it to creative office tenants, with retail on the ground floor. The renovation will start in the spring.

By Donna Evans

San Francisco-based real estate giant Shorenstein Properties purchased the 102-year-old former Ford Motor Factory building at the southwestcorner of Seventh Street and Santa Fe Avenue, and two accompanying structures, for $37 million in April. Last week, Shorenstein officials revealed details of their revitalization plan at a meeting hosted by the land use committee of the Los Angeles River Artists and Business Association.

The vision involves turning the approximately 300,000-square-foot complex into creative office space with ground-floor retail on Seventh Street and Santa Fe Avenue, said Jim Pierre, senior vice president of Shorenstein. He said he expects construction to begin next April and be completed in spring 2016. No budget has been announced.

Shorenstein owns and manages 26.2 million square feet of office and mixed-use buildings across the country, including Downtown’s 1.1-million-square foot Aon Center, which it acquired for $270 million in October. Pierre said the company was drawn to the Arts District by the growth in the residential sector, transit improvements and an increasing number of restaurants and entertainment options.

The vicinity of Seventh and Santa Fe has seen the creation of housing complexes and the arrival of the artisanal bakery Bread Lounge and Stumptown Coffee, among others. Pierre said these developments, which he termed “urbanization trends,” have resulted in an increased office demand from a variety of industries, including tech and media.

“That trend and the unique history of this special property made the investment very appealing to us,” Pierre said.

The project will be called the Ford Factory. Renderings reveal floor-to-ceiling windows on the ground floor. The four levels above the street also will feature large windows.

One major change will be the rooftop. Shorenstein Development Manager Jeanie Ranier told the LARABA committeethe company envisions a deck that would offer sweeping views of Downtown and Boyle Heights.

Shorenstein representatives said they plan to keep the existing water tower on the roof, though for decorative purposes. The steel window frames will also remain, but the glass will be replaced. Pierre described a 340-foot-long skylight stretching down the middle of the building as “just amazing.”

He said plans call for using recycled materials from the property in the new construction. In past Shorenstein projects, Pierre said, the company turned a 1,000-pound door into a conference table and used marble from a bathroom floor to create lobby tiles.

Pierre would not discuss possible retail tenants, though he indicated the company will not pursue chain stores.  

“Retail creates a vibe we want — cool retail. We don’t want a Starbucks,” he said. “I don’t think that would be in keeping with the neighborhood.”

No More Model T’s

The Ford building opened in 1912 as Ford Motor Company’s primary Southern California assembly operations for Model T’s and Model A’s. It functioned as the headquarters of Los Angeles-based Imperial Toy Company from 1972 to 2005. Shorenstein bought the three buildings on the roughly four-acre site and plans to demolish one structure to erect a parking garage.  

It is not the only prominent project set for the area. Mark Borman, the original developer on the project that became 940 E. 2nd St., has purchased two properties east of the Ford Building, and owns another property at 2045 Violet St., south of Shorenstein’s acquisition. He is in the midst of preparing plans and said he thinks the clutch of developments can heavily increase foot traffic in the community.

“I think the activity will keep continuing all the way down to the 10 Freeway,” Borman said. “It’s going to create a lot of jobs and continue to be unique and dynamic.”

In 2013, Bolour Associates and Crescenta Capital partners purchased a collection of 11 warehouse and industrial buildings on the north side of Seventh Street at Santa Fe Avenue. Their AMP Lofts will be a $130 million development with 320 live/work apartments and 20,000 square feet of retail space. It would include 60,000 square feet of open space.

AMP project manager Ryan Granito anticipates breaking ground by the middle of 2016, with an opening in 2018. Residences at AMP Lofts would range from 525 to more than 1,200 square feet.


Shorenstein Press Center

Source

The Registry

 

San Francisco 2030 District Officially Kicks Off

Two initiatives launched on Friday, both signaling a deeper commitment to a much larger goal of realizing something that has not been accomplished to date. The Orion spacecraft marked NASA’s start in what the agency hopes will be a new era of human exploration in outer space. At the same time, San Francisco 2030 District officially launched as an organization centered around lofty goals of dramatically reducing energy and water consumption as well as reducing greenhouse emissions by 50 percent by the year 2030 in the the city of San Francisco.

San Francisco 2030 District is part of a national collaborative that today counts 8 cities (Seattle, where the movement originated, Cleveland, Pittsburgh, Los Angeles, Denver, Stamford, Dallas and San Francisco). The districts today are an extension of an earlier initiative called Architecture 2030, which was founded by architect Edward Mazria. Mazria founded the movement around a mission of transforming the built environment as a major contributor to greenhouse gas emissions into a solution to the climate and energy crises. The mission is carried out through the creation of an organization inside the downtown core of the central business district whose members commit to the water, energy and emission reduction goals. Not only are these goals targeting better environmental practices, but they also make sound business sense, since they help cut energy costs and overall operational expense for the building owners/managers.

The hope is that as the number of districts grows, so will collaboration between them. “We’re joining a network of other cities out there. We will be able to leverage all of the best practices, knowledge and expertise not only locally, but we’ll also bring the best ideas from around the country to achieve these goals,” said Stan Lew of the San Francisco-based RMW architecture & interiors who serves as the district’s Director.

The organization pursues two primary objectives: the dramatic reduction in global fossil fuel consumption and greenhouse gas emissions of the built environment and the regional development of an adaptive, resilient built environment that can manage the impacts of climate change, preserve natural resources and access low-cost, renewable energy resources.

The organization is not focusing on policy change and political will to make the transformation, although municipal participation is welcome and encouraged. Debbie Raphael, director at San Francisco Department of the Environment, who spoke at the launch event said, “It’s driven by the private sector who share the same value as us and don’t want to wait for us to solve the problems.”

The city and county of San Francisco, as well as the San Francisco Public Utilities Commission have joined Bentall Kennedy, Cushman & Wakefield, JLL, Kilroy Realty and Shorenstein as the founding owner/operator partners of the San Francisco 2030 District.

“What we have to do is accelerate change,” said Raphael, and the district gives the city and its partners a platform to do that.

In San Francisco, the founding partners have committed over 9 million square feet inside the central business district of San Francisco, in a geography roughly bounded by Washington Street to the north, Van Ness Avenue to the west, 7th and King Street to the South and around the Embarcadero. There are other organizations that are participating in the district, such as Woods Bagot, Gensler, NBBJ and Bayer, to name a few.

“We have twenty-three stakeholders and twenty three participating buildings,” said Lew. JLL’s 1 Front Street (755,000 square feet), Shorenstein’s 50 California Street (688,000 square feet) and Kilroy Realty’s 350 Mission Street (450,000 square feet) are just some of the buildings that are part of the program, but so is City Hall and 25 Van Ness Avenue, which are part of the city’s real estate portfolio.

“It’s really dynamic, the environment that we’re in, as we try to build momentum for the 2030 district, and we’re getting calls and interest from parties across the real estate sector,” Lew added as he explained the already-outdated charts showing a smaller group of buildings as part of the program’s launch.

The hard part starts now Lew said. Over the next few months the district will be focused on a series of goals to further its agenda, including hiring a full-time director. The interest in their activity has been increasing throughout the commercial real estate industry, and undoubtedly more companies will join the initiative in the near term.


Shorenstein Press Center

Twitter building restaurants prepare to open next month in S.F.

By Annie Sciacca

The ground floor retail at 1355 Market Street — known as the “Twitter building” — is shaping up, and the first of the dining options is set to open next month.

The Market, a 22,000 square-foot grocery and prepared foods emporium will open in December, the first of four dining spots at 1355 Market, according to Jim Collins, vice president of leasing at property owner Shorenstein Properties.

The restaurants and retail at Market Square could be a driving force in boosting retail during Mid-Market’s transitional period, and they’ll be joined by a $150 million spec retail project, the 250,000-square-foot Market Street Place that is set to break ground on Nov. 12.

Headed by Small Foods owners Bruce Slesinger and Tom Collom, The Market will offer natural and specialty foods and partner with local purveyors and micro-entrepreneurs to provide a selection of prepared foods, produce, sandwiches and beverages. It will also include service counters for the deli, fresh meat and fish, as well as a taco bar and pizza bar.

The Market will be joined by eatery Bon Marché Brasserie & Bar, the next project from AQ’s Matt Semmelhack and chef Mark Liberman. That restaurant will take up 7,000 square feet and serve breakfast, lunch and dinner.

Semmelhack described the restaurant as offering “approachable price points” for coffee, espresso, pastries, house-baked breads, some classic and updated French dishes. It will also have a full craft cocktail bar, a microbrewery focused on food-friendly ales and Alsatian-style beers, charcuterie, cheese selection plus a huge collection of sparkling wines from France and elsewhere.

A bar and restaurant called Dirty Water, which will place an emphasis on fine wines and microbrews, according to Collins, will also land on the ground floor of 1355 Market. So will The Cadillac, a new iteration of San Francisco’s long-gone Cadillac Bar and Grill, once a popular Mexican restaurant on Fourth and Howard Streets. The upscale Mexican eatery, run by former general partner of the old Cadillac, Mike Rodriguez, will open at the building’s 9 th Street entrance, adjacent to the recently-opened First Republic Bank and a Walgreens.

The 1355 Market building connects to an adjacent building, 1 Tenth Street St., via an outdoor courtyard. The whole complex is dubbed Market Square, and the first few retail offerings in that building have begun to open, such as a gym from Bay Area fitness chain Fitness SF.

One space in the Market Square complex is still available for lease — a 3,610-square-foot space at 1 Tenth Street. Collins said he’s received interest from a variety of retailers, including restaurants, for that space. Interest will increase as the other spots in the buildings open, he added. While The Market and Bon Marche are set to open in December, the other two restaurants will likely open by spring 2015.

It wasn’t easy, at first, getting retailers into the building, Collins said.

While 1355 Market and nearby offices in Mid-Market filled up with tech companies, retail has lagged in the area, which was once a thriving spot for theaters and restaurants. However BART construction in the early 1970s diverted traffic away from the area. But with roughly 4,000 new units of housing going into the area, Collins said, Mid-Market once again is seeing a demand for retail.


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HomeAway Moves into its Newly Constructed Home in Austin’s The Domain

HomeAway’s 5th Local Office in Domain Helps Workers Beat Austin Traffic — in a Homey Atmosphere

Endeavor Real Estate Group partnered with Shorenstein Co. and RREEF in the development of the 140,000-square-foot building at The Domain.

by Jan Bucholz

Austin-based HomeAway Inc. has garnered a reputation for giving employees a variety of locations to call home. Recently, the online vacation rental marketplace moved 300 employees into a new building at The Domain in North Austin — its fifth office in the area.

“In Austin specifically, we’ve chosen to occupy multiple locations throughout the city to make the commute easier on our existing teams and to help attract top talent,” said Brian Sharples, CEO and founder of HomeAway.

The company first announced that it would open the North Austin location in summer 2013.

The new office at 11800 Domain Blvd. across the street from the new Whole Foods Market Inc. store replicates a dynamic that HomeAway has at its West Fifth Street and Lamar Boulevard location, which happens to be across from Whole Foods’ flagship store downtown.

“When we realized we needed to expand, we wanted an office in a location that was best for our employees. After many discussion and research, we determined that The Domain complex could best accommodate our needs … with easy access to public transportation and plenty of options for lunch and shopping,” Sharples said. “We also like that it was mixed-use development not only with offices, shopping and eating, but also convenient to hotels and apartments.”

Austin-based Endeavor Real Estate Group is the master developer of the The Domain with Simon Property Group (NYSE: SPG) developing the regional outdoor mall — sometimes referred to as Austin’s second downtown. Endeavor partnered with Shorenstein Co. and RREEF to build the HomeAway headquarters and the associated retail. The HomeAway Domain office encompasses four stories or 114,665 square feet. The street-level retail, which is handled separately by Endeavor, is 25,000 square feet. The shell structure was designed by Gensler and the build-out of the overall structure was handled by Spawglass.

Other offices that HomeAway occupies besides its downtown headquarters and the Domain are Penn Field off of South Congress Avenue, an office in the Pure Austin gym in East Austin and temporary space at Research Park Plaza in Northwest Austin.

“All offices are built with employees in mind,” Sharples said. “We seek to build spaces that our employees love to work in while making sure that they also exude our corporate mission and brand.”

Since collaboration and communication are paramount among the 970 Austin employees, HomeAway provides shuttles between all the offices.

Companies that participated in The Domain deal besides Endeavor include Lauckgroup for interior design and Harvey Cleary Builders for tenant improvements. Also involved: Kent Consulting Engineers, Furniture For Business, Southwest Strategies Group and Shorenstein Properties

“All the spaces have a travel theme and encompass our slogan, ‘Let’s Stay Together,’” Sharples said. “We want to make sure that every office reminds employees each day that they are helping families and groups create cherished memories.”

HomeAway currently has 13 offices around the world and 1,720 employees.

Sharples said the new office should accommodate corporate growth in Austin for two to three years.


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In Office Market, L.A. Is a Drag

By Max Taves

Values for trophy office buildings in large U.S. cities led by New York, San Francisco and Houston have risen sharply in the past few years, due in large part to demand for office space from the technology and energy industries.

Los Angeles, particularly the downtown section of the city, has been a different story.

Consider the recent sale of the Aon Center, the second-tallest tower on the Los Angeles skyline. The 40-year-old, 60-story property sits on the edge of the city’s financial district on Wilshire Boulevard.

Earlier this month, San Francisco-based Shorenstein Properties LLC purchased the building from Beacon Capital Partners of Boston for $269 million, about 18% less than what Beacon Capital paid for the building seven years ago.

Beacon Capital wouldn’t discuss why the building lost value, but Arty Maharajh, who tracks the Los Angeles office market for commercial broker Cassidy Turley, says years of rising vacancy rates are a primary cause.  The building is currently about 40% vacant.

When Beacon purchased Aon Center in 2007, “it was well leased up and today it is almost half empty,” said Mr. Maharajh, a vice president of research. And pointing to forecasts for downtown Los Angeles office space that show little hope of improved future demand, he adds, “The risk level downtown is DefCon 5.”

To be sure, the office market is doing well in some Los Angeles communities. Technology tenants such as Google Inc.’s YouTube, gossip website TMZ and Sony Corp.’s PlayStation have rushed to the Playa Vista neighborhood near the airport, rapidly filling up new developments at fast-rising rents. Low-slung Santa Monica has some of the highest rents in the city, well above downtown, and attracts private-equity firms and other cash-rich tenants.

But downtown Los Angeles, filled with dozens of buildings built in the 1970s to 1980s modeled after New York skyscrapers, generally hasn’t been attractive to technology companies, which prefer the flexibility to build from the ground up or rehab old industrial buildings.

Meanwhile, the traditional industries located downtown—finance, legal and accounting firms—continue to scale back and few analysts expect that to change soon.

Paul Habibi, a professor of finance and real estate at UCLA’s Anderson Graduate School of Management, estimates that 100,000 square feet of office space has been absorbed downtown this year.

“That’s a drop in the bucket.…It’s not enough to move the needle and that’s in light of the fact that zero new square feet of office space has been delivered downtown,” he said.

So why, considering such a grim prognosis, did Shorenstein buy the Aon Center? Shorenstein and several other office landlords and foreign investors that are buying downtown properties are betting that the area is at the start of a transformation. Other recent buyers include Brookfield Property Partners, Overseas Union Ltd. and Commonwealth Partners.

Russell Cooper, who heads acquisitions for Shorenstein in the Western U.S., concedes that the city’s downtown office market has been weak. But his firm is betting that demand for downtown office space will increase in the future as the area becomes a more attractive place to live, which eventually will encourage employers to relocate there, too.

In September, condo prices were 14% higher than a year earlier, exceeding by two percentage points the rate of growth in San Francisco, according to real-estate research and marketing firm the Mark Co., which notes that 3,700 new rental units are under construction.

Mr. Cooper said downtown’s growing residential population, its burgeoning night-life scene and the city’s rapidly expanding subway and light-rail lines are creating more interest from employers such as architecture and engineering firms, including tenants currently on L.A.’s Westside.

“Tenants are looking to move downtown because it’s a good place…for employees,” he said. “And while the building is older, it lends itself to smaller users.”

Cassidy Turley’s Mr. Maharajh isn’t convinced. He believes the downtown office market won’t improve soon and that many buyers of skyscrapers, which include foreign investors who believe they have found bargains, will be disappointed.

In any event, Shorenstein isn’t solely focused on one high-rise office tower. Reflecting the company’s increasing shift into the more tech- and creative-focused markets, Shorenstein purchased a mostly vacant former manufacturing building in the city’s downtown Arts District in March, and it is part owner of a former postal distribution center in Playa Vista, a popular new hub for tech companies on the Westside.

—Eliot Brown contributed to this article.


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New Mid-Market Food Emporium to be 1st in High-end S.F. Chain

By J.K. Dineen

The Art Deco Market Street building that houses some of San Francisco’s hottest new-economy companies, including Twitter, will soon be home to an ambitious startup in a decidedly old-world business: groceries.

Behind the Art Deco facade at 1355 Market St., the old San Francisco Furniture Mart, construction workers are building out a sprawling $5million food emporium that will be a hybrid grocery market and foodie food court. It will have the staples to take home — milk and eggs, cereal and veggies, meats and breads — but also a taco bar, pizzeria, oyster bar, sushi shop and wine bar.

The market in the Twitter building could be just the start for the Market on Market team. As well as 1355 Market, they are taking over the vacant Big Apple grocery store at Polk and Clay streets. That store, 11,000 square feet that will include a basement sushi bar, is set to open in the spring. A third deal for a 10,000-square-foot store is in the works at Lumina, a 656-unit condo complex Tishman Speyer is building at Main and Folsom streets.

Farm to table

Chris Foley, a San Francisco real estate investor, said the concept is a Northern California farm-to-table play on the Mario Batali’s Eataly Italian emporiums in New York and Chicago. His partners include Bruce Slesinger and Tom Collom of BAT Architects, which designed Small Foods South of Market, as well as Richard Hoff, who ran Napa Farms Market at San Francisco International Airport.

Market on Market will also include six subtenants: Malaysian street food-inspired Azalina’s, Nuubia Chocolat, Blue Bottle Coffee, Farmgirl Flowers, EO Products (skin care) and Project Juice. “We wanted to create community … a bunch of different spaces within the market where you can get to know your neighbors and the people you work with,” Foley said.

When the group first drew up plans to open the grocery store, they envisioned an 8,000-square-foot food hall similar to Canyon Market in Glen Park, where Foley is an investor. Shorenstein Properties, which owns the Twitter building, liked the concept so much it suggested it be bigger.

“Shorenstein said, ‘No, we have 13,000 square feet for you,’” Foley said. “We said OK. Then they came back and said, ‘We have 18,000 square feet.’ We said OK. They came back and said, ‘Why don’t you take it all?’ Now we are at 22,000 square feet and, honestly, if we had another 2,000 square feet, we would be really happy.”

The biggest challenge is that there is no parking. Foley said he doesn’t think that will be an issue, pointing to Canyon Market, where many customers shop daily for that night’s dinner, mostly on their way to and from the BART station a block away. Market on Market will be similar: It’s on top of a BART station and on the city’s busiest bike route, which frequently gets 6,000 one-way bike trips a day.

Moving in

The Mid-Market neighborhood is dense and getting denser. In the past three years, it has attracted Twitter, Uber, Square and Dolby. Already, 2,500 residents have moved into the neighborhood, and another 2,500 are coming as towers sprout up along Mission and Market streets, so there should be plenty of business.

Typical supermarkets do 20 percent of their business in prepared meals, but in the Bay Area that number is more like 40 percent, the highest in the United States, said Helen Bulwik, a consultant who works with grocers.

Retail West commercial real estate partner Matt Holmes, who has represented Whole Foods in the Bay Area, said he thinks Market on Market will do closer to 80 percent “consumable foods” — those meant to be eaten on site or within 12 hours of purchase.

“It will function like a food court with a limited offering of wine, savory snacks and meat,” Holmes said. “It’s not built for the soccer mom walking out with three or four bags of groceries. It’s the impulse buyer, the young urban professional.”

He predicted that the market will be part of a growing group of upscale urban markets that “seem to have no price sensitivity.”

“Anything that makes Whole Foods look like a value, I am all for,” Holmes said. “It’s a huge win for the Mid-Market, but in terms of offering affordable food for everyone who lives there, that is a bit of a push.”

Bulwik said Mid-Market is a “virtual food desert.” She said San Francisco could support additional stores of a similar nature. “You could have a food store on virtually every block — like Starbucks,” she said. “To have 15 locations, to hit the San Francisco limit (allowed under the city’s antichain-store laws), would not be a problem.”

Employing hundreds

Once the three stores are done, the Market group will look at other sites, including Dogpatch, Pacific Heights and West Portal, Foley said.

“When we get our feet grounded we would love to do more. We believe this is what people want in a high-density urban environment,” he said.

Market on Market will eventually employ 200 people, Foley said. Once Market on Polk and Market on Main are open, the company could reach 400 workers. The partners plan to hire more than half of the workers for Market on Market from the surrounding supervisorial District Six, where they’re working with nonprofits on job training.


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Iconic Chicago Buildings Find $1.6 Million in Energy Savings with EDF Climate Corps

Commercial Buildings Seek Innovative Ways to Enhance Energy Management, Cut Costs

By Stephanie Kennard

(Chicago, IL – October 21, 2014) – Today, Environmental Defense Fund announced the findings from EDF Climate Corps in Chicago, a program surfacing scalable energy solutions for multi-tenant commercial buildings in the city. In collaboration with the Energy Center of Wisconsin, EDF trained and placed ten EDF Climate Corps fellows at 26 iconic buildings totaling more than 13 million square feet of commercial space. Within the last 16 months, these fellows have helped building owners and operators identify 6.6 million kilowatt hours in energy savings, worth a total of $1.6 million to participating organizations.

EDF Climate Corps found the greatest energy-saving potential through mapping energy data, analyzing demand response participation, installing sub-meters and deploying tenant engagement programs.

77 West Wacker Drive, a prominent Class A building, had already reduced energy consumption by 32 percent by participating in demand response and other energy efficiency efforts. EDF Climate Corps worked with JLL, the building’s managing agent, to develop a 26.5 percent energy reduction goal by 2018, allowing the building to join Mayor Emmanuel’s Retrofit Chicago initiative.

“EDF Climate Corps provided us with the education and resources to make smarter decisions. It is priceless,” Myrna Coronado-Brookover, Senior Vice President and General Manager at JLL said.

Shorenstein Properties, a national commercial real estate company, worked with EDF Climate Corps to gain deeper insight into energy use at its River North Point building. By mapping energy use and analyzing data from over 140 electric meters throughout the building, the EDF Climate Corps fellow uncovered efficiency opportunities from cooling, heating and lighting. The fellow also coordinated a tenant education program that has led to the building’s participation in the Chicago Green Office Challenge.

“Shorenstein is committed to continuously evaluating and improving building performance. Participation in the EDF Climate Corps is a key part of our sustainability strategy,” Jaxon Love, Sustainability Program Manager at Shorenstein Properties, said. “Our EDF Climate Corps fellow at River North Point helped us unlock deeper efficiency opportunities in the building, and we anticipate a great return on investment from our involvement in EDF’s Chicago initiative.”

EDF Climate Corps also found that Class B commercial buildings could save hundreds of thousands of dollars annually by scaling energy efficiency practices across their entire portfolios. However, many need help developing turnkey processes and automating their energy management systems to surface energy-saving opportunities.

Local property investment company, Urban Innovations, tasked its EDF Climate Corps fellow with developing an automated, capital budgeting tool that allowed it to refine its budgeting process and drive significant energy and cost savings efforts. In analyzing Urban Innovation’s budgeted projects for the coming year, the tool has already identified more than $72,000 in immediate rebates and driven capital equipment decisions that will yield $70,000 in annual energy cost-savings.  

“EDF Climate Corps helped us to find the best ways to manage our impact on the environment,” Mike Scilingo, President of Urban Innovations said. “As Urban Innovations continues its efforts to re-use existing buildings, we hope this new tool will serve as a financial planning prototype for similar buildings.”

EDF’s work to advance energy management in Chicago’s commercial buildings joins the efforts of Mayor Emmanuel’s Retrofit Chicago, the Natural Resources Defense Council and C40 to reduce building energy use by 20 percent over the next five years.

“EDF Climate Corps provides the hands-on help organizations need to dig into the complexities of energy efficiency, project financing, data management and demand response,” Ellen Bell, Senior Specialist at EDF said. “Our goal is to cut energy use in a critical mass of downtown buildings – creating a tipping point that drives large-scale reductions in energy costs and emissions for buildings across the city.”

The ten organizations participating in EDF Climate Corps in Chicago are CBRE for 100 N Riverside Plaza, GlenStar Asset Management, Institute of Cultural Affairs, JLL for 77 W Wacker Drive, MacArthur Foundation, Merchandise Mart, River North Point, select Skidmore, Owings & Merrill designed buildings, South Street Capital and Urban Innovations. Since its launch in 2008, EDF Climate Corps has identified $1.4 billion in total energy-savings for more than 300 leading companies, cities and universities across the U.S. and China.  

See the full list of organizations that have participated in EDF Climate Corps at edfclimatecorps.org.

# # #

EDF Climate Corps, a premier fellowship program, places specially trained graduate students in companies, cities, universities and nonprofits as dedicated problem-solvers. Connect with EDF Climate Corps at edfclimatecorps.org.

Environmental Defense Fund (edf.org), a leading national nonprofit organization, creates transformational solutions to the most serious environmental problems. EDF links science, economics, law and innovative private-sector partnerships. Connect with us on EDF Voices, Twitter and Facebook.


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Shorenstein’s Plans for 800 Bell Tranformation

Inside the former Exxon Building’s Tranformation

by Jenny Agee-Aldridge

You can add another tower to the ever-growing lineup of new buildings on tap for downtown Houston, according to Transwestern.

Currently known by its address, 800 Bell, the 45-story tower occupied by Exxon Mobil Corp. is not being renovated. It’s being reconstructed, said Eric Anderson, executive vice president at Transwestern’s Houston office, which is marketing the property.

“It will be a newly developed product. The only thing that is being reused is the concrete. Everything else will change,” he said. “It will have all the same attributes of the new office buildings being constructed downtown.”

The new design will include floor-to-ceiling windows, 9-foot ceilings, widened floor plates, a three-floor expansion of the existing parking garage, a 12,000-square-foot fitness center, a food service area, an outdoor courtyard, a conference center and a connection to the underground tunnel system.

The cost of the rebuild was not disclosed. Tellepsen Builders is the general contractor and Ziegler Cooper Architects is the designer.

San Francisco-based Shorenstein Properties bought the 1.2 million-square-foot tower from Irving-based Exxon Mobil Corp.(NYSE: XOM) in January of 2013. Exxon has leased back the entire building until March 2015, when renovation work will begin. It will be ready for occupancy in January 2017.

Although no tenants have signed on, Anderson said many companies have shown interest.

Several older buildings in downtown Houston, including Pennzoil Place, 1001 McKinney and the Esperson Building, are undergoing major renovations to better compete with new office buildings being built.

It could be an investment that pays off.

Of the 13 major downtown office markets in the country, Houston is among the three with the lowest vacancy rates and is one of the most expensive. Downtown Houston’s average office vacancy rate went down from 9.2 percent in the second quarter to 8.7 percent in the third, reports CBRE.


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Communicating Sustainability Performance: Shorenstein’s Viewpoint

By Jaxon Love

Sustainability reporting is moving from best practice to standard practice in the real estate industry. As the need for climate action becomes increasingly evident, both publically traded and privately held real estate companies are recognizing the business case for communicating their corporate responsibility actions and quantifying the results. Shorenstein’s road to sustainability reporting resembles that of many peers in the industry. In 2008, with increased sensitivity to environmental issues, we began implementing new and creative strategies to operate our properties better. A multi-departmental committee, charged with developing a sustainability program, launched more than 30 initiatives to increase resource efficiency, reduce chemicals and waste and engage tenants. Since that time, we have saved $8.2 million in operating costs and cut carbon emissions equivalent to taking 1,500 cars off the road.

This year, with heightened stakeholder interest in sustainability, we decided to tell our story. It’s the story of implementing “G.R.E.E.N. Initiative” operating procedures, benchmarking utility consumption and helping tenants make an impact, with 13 million sq. ft. of LEED-certified property, 47 Energy Star buildings and a nationwide “Energy Savings Tour” that saved $1.7 million in one year. Looking back on our 2008 baseline, the Shorenstein 2013 Sustainability Report shows how far we have come.

And looking back on the broader real estate corporate responsibility movement shows how far building owners and operators have come. Companies no longer ignore or deny their impact on the planet. Nor can they redeem a tarnished image with a superficial “greenwash” marketing campaign. Today, stakeholders expect transparency. Companies are responding with sustainability disclosures that increasingly approach financial accounting quality in terms of completeness, timeliness, reliability and comparability.

Let’s take stock of the drivers, reporting frameworks and operating platforms that factor into a real estate sustainability reporting strategy.

The drivers

With September’s United Nations Climate Summit proceedings and surrounding demonstrations as a backdrop, let’s consider the motivators. Public disclosure is being driven by three key stakeholder groups: investors, tenants and regulators. These audiences want to know the size of the environmental footprint left by commercial buildings and what actions companies are taking to reduce it.

Investors are recognizing that global climate change presents real risks to asset value, in the form of both extreme weather events and the probability of future carbon regulation. They have also found that sustainable operating practices correlate with strong financial performance, and they increasingly factor corporate responsibility to investment decisions.

Tenants consistently rate green operation as important to their leasing decision. They want to be good stewards of the planet and they understand that the buildings they lease constitute a substantial part, if not the majority, of their environmental impact. Tenants care about indoor environmental health for employee productivity and job satisfaction. Our annual tenant satisfaction survey clearly identifies sustainability as a key ingredient for tenant attraction and retention.

Governments, especially at the local level, are taking bold steps to measure and manage their environmental impact. Buildings use nearly 40 percent of U.S. energy and 13 percent of potable water. Regulations are now in place requiring approximately 50,000 of the nation’s largest private buildings in 11 of its biggest cities to annually disclose utility information, with more legislation anticipated. Additionally, the threat of rising seas and increasingly extreme weather events is driving planning and code departments to consider resiliency in land use planning and development.

The reporting frameworks

Disclosures on corporate responsibility are certainly not unique to real estate. According to Ernst and Young, 95 percent of the 250 largest global corporations as well as a majority of the Fortune 500 produce sustainability reports. As a broader business trend, the concept of materiality is expanding beyond the traditional financial accounting scope to include environmental, social, and governance (ESG) factors. Since its establishment in 1997, the Global Reporting Initiative (GRI) has grown into the most widely adopted reporting framework in the U.S. and internationally. More recently, the Sustainability Accounting Standards Board has been engaging with business and the Securities Exchange Commission to define industry-specific disclosure standards.

In the real estate industry, the Global Real Estate Sustainability Benchmark (GRESB) has gained widespread investor recognition as a source of comparable sustainability data. This year, 637 entities representing $2.1 trillion in real estate assets participated in the GRESB survey. To engage tenants, property managers utilize newsletters, informational factsheets, online resource sites and Earth Day events to communicate efforts and encourage involvement. Energy benchmarking regulations in 11 of the nation’s largest real estate markets have mandated disclosure of building carbon footprints and have made building efficiency public information.

The operating platform

Good sustainability reporting flows naturally from an effective sustainability program. Walking the talk on corporate responsibility is essential. Fortunately, it isn’t that hard. A program should be operationally-focused and consist of strong policies, effective training, good data, smart efficiency investment and tenant engagement. Here are the foundational components upon which Shorenstein’s sustainability program is built:

  1. Policies: Put in place building management policies for energy and water management, recycling, cleaning, pest management, landscaping, and indoor environmental quality. Such policies are required by the U.S. Green Building Council’s (USGBC) LEED for Existing Buildings standard.

  2. Training: Once policies are established, give your teams with the knowledge and tools necessary for proper implementation. Training ensures competency and fosters a corporate culture that embraces sustainable operation. You can develop an in-house training program leverage or external support. The USGBC’s Green Associate credential is an effective means for employees to demonstrate green building competency.

  3. Data: You can manage what you don’t measure. Put in place systems and processes for gathering and analyzing performance information. This does not necessarily require huge outlays of capital for sophisticated software platform (although many great, affordable systems exist). The EPA’s Energy Star Portfolio Manager is free and provides robust tracking of energy, greenhouse gas emissions, and water—the majority of the data inputs needed for sustainability reporting. Furthermore, it is the de facto standard disclosure tool for municipal energy benchmarking compliance.

  4. Investment: Good data will tell you where the biggest efficiency ROI opportunities lie. Invest in proven technologies and better operating practices. Start with the low-hanging fruit, and then climb to the higher branches. Technologies such as VFDs on motors, replacement of inefficient T12 and metal halide lighting, occupancy sensors, low-flow aerators and restroom fixtures payback very quickly, sometimes in a matter of months. Operating practices such as matching HVAC operation to actual occupancy hours and reading water meters daily or weekly have a small price tag but can have a huge impact. ASHRAE’s (formerly the American Society of Heating, Refrigerating and Air Conditioning Engineers) level 1 and level 2 audits can uncover bigger opportunities such as building management system tuning. Energy and water systems must be maintained and frequently calibrated to ensure actual operation is consistent with design parameters. Commissioning and retro-commissioning can often be subsidized with utility incentives.

  5. Tenant engagement: Occupants control the majority of a building’s energy, water and waste. They decide lighting levels and schedules, indoor temperature, and whether electronic devices are left on or turned off after hours. Provide building occupants with the information, tools, and incentives that empower efficiency. You can use lobby events, electronic communications or printed materials (double-sided on recycled paper, of course). Review the green leasing basics, and be sure that brokers understand the mutual benefits. Most people want to choose environmentally-friendly behaviors. Outreach efforts will translate into lower operating costs and higher tenant satisfaction.

Conclusion

The growing body of sustainability reports in the real estate industry, and across the economy more broadly, suggests that investors and managers understand the alignment of financial and environmental performance. It’s about market competitiveness, risk management, and reputation. Together, we are building a sustainable future because it is good for the planet, and good for business.


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707 Wilshire

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Shorenstein Completes Purchase of 707 Wilshire in Los Angeles

Los Angeles – October 9, 2014 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, today confirmed the purchase of 707 Wilshire, a 1.1 million square foot commercial office tower on the southern edge of LA’s financial district; it is currently 59 percent leased. Terms of the purchase, which was concluded with an affiliate of Beacon Capital Partners LLC and which includes an adjacent parking structure at 637 Wilshire, were not disclosed.

Shorenstein made the acquisition on behalf of its tenth real estate investment fund, formed in 2010 with $1.23 billion in committed capital from Shorenstein and its investors.

 
About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored ten closed-end investment funds with total equity commitments of $6.7 billion, of which Shorenstein committed $573.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 55.7 million square feet in transactions with a gross investment value in excess of $13.2 billion.


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Los Angeles Times

 

Southern California office leasing market boosted by job growth

By Roger Vincent

Job growth in Southern California finally produced a robust quarter of leasing for office landlords, who were able to fill long-vacant space and push up rents.

Office leasing is a lagging indicator of the economy; many tenants curtailed the size of their offices in recent years to reflect cuts they made during the economic downturn. Now that trend is reversing as expanding entertainment, media and technology tenants are filling up empty office spaces.

“There was a dramatic shift in the third quarter with explosive growth that elevated market fundamentals to an unprecedented level,” said real estate brokerage Cushman & Wakefield, which compiled the office market data.

Overall, Southern California office vacancy from Los Angeles County to San Diego County fell to 15.7% in the third quarter, the lowest level since 2008, the brokerage said. New leases skyrocketed 55% to 21 million square feet so far this year, compared with 13.5 million square feet leased in the same period a year ago.

A better indicator of growth, however, is the net gain in occupied office space, known as absorption, which during the first three quarters tripled over last year to 4.2 million square feet, the largest expansion since 2006. By year end, gains are expected to surpass those of the last 13 years.

“We had an amazing third quarter,” said Petra Durnin, managing director of research for Cushman & Wakefield. “Things are finally looking up.”

While overall numbers are encouraging for landlords, the new wealth is not being distributed evenly. Certain geographically desirable markets popular with tech and entertainment businesses such as the Westside of Los Angeles County and the “Tri-Cities” of Burbank, Glendale and Pasadena are in strong demand while others are still waiting for action.

“There are still a lot of buildings with vacancy,” said Russ Cooper, managing director of office landlord Shorenstein Properties. “Not all boats have been lifted — but it does feel better.”

Shorenstein is one of several companies going after tech and media tenants by building so-called creative space intended to appeal to them. Tenants in creative fields tend to favor nonconventional office space such as converted former industrial buildings or new low-rise properties with high ceilings and room to roam outdoors.

Shorenstein bought a three-building former industrial complex in the arts district of downtown Los Angeles that dates to 1912. Ford Motor Co. built the complex, where it once assembled Model T’s and Model A’s.

San Francisco-based Shorenstein plans to redevelop the property into a creative office campus with ground floor retail and parking.

“All eyes are still on creative” offices, Durnin said.

Among the markets catering to the creative crowd is Playa Vista, she said, which offers new offices and converted industrial buildings. Third-quarter vacancy there fell from nearly 40% in 2013 to 24.8%.

“A year ago people were questioning whether Playa Vista would be the next logical submarket after Santa Monica” for creative firms, she said. “It’s not a question anymore.”

Seven out of the 10 largest leases on the Westside this year have been in the entertainment and media sector, including two 130,000-square-foot leases in the third quarter, brokerage CBRE Group Inc. said.

“Creative office and campus-style product is the primary driver of the 2.4 million square feet under construction in the greater Los Angeles area,” CBRE Group said in a report. Much of the new construction is in Hollywood.

Several landlords in downtown Los Angeles are looking for ways to attract growing creative firms, but most of the space there is in the traditional corporate high-rises that are out of favor with that crowd. Downtown vacancy ticked up slightly in the third quarter to 21.7%.

Orange County is also experiencing strong job growth, particularly in the healthcare sector, which pushed vacancy down to 14.4% from 14.8%. Asking rents, however, jumped from an average of $1.86 per square foot to $2.06, led by a 30% rent leap in buildings around John Wayne Airport.

One reason for the rent jump is that landlord Irvine Co. recently completed a new tower at 520 Newport Center Drive where it is asking for the highest rents in Orange County at $6 to $8 per square foot, according to brokers.

The comparatively small Inland Empire office market remains weak at nearly 18% vacancy but has improved from 19.6% vacancy a year ago. Average asking rents rose 3 cents to $1.73 a square foot.

Not including San Diego County, vacancy in Southern California was 17% with asking rents of $2.54 a square foot in the third quarter, compared with 17.5% and $2.33 a year earlier.


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GlobeSt.com

 

Shorenstein Closes on Champion Station Buy

The four buildings, totaling 426,000 square feet, are currently fully leased to Champion Station on a short-term basis.

SAN JOSE, CA—Shorenstein Properties LLC has closed on its purchase of the first phase of Champion Station, a four-building, low-rise office and R&D campus at 110-180 West Tasman Dr. in North San Jose. Terms of the purchase, which was concluded with TMG Partners, were not disclosed.

The four buildings, totaling 426,000 square feet, are currently fully leased to Champion Station on a short-term basis. “This is an opportunity to reposition a well-located campus in a market with strong leasing demand and a dearth of available blocks of office space to accommodate large users,” says Douglas W. Shorenstein, CEO and chairman, Shorenstein Properties LLC.

Mike Seifer, managing director of JLL, who represented the seller, tells GlobeSt.com that “There was broad investor interest in this opportunity and tenant activity in the immediate area continues to escalate.  This really demonstrates the continued improvement, maturation and importance of the north San Jose submarket and how this market has been transformed by the entertainment (Levi Stadium), retail and housing development that has occurred in the neighborhood.”

Champion Station is located in North San Jose, in an area that has seen significant ongoing capital investment by both public and private investors. The property is approximately 1.5 miles from Levi’s Stadium, the recently opened home of the San Francisco 49ers, as well as extensive retail and restaurant amenities.

Two major mixed-use developments, totaling more than $7 billion, have been proposed nearby and at least one of those developments is anticipated to begin construction in 2016, according to a prepared statement.

In addition to its location close to housing and workplace amenities, Champion Station is surrounded by several transit alternatives including public transit (light rail, bus, Amtrak, Caltrain, free shuttles) and is within easy access of Highways 101, 237 and 880 and other major thorough fares linking the property to San Francisco, the Peninsula, East Bay and downtown San Jose.

The property is adjacent to the Valley Transportation Authority’s Champion Station light rail stop with trains linking to Caltrain, Bay Area Rapid Transit’s (BART) future Silicon Valley extension and San Jose Mineta International Airport.  

Champion Station is the first investment to be completed for Shorenstein Realty Investors Eleven, a closed-end investment fund formed earlier this year with $1.22 billion in committed capital from Shorenstein and its investors.


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Shorenstein Completes Purchase of Champion Station in North San Jose

Four-building, low-rise technology campus offers transit-oriented
workplace environment in heart of Silicon Valley

San Jose  – September 24, 2014 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, today confirmed the purchase of the first phase of Champion Station, a four-building, low-rise office and R&D campus at 110-180 West Tasman Drive in North San Jose. Terms of the purchase, which was concluded with TMG Partners, were not disclosed.

The four buildings, totaling 426,000 square feet, are currently fully leased to Cisco on a short-term basis.

“This is an opportunity to reposition a well-located campus in a market with strong leasing demand and a dearth of available blocks of office space to accommodate large users.” said Douglas W. Shorenstein, CEO and Chairman, Shorenstein Properties LLC.

Champion Station is located in North San Jose, in an area that has seen significant ongoing capital investment by both public and private investors.  The property is approximately 1.5 miles from Levi’s® Stadium, the recently opened home of the San Francisco 49ers, as well as extensive retail and restaurant amenities.  Two major mixed-use developments, totaling more than $7 billion, have been proposed nearby and at least one of those developments is anticipated to begin construction in 2016.

In addition to its location close to housing and workplace amenities, Champion Station is surrounded by several transit alternatives including public transit (light rail, bus, Amtrak, Caltrain, free shuttles) and is within easy access of Highways 101, 237 and 880 and other major thoroughfares linking the property to San Francisco, the Peninsula, East Bay and downtown San Jose.  The property is adjacent to the Valley Transportation Authority’s Champion Station light rail stop with trains linking to Caltrain, Bay Area Rapid Transit’s (BART) future Silicon Valley extension and San Jose Mineta International Airport.   

Champion Station is the first investment to be completed for Shorenstein Realty Investors Eleven, a closed-end investment fund formed earlier this year with $1.22 billion in committed capital from Shorenstein and its investors. 


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The Registry

 

Shorenstein Raises $1.2B for Latest Investment Fund

By Jon Peterson

San Francisco-based Shorenstein Properties has completed its latest capital raise totaling $1.22 billion for its Shorenstein Realty Investors Eleven limited partnership, according to a spokesperson for the real estate firm. The company had a $1.25 billion hard cap for the capital raise.

The real estate fund manager is expected to have its first property bought for the commingled soon, according to sources familiar with the company.

The San Francisco Bay Area is planned to be one of its key investment markets, which is not surprising. According to the company’s Web site, the fund manager owns several large projects in the region, including San Francisco, South San Francisco, Oakland, Redwood City and Santa Clara.

Shorenstein typically attracts a wide range of investors for its commingled funds. These would include a mixture of pension funds, family offices, foundations and college and university endowments. Around 6 percent of the capital raise, or $75 million, came from Shorenstein itself in the form of a co-investment into the commingled fund.

Realty Investors Eleven has a national investment strategy. The markets it will be buying outside of the San Francisco Bay Area should include Chicago, Boston, Minneapolis, Houston, Seattle, Austin, New York City, Denver and Los Angeles.

The commingled fund has a value-added investment strategy. It typically looks to acquire office buildings or mixed-use properties that might include a predominant office with either a retail or residential component.

Shorenstein looks to buy properties that are well located and have a vacancy or other issues that the manager can address using its in-house leasing, management, construction and capital expertise. The long-range plan for the investment vehicle is to sell each property once it becomes stabilized and can be sold in the marketplace to players looking for a core asset.

The total capitalization for Realty Investors Eleven comes over $3 billion. This will be accomplished as the commingled fund will have a leverage component somewhere in the range of 60 percent to 70 percent.

Shorenstein has had some recent activity buying and selling assets outside of the San Francisco Bay Area. For its Realty Investors Ten commingled fund, it paid $100 million to acquire the 1.1 million square feet Washington Square in Minneapolis. It also is under contract to sell the 229,383 square foot 399 Boylston Street in Boston for $117 million for Realty Investors Eight.


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An L.A. Story about Transformation

By Eliot Brown

The former Hughes Aircraft headquarters has been converted to office space, the latest sign of revitalization in the Playa Vista area. Ratkovich

When Wayne Ratkovich bought the 28-acre former headquarters of Hughes Aircraft Co. RTN -0.47% Raytheon Co. U.S.: NYSE $96.61 -0.46 -0.47% Aug. 26, 2014 4:01 pm Volume (Delayed 15m) : 679,849 AFTER HOURS $96.89 +0.28 +0.29% Aug. 26, 2014 5:30 pm Volume (Delayed 15m) : 17,226 P/E Ratio 14.14 Market Cap $30.16 Billion Dividend Yield 2.50% Rev. per Employee $363,825 just north of Los Angeles International Airport with the intent of converting it to modern office buildings, he figured it would take a while to attract tenants.

It didn’t.

“We barely had an opportunity to clean things up before the tenants began to submit proposals,” said Mr. Ratkovich, who bought the property in 2010 after a prior owner ran into financial distress. He has since leased the low-slung complex in Los Angeles’s Playa Vista neighborhood to firms such as Google Inc. GOOGL -0.41% Google Inc. Cl A U.S.: Nasdaq $588.12 -2.45 -0.41% Aug. 26, 2014 4:00 pm Volume (Delayed 15m) : 1.42M AFTER HOURS $588.26 +0.14 +0.02% Aug. 26, 2014 6:51 pm Volume (Delayed 15m) : 55,201 P/E Ratio 29.88 Market Cap $395.95 Billion Dividend Yield N/A Rev. per Employee $1,321,030 ‘s YouTube and advertising company 72andSunny.

Mr. Ratkovich’s firm, Ratkovich Co., has sold a majority stake in the property, excluding a still-vacant giant hangar where Howard Hughes’s famed Spruce Goose aircraft was constructed.

Atlanta-based Invesco Ltd. IVZ +1.13% INVESCO Ltd. U.S.: NYSE $41.07 +0.46 +1.13% Aug. 26, 2014 4:00 pm Volume (Delayed 15m) : 2.32M AFTER HOURS $41.07 0.00 % Aug. 26, 2014 4:54 pm Volume (Delayed 15m) : 30,185 P/E Ratio 18.50 Market Cap $17.53 Billion Dividend Yield 2.43% Rev. per Employee $856,591 has purchased the stake in the roughly 200,000 square feet of leased properties that values the seven buildings at more than $100 million. Ratkovich also invested tens of millions of dollars to upgrade the property and attract the tenants. Mr. Ratkovich declined to discuss specific terms of the sale.

The deal is likely to result in a big gain for the company and its partner, Penwood Real Estate Investment Management. They paid $32 million for the entire site, including the hangar, four years ago.

“We did not predict an outcome as attractive as this,” said Mr. Ratkovich, who redeveloped the property with his son, Milan Ratkovich, and tried to lure tenants by installing amenities such as surfboard racks, free bikes and barbecue pits.

The increased value of the former Hughes headquarters is the latest sign of the revitalization of the Playa Vista area, a dream that was envisioned at least three decades ago. The area, which used to be a sprawling Hughes airfield, was targeted to be transformed into a master-planned minicity in the 1980s.

But for years, Playa Vista has largely been characterized by delays and deferred ambitions as numerous planned projects never took off.

This time, it’s a different story. The area has emerged as an unexpected hot spot among one of the economy’s fastest-expanding sectors—media, advertising and tech companies—underscoring how those industries are changing neighborhoods and boosting the fortunes of developers.

Mr. Ratkovich isn’t alone among developers who are capitalizing on the area’s changing fortunes.

One mile away, a venture of Los Angeles developer Worthe Real Estate Group and San Francisco-based Shorenstein Properties paid $44 million for a former postal distribution center in 2011. A prior owner had surrendered it to creditors after the downturn.

The new owners replaced the drab industrial walls with glass and added a fitness center and beach volleyball court. The complex, named the Reserve, is now fully leased with companies including Sony Corp.’s 6758.TO -0.81% Sony Corp. Japan: Tokyo ¥1,956 -16 -0.81% Aug. 26, 2014 3:00 pm Volume (Delayed 20m) : 7.21M P/E Ratio N/A Market Cap ¥2,067.81 Billion Dividend Yield 1.28% Rev. per Employee ¥55,815,900 PlayStation unit and celebrity-gossip website TMZ, the types of companies that are prized by landlords for their fast growth.

Playa Vista rents have risen, even while many other neighborhoods in Los Angeles, including the downtown, have seen sluggish growth.

Take the case of Vantage Property Investors, which redeveloped a former ATM servicing facility in Playa Vista into office space aimed at entertainment companies. Ned Fox, Vantage’s chief executive, said he was expecting net rents of about $24 a square foot when he bought the 195,000-square-foot complex in 2011. Since then, rents have risen by more than one-third, he said, to about $33.

The property, called Playa Jefferson, is about 50% leased today. Mr. Fox said he is in discussions with several companies to lease the rest of the property.

The first developer to try to redevelop the Hughes airfield and headquarters was Maguire/Thomas Partners, which bought most of Playa Vista from a successor to Hughes Aircraft in the 1980s. At one point, DreamWorks Animation SKG Inc. DWA +0.90% DreamWorks Animation SKG Inc. Cl A U.S.: Nasdaq $22.42 +0.20 +0.90% Aug. 26, 2014 4:00 pm Volume (Delayed 15m) : 1.07M AFTER HOURS $22.18 -0.24 -1.08% Aug. 26, 2014 5:30 pm Volume (Delayed 15m) : 7,398 P/E Ratio N/A Market Cap $1.88 Billion Dividend Yield N/A Rev. per Employee $285,614 considered the area for a giant studio complex.

But Maguire/Thomas was held back by lawsuits and sluggish leasing progress. The company struggled for years to get it off the ground.

“Playa Vista’s taken a long time,” said Mr. Fox, who was a top executive at Maguire at the time. “It shows how difficult it is to make substantial returns on a project that takes several cycles.”

Carl Muhlstein, managing director at real-estate-services firm JLL who has been working on leasing the Reserve, compared the experience of developers in the area to Manhattan’s Meatpacking District and San Francisco’s South of Market a generation ago.

“Those who pioneered and those who took positions had handsome payoffs, and Playa is no different,” he said.

More development is in store. New York-based Tishman Speyer Properties, which built a successful development in Playa Vista before the recession but also lost a large swath of land to creditors after the economy turned, is building another office development aimed at creative tenants. And Robert Maguire, who built many of Los Angeles’s downtown towers before losing them in the recession, is looking for investment partners to start a new development at his property in the area, known as Water’s Edge.

The increase in office workers has helped give rise to a long-planned mixed-use complex being constructed by Lincoln Property across from Mr. Fox’s project, where a Whole Foods, a movie theater and hundreds of residential units are planned.

For Mr. Ratkovich, another payoff could be in store. According to several people familiar with the discussions, Google is in early talks to lease the hangar site on the property, a complex with more than 300,000 square feet that has been used as a Hollywood set for movies, including “Transformers.”

Asked how much more the property would be worth if he can secure a tenant for the complex, Mr. Ratkovich said it would be a “very successful” investment.


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Shorenstein Purchases 1.1MSF Minneapolis Office Portfolio

Minneapolis, Minn. – August 22, 2014 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, has closed on the purchase of Washington Square, a portfolio including three office buildings, a parking garage and an adjacent development parcel in downtown Minneapolis.  
 
The three buildings are 20 Washington Square, a 6-story office building which is fully leased to a single tenant on a long term lease; 100 Washington Square, a 22-story multi-tenant office building which is currently 71 percent leased; and 111 Washington Square, a mixed-use building with 15 floors of vacant office space above two floors of below-grade data center space.  The purchase includes a 7-level parking structure with 900 spaces and an adjacent 1.25-acre development parcel which currently serves as surface parking.
 
The property sits at the convergence of the downtown core and the burgeoning North Loop neighborhood.  Shorenstein also owns 33 South Sixth Street, a 1.6 million s.f. mixed use office/retail property just four blocks away on the Nicollet Mall.
 
“This property provides us with solid income in place as well as the opportunity to add value over the life of our investment by using our in house experience in repositioning and leasing large scale urban environments,” said Douglas W. Shorenstein, President and CEO, Shorenstein Properties.  “This is a well located asset, fully in the path of growth, that already has significant amenities to appeal to today’s tenants,” he added.
 
100 Washington Square has a state of the art conference facility, full service cafeteria, fitness center and two levels of below-grade parking. 111 Washington Square includes 90,000 s.f. of data center space, which is 64% leased, and is one of few properties in the market able to offer more than 200,000 s.f. of contiguous office space.
 
Shorenstein made the acquisition on behalf of its tenth real estate investment fund, formed in 2010 with $1.23 billion in committed capital from Shorenstein and its investors.


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Shorenstein pays $100M for Washington Square buildings in downtown Minneapolis

By Sam Black

Shorenstein Properties, a San Francisco-based real estate investment firm, closed Wednesday on its acquisition of the three-building Washington Square campus in downtown Minneapolis.

The price of the 1 million-square-foot portfolio hasn’t been released, but sources close to the deal put it around $100 million.

I reported in early July that Shorenstein had a contract to buy the buildings from a real estate investment fund managed by Los Angeles-based CommonWealth Partners. CommonWealth last year hired Eastdil Secured to market the buildings for sale.

Shorenstein is buying the complex through its Fund Ten investment vehicle, a $1.2 billion fund that also paid $205 million to acquire 33 South Sixth/City Center, a 50-story office tower in the heart of downtown Minneapolis.

With both deals, Shorenstein is quickly building up a portfolio with economy of scale in this market.

The Washington Square campus includes:

  •     20 Washington Square (20 Washington Ave. S.); leased to Voya Financial (formerly ING); 148,100 square feet over six stories
  •    100 Washington Square (100 Washington Ave. S); multi-tenant building about 80 percent leased; 481,600 square feet over 22 stories
  •     111 Washington Ave. S. (245 Marquette Ave. S); mostly vacant multi-tenant building; 422,900 square feet over 15 stories
  •     A parking ramp at 25 First St. N. with about 1,000 stalls and a surface parking lot along Hennepin Avenue that could be developed for offices, a hotel or housing

The last recorded sale of these properties was in January 2008, when a partnership that included Hines Interests of Houston and the California Public Employees Retirement System (CalPERS) bought them for $118 million from Amsterdam-based insurance firm ING Group. Hennepin County’s estimated market value of the properties for tax purposes is $60.4 million. In 2010, CommonWealth replaced Hines as manager of the CalPERS partnership.


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Shorenstein Publishes its First Report on Sustainability Achievements

San Francisco, CA – August 18, 2014 – Shorenstein Properties LLC announced the release of its 2013 Sustainability Report.  A milestone in Shorenstein’s long-standing commitment to reducing the environmental footprint of its real estate operations, the report summarizes the company’s sustainability efforts and achievements through year-end 2013.

Although this is the first comprehensive public sustainability disclosure by Shorenstein, the company has worked for many years on environmental performance initiatives that benefit properties, tenants, employees, and the broader communities in which the company operates.  Since 2008, Shorenstein has reduced operating expenses by $8.2 million and cut carbon emissions by over 30,000 metric tons – the equivalent of taking 1,500 cars off the road.

Among the highlights of the report:

  • $1 million personal leadership commitment by Doug Shorenstein toward a targeted expansion of the Environmental Defense Fund’s Climate Corps summer fellowship program.
  • 11.9% reduction in portfolio-wide energy intensity since 2008, equivalent to taking 1,800 homes off the grid.
  • 13 million square feet of LEED-certified office space.
  • A signature Flip the Switch tenant sustainability program, with online resources and targeted outreach campaigns.
  • Case studies featuring the sustainable redevelopment of Market Square in San Francisco, CA and the energy-efficient retrofit of Palisades Office Park in Atlanta, GA.
  • Leadership in local sustainability initiatives in markets including Boston, Houston, Minneapolis, Seattle, and Washington, DC.
  • LEED professional credentialing support for all Property Managers.

Shorenstein has been a firm advocate for sustainability within the real estate industry.  The company is a member of the Department of Energy’s Better Buildings Challenge, with a public commitment to reducing energy use 20% by 2020 and to sharing energy efficiency best practices with industry peers.  Shorenstein is a Gold-level corporate member of the U.S. Green Building Council and a member of the Environmental Protection Agency’s ENERGY STAR program for commercial buildings.

About Shorenstein Properties LLC
Founded in 1924, Shorenstein Properties LLC is a privately-owned real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Since 1992, Shorenstein has sponsored eleven closed-end investment funds with total equity commitments of $7.9 billion, of which Shorenstein committed $648.7 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 53.5 million square feet in transactions with a gross investment value in excess of $12.1 billion.


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Twitter Tour

Twitter’s future home at 1 Tenth just got named LEED Gold, and we got an exclusive tour with Shorenstein’s Jim Collins this week. He expects Twitter to retain the exposed ceiling look throughout. Also on the floor were super secret mock furniture layouts we couldn’t shoot. Windows were just 2×2 feet when Shorenstein bought the property, and after they were replaced with an extended glass curtain wall, the building actually grew by 1,000 SF on each floor.

Jim calls 1 Tenth’s leather-lined lobby an “innovative” choice by Doug Shorenstein, who decided it would be an interesting way to panel the walls. Marble dating back to 1937 was repurposed from the neighboring 1355 Market building, sent to a mill and cut into uniform panels.

Jim’s chilling next to the alleyway’s new fire pit, which will soon be the hot spot once the fall hits and the retailers around the private park start opening their doors. (Market on Market seems to be the furthest along, and Dirty Water—which will boast the city’s most-expensive bourbon list—and Cadillac will follow.) Fitness SF already opened its sales office; he reveals Shorenstein also chatted with Equinox and 24 Hour Fitness but they all wanted two stories of space (Fitness SF only needed one). The retail is all leased except for a 3,600 SF space.

On the 10th floor we spied on the Twitterati of the world across the way, playing cornhole and dining al fresco. This year Twitter signed a lease at 1 Tenth for floors two and five through 10, with an option to take three and four.

At the time of purchase, 1355 Market had columns clad with a brass faux Egyptian pattern. Those brass panels were repurposed into an art display in the lobby (this is his favorite perspective and place to perch). What’s also behind him used to be the entrance to the garage down ramp. It was turned into 1355′s second lobby with six high-speed elevators.


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Shorenstein Receives LEED Gold Certification for 1 TENth Street in San Francisco

San Francisco, CA – August 1, 2014 – Shorenstein Properties LLC announced the LEED Gold certification of 1 TENth, a newly redeveloped Class A office building located in the Mid-Market submarket of San Francisco.  The building achieved Gold certification under the LEED Core and Shell rating system.

1 TENth, formerly known as 875 Stevenson Street, was built in 1975 as an expansion to the historical 1355 Market Street known as the “San Francisco Mart and Western Merchandise Exchange”, offering wholesale home furnishings to design professionals and retailers.  Shorenstein Properties acquired the building in March 2011 on behalf of its ninth investment fund with the intent to modernize and upgrade the Property to a Class A standard for creative office use.  The newly re-clad 1 TENth is a cutting edge 10-story office structure comprised of 338,000 square feet.  Construction began in April 2013 and is currently 78% leased by Twitter and Fitness SF.  Twitter will take occupancy in 2015 and Fitness SF by the fall of 2014.  The redevelopment, designed by RMW Architecture includes a seismic upgrade, installation of a new unitized glass curtain wall, upgrades to the mechanical, electrical, plumbing, fire protection, life safety, and security systems, and renovated restrooms and lobby.  1 TENth and 1355 Market Street are joined by a recently constructed landscaped plaza that creates a cohesive urban campus environment.

The LEED Core and Shell rating system is designed to meet the needs of commercial property development and redevelopment projects.  This rating system addresses the sustainability of base building elements including the site selection, mechanical and electrical systems, plumbing, fire protection, and building envelope.  Core and Shell enables certification of building interior space by tenants under the LEED for Commercial Interiors rating system.

Some sustainability highlights of 1 TENth include:

•    Low flow restroom fixtures and automatic faucets to reduce domestic water consumption
•    Energy-efficient heating, cooling, and ventilation system
•    Direct electrical sub-metering for tenant spaces
•    Recycling program for the diversion of construction materials from landfill
•    Card-accessed secure bicycle storage and showers
•    Renovated lobby using reclaimed marble from 1355 Market
•    Window replacement with high-efficiency glazed glass

Shorenstein owns more than fourteen million square feet of LEED-certified property at the Silver level or higher.  Thirty-eight buildings currently owned by the company are LEED certified. Shorenstein recently sold Mission Tower II, a LEED Platinum office building in Santa Clara, CA, and is in the formal process of pursuing LEED certification for one additional building.

Shorenstein’s commitment to sustainability extends well beyond its LEED program.  The company is a partner in EPA’S ENERGY STAR® program and 78 percent of its portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.  More information about Shorenstein’s sustainability program can be found at www.shorenstein.com/sustainability.


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Environmental Stewardship and the Modern Landlord: Lincoln Center, Tigard, Oregon


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Downtown Minneapolis Retail Evolves as Residents Move in

The upscale apartment boom’s demographic changes give retailers new opportunities

By Janet Moore

Come Aug. 1, residents will begin moving into Nic on Fifth, a $100 million luxury apartment tower on the northern flank of Nicollet Mall.

The 253-unit building is part of a continuum of residential development expected to stretch toward the Mississippi River — rising up from an unattractive panorama now largely made up of surface parking lots.

As hundreds move into upscale housing on or near the northern stretch of Nicollet Mall, they’ll have a heavy influence on the often-challenged retail market of downtown Minneapolis, where change is already afoot.

“Any time you bring more people downtown, it will have a positive impact,” said Bryan Moeller, manager of the R.F. Moeller jewelry store in Gaviidae Common I. The demographics of new downtown residents will bolster his business, he said: Affluent empty-nesters can well afford new jewelry, and millennials may be on the hunt for engagement rings.

The mall’s three major shopping centers — Gaviidae Common I and II and City Center — are all being repositioned by their relatively new out-of-state owners. At the same time, Saks Off 5th confirmed this month that it will close its department store at 655 Nicollet Mall, though the retailer said it may move elsewhere downtown.

In general, once the population in an urban area nears the 40,000 to 50,000 mark, “you’re at a tipping point in retail development or retail rebirth,” said Liz McLay, a Minneapolis retail consultant working with San Francisco-based Shorenstein Properties, owner of City Center. At that point, a city’s core becomes more of a 24/7 destination as opposed to a 9-to-5 weekday locale, she said.

The population of downtown Minneapolis now stands at about 37,000.

“Retailers will follow the residents,” McLay said.

Next step in continuum

Experts say downtown is fortunate to already have a Target store at 9th Street and Nicollet Mall and a new Whole Foods grocery on the 200 block of Hennepin Avenue, plus Lunds stores nearby in Northeast and near Loring Park. “Fifteen years ago, you couldn’t beg, borrow or steal to get a grocery store downtown,” said Steve Cramer, president and CEO of the Minneapolis Downtown Council.

The restaurant scene on the southern end of Nicollet Mall and in the Warehouse District and North Loop appears to be robust, too. The next step in the shopping continuum typically involves attracting “service-oriented” retailers — such as dry cleaners, drugstores and hair salons — as well as fashion-oriented local boutiques and then national retailers.

A good litmus test for retail along the northern stretch of Nicollet Mall is Gaviidae Common II, the former Neiman Marcus wing that is being renovated by KBS Real Estate Investment Trust III.

The top two floors of the mall, which include the former food court, are being converted into office space. The skyway and street levels will be devoted to convenience- and service-oriented retail, said Sonja Dusil, senior director at Cushman & Wakefield/NorthMarq, who is leading the leasing effort. While Ann Taylor and Talbots have departed, the D’Amico restaurant and Caribou Coffee outlet will remain.

Retail consultant Michael Berne said success along Nicollet Mall isn’t dependent on any one group of consumers. “While additional rooftops are an important part of the equation, one or two new towers only represent a tiny fraction of what a retailer would need to sustain the relatively high occupancy costs of a Nicollet Mall location,” he said.

Other “traffic drivers,” such as office workers and tourists, “also generate large pools of potential customers, and that ultimately, the retail mix in a downtown setting of this scale will require destination appeal and need to draw from further afield,” said Berne, who is working with the city and the Downtown Council on retail issues.

More office workers, too

On top of the anticipated surge in rental development, which will also include the 30-story 4Marq upscale apartment tower, the population of office workers on northern Nicollet Mall also will increase in the next two years.

The former Neiman Marcus building will become home to 350 CenterPoint Energy employees by early 2015. Opus has already begun construction of a headquarters expansion for Xcel Energy Corp. on the 400 block of Nicollet Mall, a stone’s throw from the recently converted Soo Line Building City Apartments and its skyway connection to downtown buildings.


Shorenstein Press Center

Source

The Seattle Times

 

Amazon Fills up Another Four Office Building

By Sanjay Bhatt

Amazon.com has finalized long-rumored office leases for more than 546,000 square feet in three Seattle buildings, and inked yet another deal for 26,000 square feet in the newly renovated historic Supply Laundry Building, public records show.

Applications filed with the city within the past week show the technology giant is preparing to move into office space at Blanchard Plaza, Fifth & Bell and 635 Elliott Ave. W. The possibility of leases at the first two buildings has been circulating in the real-estate brokerage community since last fall, while talk of a lease with Seattle developer Martin Selig leaked earlier this year.

That’s a significant expansion of its already hefty footprint in Seattle: Amazon already leases or owns more than 5.2 million square feet of office space, including about 2 million square feetunder construction. The tech juggernaut also has approvals to build another 2.2 million square feet on its future Denny Triangle campus and earlier this year bought nearly an entire city block from Clise Properties.

At Blanchard Plaza, Amazon has signed an 11-year lease for more than 255,000 square feet, public records show. Permits for tenant improvements show Amazon will occupy most of the 15-story building, which is owned by San Francisco-based Shorenstein Properties. The improvements include a $2.5 million remodeling of the building’s second floor for conference rooms and offices, records show.

At Fifth & Bell, which is owned by Houston-based Hines, Amazon has received a permit for improvements on the first, second and third floors of the six-story building. The space adds up to just over 100,000 square feet.

And at 635 Elliott Avenue West, Amazon has agreed to a five-year lease for the four-story building with expansive views of Elliott Bay. Amazon applied for a permit last week for improvements to all four floors.

In addition, Amazon.com has signed a 10-year lease with developer Vulcan for the office portion of the historic Supply Laundry Building and for parking rights in the parking garage beneath the Stack House Apartments, public records show. The building is at the corner of Republican Street and Yale Avenue North.

Vulcan, which redeveloped the century-old brick structure, confirmed the 26,000 square-foot office space has been leased but refused to comment on the tenant. Vulcan also developed the 278 apartments on the block.

Amazon officials didn’t respond to a request for comment on Monday.


Shorenstein Press Center

Source

MIS Asia

 

The Internet of Things Gets Real

By Bob Violino

Practical applications are emerging for connected devices in key industries.

And of course ensuring IoT data security is a big challenge for the industry. Despite these issues, there are IoT initiatives under way today. Here are a few examples from different industries.

Water Management

HydroPoint Data Systems, a water management company in Petaluma, Calif., is leveraging real-time, two-way wireless communications via AT&T’s machine-to-machine network; big data analytics and the cloud to offer customers an automated system that eliminates water waste while monitoring and protecting against damages caused by leaks and runoff.

The system, called WeatherTRAK, has more than 25,000 subscribers who in 2013 saved more than 20 billion gallons of water, 77 million kilowatt hours of electricity and about $143 million in expenses, according to Chris Spain, CEO and president of HydroPoint.

WeatherTRAK is a smart irrigation controller that replaces existing timers with an Internet-enabled controller that can comprehend data inputs delivered from the Internet — such as weather data — and provide proactive management to water supply maintainers via a Website and mobile application.

HydroPoint’s platform connects a site’s irrigation system and sprinklers, master valves, flow sensors, historical water bills, water budgets and site-specific weather data into an integrated management framework, Spain says.

“In the field, we utilize machine-to-machine communications, data over power lines and wireless communications back to the cloud,” Spain says. The company, “really couldn’t deliver our service without IoT in any cost effective fashion,” Spain says. “Water management systems, by their very nature, can change from one moment to the next so having real-time monitoring is essential.”

Product Tracking

Pirelli, one of the world’s largest tire manufacturers, is gaining insights about the performance of its products in near-real time directly from sensors embedded in the tires.

Using SAP’s HANA data analytics platform, the Milan, Italy, company can manage the enormous amounts of data from its Cyber Tyre products. The tires contain sensors that collect data about tire conditions and performance that influence safety, control and vehicle dynamics.

The tire-mounted sensors enable fleet managers to remotely view tire pressure and temperature, as well as the mileage for each tire. With the HANA platform, the company can run reports on product performance and deliver timely and accurate sales and distribution information, which can lead to more efficient manufacturing and business processes.

According to SAP, Pirelli is building systems to enable the integration of vehicle position and operating data for purposes such as vehicle protection and control; information about traffic, road conditions and parking; remote vehicle behavior and diagnostics; management of logistics and of industrial vehicle fleets; and automated emergency calls.

Smart Lighting

Shorenstein Properties, a San Francisco-based real estate business, recently retrofitted parking lot light fixtures at its Santa Clara Towers office complex to LEDs, and at the same time integrated networking capabilities, creating a “Light Sensory Network” (LSN).


Shorenstein Press Center

Press Contacts

Andrew Neilly

T 925.930.9848

 

The Russ Building Earns BOMA Innovative EARTH Award for Tenant Engagement Program

San Francisco, CA – May 5, 2014 – Shorenstein Properties LLC announced that the Russ Building has received the BOMA San Francisco Innovative EARTH Award for the company’s “I Will if You Will” Energy Savings Challenge.  The Challenge, part of Shorenstein’s signature Flip the Switch tenant engagement program, empowers tenants to save energy and greenhouse gas emissions by tracking office equipment energy use with modlet™ monitoring outlets.

Bill Whitfield, The Russ Building’s General Manager, accepted the award at the April membership meeting of the San Francisco Building Owners and Managers Association (BOMA).  Whitfield helped Shorenstein design the “I Will if You Will” Challenge and pilot tested it with two tenants in 2013.  Challenge participants committed to shutting off computers, monitors, printers, coffee makers, and other office devices, which are commonly left on after business hours.  Overall, pilot tests of the Challenge demonstrated average energy savings of 45% over baseline measurements.    

The “I Will if You Will” Challenge provides building occupants with personalized information and feedback on the impact of their energy management actions.  Property Managers offer a fun reward such as a gift card raffle or pizza party (the “I Will”) if participants commit to adopting energy saving strategies for their office devices (the “You Will”).  Participants use modlets, made by ThinkEco Inc., to wirelessly transmit real-time office device energy use information to an online dashboard.  The modlet, which earned a 2014 Top Product Award from Building Operations Management, is also able to save energy through an automated on/off schedule.  “Shorenstein’s Challenge educates individuals about plug load energy use and prompts behavior changes.  That is exactly what we designed the modlet for – to reduce energy consumption and greenhouse gas emissions from everyday appliances and electronics,” said Jun Shimada, CEO at ThinkEco.

According to Whitfield, tenant feedback has been overwhelmingly positive.  “Participants are very excited about the modlet technology and the opportunity to learn just how much energy their computers and other devices use – and how much can be saved,” he said.  For the ClimateWorks Foundation, one of the Russ Building pilot tenants, the Challenge allowed them to quantify the impact of their existing energy management practices and identify additional savings opportunities.  

Chaquita Perkins with ClimateWorks said, “We found that the break room coffee machine was using a lot of energy during nighttime hours and implemented a simple procedure for turning it off at the end of each day.”  The new coffee machine shutoff procedure saves over 290 pounds of greenhouse gas emissions annually – equivalent to the carbon sequestered by six trees.  As part of the Challenge, Chaquita also used a modlet for three months to monitor the energy consumption of her desktop PC, which goes to sleep automatically each night as part of the organization’s standard IT power management policy.

Shorenstein rolled out the Challenge company-wide in January and will engage 30 tenants representing nearly 1 million square feet of office space across Shorenstein’s national portfolio in 2014.  Shorenstein’s G.R.E.E.N. (Green Real Estate Environments Now) Committee created the Challenge with technical support from the Environmental Defense Fund’s Climate Corps program.  The Committee designed “I Will if You Will” based on the Earth Hour organization’s 2013 campaign of the same name.

“The Challenge personalizes sustainability for our tenants and sets up broader conversations about building energy efficiency and the environment,” said Jaxon Love, Sustainability Program Manager for Shorenstein.  According to Love, approximately 70% of the energy used in the company’s buildings is determined by occupants.  Tenant education and engagement are critical to achieving deep energy savings in commercial properties.  The Flip the Switch Program focuses on equipping tenants with information, tools, and incentives to make environmentally-friendly choices that benefit their organizations and the building.  Shorenstein initiated Flip the Switch in 2011 with a nationwide energy awareness educational tour for tenants. Since then, Shorenstein has launched the GreenShorenstein.info website devoted to tenant sustainability as well as other educational resources that make it easy to go “green”.

At the Russ Building, Whitfield’s property management team is redeploying the modlets to continue “I Will if You Will” with other interested tenants this year.  “The modlets reveal energy savings potential that really gets tenants interested in taking action.  We are finding that offering a reward often isn’t necessary because tenants are mainly excited about the opportunity to better understand their personal environmental impact,” he noted.


Shorenstein Press Center

Source

The Registry

 

The Russ Building Earns BOMA Innovative EARTH Award for Tenant Engagement Program

San Francisco, CA – May 5, 2014 – Shorenstein Properties LLC announced that the Russ Building has received the BOMA San Francisco Innovative EARTH Award for the company’s “I Will if You Will” Energy Savings Challenge. The Challenge, part of Shorenstein’s signature Flip the Switch tenant engagement program, empowers tenants to save energy and greenhouse gas emissions by tracking office equipment energy use with modlet™ monitoring outlets.

Bill Whitfield, The Russ Building’s General Manager, accepted the award at the April membership meeting of the San Francisco Building Owners and Managers Association (BOMA). Whitfield helped Shorenstein design the “I Will if You Will” Challenge and pilot tested it with two tenants in 2013. Challenge participants committed to shutting off computers, monitors, printers, coffee makers, and other office devices, which are commonly left on after business hours. Overall, pilot tests of the Challenge demonstrated average energy savings of 45% over baseline measurements.

The “I Will if You Will” Challenge provides building occupants with personalized information and feedback on the impact of their energy management actions. Property Managers offer a fun reward such as a gift card raffle or pizza party (the “I Will”) if participants commit to adopting energy saving strategies for their office devices (the “You Will”). Participants use modlets, made by ThinkEco Inc., to wirelessly transmit real-time office device energy use information to an online dashboard. The modlet, which earned a 2014 Top Product Award from Building Operations Management, is also able to save energy through an automated on/off schedule. “Shorenstein’s Challenge educates individuals about plug load energy use and prompts behavior changes. That is exactly what we designed the modlet for – to reduce energy consumption and greenhouse gas emissions from everyday appliances and electronics,” said Jun Shimada, CEO at ThinkEco.

According to Whitfield, tenant feedback has been overwhelmingly positive. “Participants are very excited about the modlet technology and the opportunity to learn just how much energy their computers and other devices use – and how much can be saved,” he said. For the ClimateWorks Foundation, one of the Russ Building pilot tenants, the Challenge allowed them to quantify the impact of their existing energy management practices and identify additional savings opportunities.

Chaquita Perkins with ClimateWorks said, “We found that the break room coffee machine was using a lot of energy during nighttime hours and implemented a simple procedure for turning it off at the end of each day.” The new coffee machine shutoff procedure saves over 290 pounds of greenhouse gas emissions annually – equivalent to the carbon sequestered by six trees. As part of the Challenge, Chaquita also used a modlet for three months to monitor the energy consumption of her desktop PC, which goes to sleep automatically each night as part of the organization’s standard IT power management policy.

Shorenstein rolled out the Challenge company-wide in January and will engage 30 tenants representing nearly 1 million square feet of office space across Shorenstein’s national portfolio in 2014. Shorenstein’s G.R.E.E.N. (Green Real Estate Environments Now) Committee created the Challenge with technical support from the Environmental Defense Fund’s Climate Corps program. The Committee designed “I Will if You Will” based on the Earth Hour organization’s 2013 campaign of the same name.

“The Challenge personalizes sustainability for our tenants and sets up broader conversations about building energy efficiency and the environment,” said Jaxon Love, Sustainability Program Manager for Shorenstein. According to Love, approximately 70% of the energy used in the company’s buildings is determined by occupants. Tenant education and engagement are critical to achieving deep energy savings in commercial properties. The Flip the Switch Program focuses on equipping tenants with information, tools, and incentives to make environmentally-friendly choices that benefit their organizations and the building. Shorenstein initiated Flip the Switch in 2011 with a nationwide energy awareness educational tour for tenants. Since then, Shorenstein has launched the GreenShorenstein.info website devoted to tenant sustainability as well as other educational resources that make it easy to go “green”.

At the Russ Building, Whitfield’s property management team is redeploying the modlets to continue “I Will if You Will” with other interested tenants this year. “The modlets reveal energy savings potential that really gets tenants interested in taking action. We are finding that offering a reward often isn’t necessary because tenants are mainly excited about the opportunity to better understand their personal environmental impact,” he noted.


Shorenstein Press Center

Press Contacts



T

 

Ford Factory

Shorenstein Press Center

Press Contacts

Andrew Neilly

T 925.930.9848

 

Shorenstein Completes Purchase of Downtown LA Redevelopment

Los Angeles – April 22, 2014 – Shorenstein Properties LLC, a private real estate investment firm and fund sponsor engaged in the ownership of high quality office and mixed-use properties nationwide, today confirmed it has closed on the purchase of a largely vacant former manufacturing complex in downtown Los Angeles.  Terms of the purchase, which was concluded with a private seller, were not disclosed.

Currently named for its location at Seventh and Santa Fe, the multi-building complex will be redeveloped and repositioned by Shorenstein as the premier creative office and retail location within downtown Los Angeles’ Arts District.  The Arts District, a former industrial area which is now well established as a live/work neighborhood with strong growth in residential development as well as restaurants and other retail amenities, has relatively little creative office space to offer users such as media, design/architectural, technology and fashion businesses.

Built in 1912 and expanded in 1923, the property at Seventh and Santa Fe was for many years the site of Ford Motor Company’s primary Southern California assembly operations for Model T’s and Model A’s until it opened a new factory in Long Beach.   From 1972 to 2005, the property was the headquarters of a Los Angeles-based toy company.

The old assembly line building and five-story tower are original structures from the Ford plant.  The project, once renovated, will offer approximately 255,000 square feet of rentable office and ground-floor retail space, and will include surface and structured parking.  

“This property provides us with the opportunity to leverage our significant in-house construction, leasing, asset and property management expertise to create a viable and authentic, amenity-rich business address in a historically significant setting within downtown Los Angeles,” said Douglas W. Shorenstein, President and CEO, Shorenstein Properties.   

Shorenstein made the acquisition on behalf of its tenth real estate investment fund, formed in 2010 with $1.23 billion in committed capital from Shorenstein and its investors.


Shorenstein Press Center

Press Contacts

Andrew Neilly

T 925.930.9848

 

Shorenstein and Worthe Receives LEED Gold Certification for The Reserve in Los Angeles

San Francisco, CA – March 24, 2014 – Shorenstein Properties LLC and Worthe Real Estate Group announced the LEED Gold certification of The Reserve, a newly redeveloped Class A office building located in Los Angeles.  The building achieved Gold certification under the LEED Core and Shell rating system.

Formerly a U.S. Post Office facility, now a model of sustainable reuse, The Reserve is a place where people and companies can thrive. A unique 20-acre site at the edge of restored wetlands and wildlife preserve, the site is just a short bike ride to the beach. The Reserve is a life and work enhancing environment away from urban congestion, offering all the right amenities in a high-performance office space designed to support creativity and balance for today’s innovators. An ideal setting for technology firms, digital arts, media groups and other forward-looking companies, The Reserve offers striking architecture and interiors suffused with natural light. The collection of onsite amenities includes a private fitness center, bike shop and café, as well as two acres of garden spaces, including 600 newly planted trees that invite walking, biking or restorative time out of doors. The Reserve has all the elements required to act as a catalyst for creativity while supporting business needs and the corporate vision.

The LEED Core and Shell rating system is designed to meet the needs of commercial property development and redevelopment projects.  This rating system addresses the sustainability of base building elements including the site selection, mechanical and electrical systems, plumbing, fire protection, and building envelope.  Core and Shell enables certification of building interior space by tenants under the LEED for Commercial Interiors rating system.

Some sustainability highlights of The Reserve include:

•    Adaptive reuse of an existing structure, avoiding development of virgin land and minimizing resource use
•    Acres of drip-irrigated gardens showcasing native species and encouraging outdoor enjoyment while minimizing water use
•    Electric vehicle charging stations on-site
•    Bicycle storage, a bike shop, and on-site fitness facility for tenant use
•    Innovative storm water treatment methods utilize plant materials and science to naturally filter water and reduce the volume of storm runoff into the ocean
•    LED Lighting used extensively within the building and throughout the site
•    Advanced mechanical and electrical system commissioning and use of variable speed motors to optimize building energy performance
•    Low VOC construction materials utilized to minimize effects on indoor air quality
•    Indoor air quality that exceeds industry standards through enhanced ventilation, filtration, and fresh air delivery to indoor spaces
•    Addition of skylights, light courts, large windows and a curtain wall to maximize natural lighting throughout the building

Shorenstein now owns more than fourteen million square feet of LEED-certified property at the Silver level or higher.  Twenty-five properties currently owned by the company are LEED certified. The company is in the formal process of pursuing LEED certification for two additional properties.

Shorenstein’s commitment to sustainability extends well beyond its LEED program.  The firm is a partner in EPA’S ENERGY STAR® program and 78 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored ten closed-end investment funds with total equity commitments of $6.7 billion, of which Shorenstein committed $573.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 53.5 million square feet in transactions with a gross investment value in excess of $12.1 billion.

About Worthe Real Estate Group

Since 1967 M. David Paul Associates, Worthe Real Estate Group and Krismar Construction have been committed to a long term ownership philosophy with its development and acquisition activities in the Los Angeles area. The company has achieved lasting value and created some of the highest quality office environments which support vibrant and active business communities throughout the region today. Three companies formed to produce a seamless process from the point of acquisition, through the design phase, construction, leasing and property management. Value creation is achieved by ground up development, adaptive repositioning of assets, opportunistic debt plays and the flexible approach to recapitalization and or exit strategies.


Shorenstein Press Center

Press Contacts

Andrew Neilly

T 925.930.9848

 

Shorenstein Receives LEED Gold Certification for 1355 Market Street in San Francisco

San Francisco, CA – March 3, 2014 – Shorenstein Properties, LLC announced the LEED Gold certification of 1355 Market Street, a newly redeveloped Class A office building located in the Mid-Market submarket of San Francisco.  The building achieved Gold certification under the LEED Core and Shell rating system.

1355 Market Street is a 775,000 square foot historical Art Deco icon built in 1937 and was known as the “San Francisco Mart and Western Merchandise Exchange”, offering wholesale home furnishings to design professionals and retailers.  Shorenstein Properties acquired the building in March 2011 on behalf of its ninth investment fund with the intent to modernize and upgrade the Property to a Class A standard for creative office use.  Construction began in July 2011 and the first tenants took occupancy in the summer of 2012.   1355 Market is currently 99% leased and home to dynamic technology tenants such as Twitter, Yammer, Runway and One King’s Lane. The redevelopment, designed by RMW Architecture & Interiors and BCV Architects, includes a structural and seismic retrofit, new and renovated mechanical, electrical, plumbing and fire and life safety systems, installation of six new elevators, modernization of four existing elevators and new and renovated public spaces.  Exterior work includes window and canopy removal and replacement, and demolition of the non-historic wood structure addition at the 9th Floor in order to create an outdoor roof deck.

The LEED Core and Shell rating system is designed to meet the needs of commercial property development and redevelopment projects.  This rating system addresses the sustainability of base building elements including the site selection, mechanical and electrical systems, plumbing, fire protection, and building envelope.  Core and Shell enables certification of building interior space by tenants under the LEED for Commercial Interiors rating system.

Some sustainability highlights of 1355 Market Street include:

•    State of the art lighting controls, including use of day light harvesting at perimeters
•    All new energy efficient mechanical equipment with zone driven direct digital controls for HVAC
•    Low flow restroom fixtures and automatic faucets to reduce domestic water consumption
•    Direct electrical sub-metering for tenant spaces
•    Recycling program for the diversion of construction materials from landfill
•    Card-accessed secure bicycle storage
•    Renovated lobby using reclaimed wood from the demolished non-historic wood structure addition
•    Reuse of column brass cladding to create a unique art piece in the new lobby
•    Outdoor roof deck with drought resistant plants and subsurface irrigation
•    Window replacement with high-efficiency glazed glass

With this certification, Shorenstein now owns more than fourteen million square feet of LEED-certified property at the Silver level or higher.  Twenty-five properties currently owned by the company are LEED certified. The company is in the formal process of pursuing LEED certification for two additional properties.

Shorenstein’s commitment to sustainability extends well beyond its LEED program.  The firm is a partner in EPA’S ENERGY STAR® program and 78 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

###

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored ten closed-end investment funds with total equity commitments of $6.7 billion, of which Shorenstein committed $573.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 53.5 million square feet in transactions with a gross investment value in excess of $12.1 billion.


Shorenstein Press Center

Source

The Registry

 

Shorenstein Receives LEED Gold Certification for 1355 Market Street in San Francisco

San Francisco, CA – March 3, 2014 – Shorenstein Properties, LLC announced the LEED Gold certification of 1355 Market Street, a newly redeveloped Class A office building located in the Mid-Market submarket of San Francisco.  The building achieved Gold certification under the LEED Core and Shell rating system.

1355 Market Street is a 775,000 square foot historical Art Deco icon built in 1937 and was known as the “San Francisco Mart and Western Merchandise Exchange”, offering wholesale home furnishings to design professionals and retailers.  Shorenstein Properties acquired the building in March 2011 on behalf of its ninth investment fund with the intent to modernize and upgrade the Property to a Class A standard for creative office use.  Construction began in July 2011 and the first tenants took occupancy in the summer of 2012.   1355 Market is currently 99% leased and home to dynamic technology tenants such as Twitter, Yammer, Runway and One King’s Lane. The redevelopment, designed by RMW Architecture & Interiors and BCV Architects, includes a structural and seismic retrofit, new and renovated mechanical, electrical, plumbing and fire and life safety systems, installation of six new elevators, modernization of four existing elevators and new and renovated public spaces.  Exterior work includes window and canopy removal and replacement, and demolition of the non-historic wood structure addition at the 9th Floor in order to create an outdoor roof deck.

The LEED Core and Shell rating system is designed to meet the needs of commercial property development and redevelopment projects.  This rating system addresses the sustainability of base building elements including the site selection, mechanical and electrical systems, plumbing, fire protection, and building envelope.  Core and Shell enables certification of building interior space by tenants under the LEED for Commercial Interiors rating system.

Some sustainability highlights of 1355 Market Street include:

  •     State of the art lighting controls, including use of day light harvesting at perimeters
  •     All new energy efficient mechanical equipment with zone driven direct digital controls for HVAC
  •     Low flow restroom fixtures and automatic faucets to reduce domestic water consumption
  •     Direct electrical sub-metering for tenant spaces
  •     Recycling program for the diversion of construction materials from landfill
  •     Card-accessed secure bicycle storage
  •     Renovated lobby using reclaimed wood from the demolished non-historic wood structure addition
  •     Reuse of column brass cladding to create a unique art piece in the new lobby
  •     Outdoor roof deck with drought resistant plants and subsurface irrigation
  •     Window replacement with high-efficiency glazed glass

With this certification, Shorenstein now owns more than fourteen million square feet of LEED-certified property at the Silver level or higher.  Twenty-five properties currently owned by the company are LEED certified. The company is in the formal process of pursuing LEED certification for two additional properties.

Shorenstein’s commitment to sustainability extends well beyond its LEED program.  The firm is a partner in EPA’S ENERGY STAR® program and 78 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

About Shorenstein Properties LLC
Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored ten closed-end investment funds with total equity commitments of $6.7 billion, of which Shorenstein committed $573.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 53.5 million square feet in transactions with a gross investment value in excess of $12.1 billion.


Shorenstein Press Center

Source

Forbes

 

Meeting Retrofit Chicago’s Energy Goals: Three Key Constituencies

By Ellen Bell

Following the lead of mayors and governors across the country, last month the President announced energy as a priority for the year. By focusing on energy management, organizations are contributing to the transformation of energy use in the country, saving billions in energy costs and cutting greenhouse gas emissions.

Mayor Rahm Emanuel’s Retrofit Chicago initiative, aimed at reducing participating buildings energy use in the city by 20 percent within the next five years, is a compelling example of this. For this reason, EDF Climate Corps, an innovative summer fellowship program that places specially trained graduate students in organizations to save energy and related costs, is working to recruit organizations in Chicago this month.

To ramp up energy savings in the area, EDF Climate Corps has already signed on AT&T AT&T, McDonald’s Corporation, Shorenstein Properties and Jones Lang LaSalle. Each summer, EDF Climate Corps fellows evaluate organizations for energy savings opportunities with many of them uncovering stakeholder engagement as a key savings opportunity.

After 400 EDF Climate Corps engagements, the program has found that there are three key constituencies to tap into for energy management:

Executive Leadership – EDF’s Virtuous Cycle of Strategic Energy Management framework notes that executive leadership teams have significant influence when it comes to an organization’s energy performance. Ambitious goal setting is one way executive leaders can advance green initiatives. For example, Cummins, Inc., a global power leader that designs, manufactures, distributes and services engines and related technologies, set intensity goals for energy and greenhouse gas emissions. To help reach their 2015 goals, Cummins brought in two EDF Climate Corps fellows in 2012 to develop strategic energy efficiency initiatives for its new and existing facilities. By auditing the company’s forty U.S. facilities, the EDF Climate Corps fellow developed recommendations that could potentially help Cummins reach its 2015 goals, save more than $5 million in annual net-operating costs and eliminate 51,000 metric tons of carbon dioxide emissions.

Employees– When it comes to energy efficiency, employee engagement is an organization’s greatest resource. By empowering employees at all levels with knowledge and responsibility surrounding the organization’s energy use, positive behavior changes can produce sustainable work environments and communities. McDonald’s Corporation, for example, worked with EDF Climate Corps in 2011 to uncover strategies to engage about 700,000 employees at the company’s 14,000 U.S. restaurants. As a result, the fellow produced and distributed an employee education video that has the potential to reduce the average U.S. McDonald’s restaurant energy consumption by up to 10 percent.

Local communities and utilities – Thanks to the leadership of politicians and grassroots organizations, more cities and communities are offering incentives and solutions to decrease energy use and greenhouse gas emissions. For example, Property Assessed Clean Energy (PACE) financing programs and legislation like California’s Global Warming Solutions Act (also called AB 32) are compelling organizations to evaluate the energy performance of their facilities. In Sacramento last summer, an EDF Climate Corps fellow joined Mayor Kevin Johnson to launch the nation’s largest PACE project and worked with the nonprofit Greenwise Joint Venture to identify three strategies to advance the program. Building certifications and even utility companies all offer organizations a way to improve energy performance. In fact, the EDF Climate Corps program has found that demand response management and other energy market opportunities are surfacing from utilities nationwide.

Working with these three distinct groups can drive energy management practices forward at almost any organization. If a majority of buildings in Chicago actively engaged these groups around energy management – the city has the opportunity to exceed Mayor Emanuel’s energy reduction goals.

As the nation works to meet the President’s “Better Building Challenge,” now is the time for leaders to prioritize energy management, and EDF Climate Corps is a hands-on, cost-effective way for companies to reach their goals.

Learn more about the energy assets available through EDF Climate Corps before the 2014 application deadline of February 21, 2014.

What is the next step your organization will take to improve energy performance?

Ellen Bell is the Senior Specialist for the Building Energy Initiative at Environmental Defense Fund.


Shorenstein Press Center

Market Square: Urban Game Changer: Having attracted Twitter, upscale retail, and a food emporium as key tenants, a renovated Art Deco building is kick-starting the transformation of a once-seedy part of San Francisco

By Lamar Anderson

With a prime location near San Francisco’s Civic Center and downtown shopping corridor, one of the city’s few subway stops, and wide brick sidewalks fit for throngs of pedestrians, Mid-Market has had all the makings of a sought-after neighborhood. Though it was a thriving theater district in the early 20th century, this mile-long stretch of Market Street never recovered from a spiral of disinvestment and blight that began in the postwar years, even as the tech booms of the late 1990s and beyond sent real-estate values soaring nearly everywhere else. With a storefront vacancy rate around 30 percent in 2011, the neighborhood was caught in a catch-22 that plagues both redevelopment efforts and dull parties: no people means no action, and no action means no people.

Then, one day in June 2012, 800 people showed up. Twitter, having outgrown its old quarters in the South of Market district, had leased three floors in a former wholesale furniture mart at 1355 Market, an L-shaped block-long Art Deco complex from 1937 with a 1975 addition in the rear. The 863,000-square-foot, 11-story Deco building, with a monumental terra-cotta facade featuring Mayan motifs, spans an entire block, from Ninth to Tenth streets. Attracted by the concrete structure’s enormous footprint and a payroll-tax holiday offered by the city, Twitter enlisted Lundberg Design and Interior Architects to design its new headquarters space. At the same time, the building—now christened Market Square—and its original lobby were renovated by RMW Architecture & Interiors, with Page & Turnbull serving as the historic-preservation architects.

Fast-forward a year and a half, and the majority of Market Square’s remaining office suites are rented, Twitter has added 700 more employees and captured four more floors, and an upscale eatery and marketplace are scheduled to move into the ground level later this year. In April, RMW will finish reskinning the precast-concrete-clad 1975 addition in glass; much of that building (now called 1 Tenth) is reserved for another Twitter expansion. And CMG Landscape Architecture will finish the conversion of a former alley separating the two buildings into a pocket park, called the Commons, with a zigzagging canopy of LED tube lights and a fire pit.

Meanwhile, the sky above Market Street is full of cranes. More tech companies have moved to the area, and 5,000 apartments in new towers are either approved or under construction (26 percent of them below market rate), according to the city’s Office for Economic and Workforce Development. “A lot of these units were [planned] and on the boards, but no one could pull the trigger,” says RMW principal Terry Kwik. “Twitter’s lease got done, and everything got dusted off.” After decades, can the urban desolation of the neighborhood be reversed by a tech company hatched in 2006?

For now, Market Square is an office building. Until the retail tenants move in, the project’s effect on street life remains unknown. But if all goes well, Market Square will become a destination in its own right. The developer, Shorenstein Properties, hired Baldauf Catton von Eckartsberg Architects (BCV)—the firm that designed the retail areas of the Ferry Building, San Francisco’s beloved local-food emporium—to transform, with RMW, the fortresslike furniture mart’s ground floor into a soaring, wood-paneled market hall.

When RMW and BCV began work in 2011, many of the building’s concrete columns had been masked by ad-hoc showroom partitions and, after a misguided 1980s renovation, encased in mirrors. Underneath all that, “It was this amazing, Lou Kahn–like structural system,” says BCV prinicpal Hans Baldauf, referring to the dramatic column grid and use of concrete as a defining material. The architects stripped the interior, sandblasted the columns, and carved out a new double-height lobby at Market and Ninth to mimic the scale of the Art Deco lobby at midblock. They paneled everything but the original marble-walled lobby in Douglas fir reclaimed from a rooftop addition taken down by Shorenstein. But this isn’t your typical rough-refined industrial-chic revamp. All that warm wood brings out the texture of the board-formed concrete structure, and slim up- and downlights on the columns emphasize the height of the retail corridors, lending them classical proportions.

Twitter’s regrettable interiors—an avian-themed maze of bright blue and green that several square miles of feather-patterned carpet tile do nothing to clarify—are, thankfully, tucked away on the upper floors, hidden from most people’s view. The company’s real contribution to Mid-Market lies in its choice to integrate itself into the neighborhood with a building open to the public. Unlike Silicon Valley’s tech industry, which grew up in and then swallowed the suburbs, Twitter is embracing a more urban approach. “Twitter as a culture is very public,” says Kelly Flannery, the company’s global head of facilities and security. “We want to be part of the people.” Of course, with far greater numbers of employees, Apple and Facebook would have a hard time squeezing themselves into a city block. But the inward-focused new campuses they’re building—Apple’s spaceship by Norman Foster in Cupertino, Facebook’s green-roofed island on stilts in Menlo Park, by Frank Gehry—suggest that they prefer a suburban relationship to the landscape.

The architects envision Market Square in its finished form as a mixed-use tech campus, anchored by an all-day restaurant called Bon Marché and an Eataly-like assemblage of food stations dubbed the Market. Crucially, pedestrians will be able to enter through the retail storefronts without going through reception and security. To make the building more inviting, the design team negotiated with the city’s historic- preservation commission to bring the windows along Market Street closer to the sidewalk. And on the rear wall facing the pocket park, they installed glass airplane hangar doors, which double as canopies that give the back of the structure an airy, porchlike feel. “We wanted the transparency to suck you through the building,” says Baldauf.

With restaurants, a bank, and a gym on the way, and residential towers rising all around, Market Square and 1 Tenth are poised to help rekindle the street life that disappeared sometime during the Eisenhower Administration. Performing arts are returning to Market Street too: two blocks north, Skidmore, Owings & Merrill is renovating the old Strand Theater for the American Conservatory Theater, to open next January. In its new incarnation, Mid-Market has the potential to blend the best of the city’s past and present, with a mix of technology, housing, food, and culture fit for the 21st century.

Size: 863,000 square feet

Construction cost:
$90 million (Market Square)
$35 million (1 Tenth)

Completion date: June 2014

Architect:
Lead / Core & Shell Architect:
RMW architecture & interiors
160 Pine Street
San Francisco, CA 94111
(415) 781-9800 (phone)
(415) 788-5216 (fax)

Retail Architect:
BCV Architects
1527 Stockton Street
San Francisco, CA 94133
(415) 398-6538 (phone)
(415) 398-6521 (fax)

Preservation Architect:
Page & Turnbull


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Boston Herald

 

Center Plaza Deal Good Sign for Boston

By Donna Goodison

Shorenstein Properties is the new owner of Boston’s landmark Center Plaza in a $307 million deal.

At $400-plus per square foot, the San Francisco real estate investment firm’s purchase of the three Government Center buildings at 1-3 Center Plaza, totalling 717,128 square feet, from the Blackstone Group is another bullish sign for Boston’s commercial property market.

“The market has significant momentum right now, and these big-ticket office buildings that weren’t selling a couple of years ago are moving like hotcakes,” said Dan Fasulo, managing director of Real Capital Analytics in New York. “There’s more equity funds running around the U.S. looking for properties today than there was at the peak of the market in 2007.”

And as a gateway city, Boston is certainly on the top of everyone’s list, he said.

“We believe this property is well-positioned to benefit from our ability to add value over time through hands-on management and leasing expertise,” Shorenstein CEO Douglas Shorenstein said in a statement.

Beacon Properties developed Center Plaza starting in the late 1960s and merged with Chicago’s Equity Office Properties Trust in 1997. New York’s Blackstone bought Equity in 2007 and recently has been selling its office buildings.


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Shorenstein Acquires Boston’s Center Plaza

Boston, MA – January 9, 2013 – Shorenstein Properties LLC has acquired Center Plaza, a transit-oriented mixed-use property totaling 717,128 square feet in the heart of Boston. Terms of the transaction were not disclosed.
 
Developed by Beacon Capital in phases in the late 1960s and early 1970s, the property consists of three nine-story buildings consisting of 620,000 s.f. of office, 77,000 s.f. of retail, 19,000 s.f. of storage space, and a 575-car garage.  

“This is an excellent property to own in a market with strong appeal to a wide range of tenants, including those looking for creative, open floor environments in urban settings close to transit and amenities.   We believe this property is well positioned to benefit from our ability to add value over time through hands-on management and leasing expertise,” said Douglas Shorenstein, Chairman and CEO, Shorenstein Properties LLC.

Center Plaza sits at the entrance to the city’s affluent Beacon Hill neighborhood and across Cambridge Street from Boston’s City Hall.  The buildings are adjacent to the MBTA’s Government Center station, which serves as a connection point for the rapid transit system’s Red and Green lines.  Proximity to this station puts tenants of Center Plaza within a 10-minute commute of the Back Bay, Cambridge and the Seaport District and 15 minutes from Logan International Airport.  

Shorenstein completed the acquisition of Center Plaza on behalf of its tenth fund, Shorenstein Realty Investors Ten, L.P., which it formed in 2010 with $1.233 billion of committed capital.  This is Shorenstein’s fourth acquisition in the Boston market since embarking on its fund format in the early 1990s and its second area acquisition for Fund Ten.
 
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About Shorenstein Properties LLC
Founded in 1924, Shorenstein Properties LLC is a private real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored ten closed-end investment funds with total equity commitments of $6.7 billion, of which Shorenstein committed $573.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositioning and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 53.5 million square feet in transactions with a gross investment value in excess of $12.1 billion.


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Shorenstein Receives LEED Silver Certification for the Lincoln Center Campus in Portland, Oregon

Portland, OR – January 6, 2014 – Shorenstein Properties, LLC announced the LEED Silver certification of Lincoln Center, a Class A seven-building office campus located in Portland’s 217 suburban office market.  Lincoln Center is the first office campus in Oregon to earn the LEED Existing Buildings: Operations and Maintenance designation under the LEED Group certification path.

Lincoln Center offers 730,486 square feet of Class A office property in a prime suburban location near Washington Square Mall.  Amenities include a fitness center, common area showers (currently being constructed), four breakfast/lunch cafés, two full service restaurants, conference rooms/training facilities and onsite management provided by Shorenstein Realty Services.  The buildings carry a weighted average ENERGY STAR rating of 85.

LEED for Existing Buildings: Operations and Maintenance addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  The rating system helps building owners and managers measure operations and maintenance on a consistent scale, with the goal of maximizing efficiency and minimizing environmental impacts.

Some of the highlights of the sustainability program at Lincoln Center include:

•    Retrofit of lighting systems throughout the buildings and parking structures for increased energy efficiency, including LED lighting;
•    Installation of high efficiency water fixtures and implementation of a new satellite-based irrigation system to reduce water consumption;
•    Implementation of a pest control management plan which greatly reduced or eliminated the use of chemicals;
•    Comprehensive green cleaning program, featuring sustainable cleaning chemicals, recycled products and green cleaning equipment to reduce particulates and promote comfort;
•    Diversion of construction waste from landfills to recycling facilities;
•    Automated control of heating, ventilation and air conditioning and the optimization of outside air delivery;
•    Installation of motion sensor controls for office lighting.

With this certification and the recent acquisition of Denver City Center, Shorenstein now owns more than twelve million square feet of LEED-certified property at the Silver level or higher.  Twenty-three properties currently owned by the company are LEED certified. The company is in the formal process of pursuing LEED certification for two additional properties.

Shorenstein’s commitment to sustainability extends well beyond its LEED program.  The firm is a partner in EPA’S ENERGY STAR® program and 78 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

About Shorenstein Properties LLC

Founded in 1924, Shorenstein Properties LLC is a privately-owned, real estate firm active nationally in the ownership and management of high-quality office properties, with offices in San Francisco and New York.  Starting in 1992, Shorenstein has sponsored ten closed-end investment funds with total equity commitments of $6.7 billion, of which Shorenstein committed $573.5 million.  Shorenstein uses its integrated investment and operating capabilities to take advantage of those opportunities which, at the particular time in the investment cycle, offer the most attractive risk-adjusted returns.  Investments have included ground-up developments, asset repositionings and stabilized assets; investment structures have included asset acquisitions, mezzanine loans, preferred equity investments and structured joint ventures.  These funds have invested in properties totaling 53.5 million square feet in transactions with a gross investment value in excess of $12.1 billion.


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Bellevue Reporter

 

Spring District Works through Winter

By Brandon Macz

With a 300,000-square-foot warehouse removed, the Spring District now has a clean slate — save for a little mud — for utilities and road construction for the $2.3 billion development project.

“I like to call it a disassembly as opposed to a demolition,” said Greg Johnson, president of Wright Runstad & Co. of Seattle. “We did tear it down but we worked really hard to recover any usable materials from the site. … We basically recycled everything.”

Demolition of the  former Safeway warehouse at the corner of Northeast 12th Street and 120th Avenue Northeast was just the beginning for the 36-acre office and apartment development, which is planned to make up 16 city blocks in Bellevue once completed.

“You can start to see the pathway for new roads,” Johnson said. “We’re actually tearing out the concrete slabs where the roads will go and utilities.”The added roadways, including a new District Way to cross 124th Avenue Northeast, are expected to be completed around March.

First to go up will be a 316-unit residential complex, which Security Properties will begin construction on this year.

“Every building is going to have retail at the ground level facing the street,” Johnson said, adding focus will be on small, local retailers. “We definitely don’t want to compete with Bellevue Square.”

Based on the Pearl District concept in Portland, the Spring District will focus on density, which means streets will be shorter and buildings more compacted together to allow for easier pedestrian travel. On the list of transportation priorities, personal vehicles fall behind walkers, bicyclists and transit riders, said Johnson.

The developer said Wright Runstad is working closely with Sound Transit to integrate buildings — likely in the third development stage — with the 120th Station to go online there along with the rest of the East Link light rail extension in 2023.

Also slated for construction on the north and south sides of District Way are two office buildings as part of Phase One development. Johnson said his company and partner Shorenstein Properties are actively seeking large tenants to fill the more than 400,000 square feet of office space that will be available under the design before construction begins. Permits through the city are already available, he added.

“We’re in a position, right now, where if we had that tenant, if we had someone signed up, we could start in a month or two,” Johnson said. “That’s about an 18-month construction time from when we start.”

The Spring District hopes to capitalize on a boom in the tech industry and meet the demands of company tenants looking for the right space to attract promising talents. With downtown Bellevue dealing with low vacancy for office space, the Spring District should provide veteran tech firms and start-ups with more adequate accommodations, said Johnson. Wright Runstad was behind the first Microsoft campus in 1986.

On top of constructing a neighborhood marketing center for people to look at new apartment models and learn more about the Spring District, Johnson said staff are also looking at leftover parcels for inspiration.

“Were toying with one of the ideas to take one old warehouse and make it into a brewery or market hall,” he said.


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Denver’s Office Market Wakes Up

By Eliot Brown

Among the nation’s large cities, Denver has long had among the sleepiest office markets. But there are signs of an awakening.

A fund managed by Shorenstein Properties LLC—which owns office buildings mainly in New York, San Francisco and Chicago—last week acquired Denver City Center, a pair of downtown office towers.

Shorenstein, controlled by the prominent San Francisco real-estate family of the same name, paid $286 million for the towers, according to a person familiar with the price. The seller is a venture led by Barclays BARC.LN -0.06% Barclays PLC U.K.: London GBp263.60 -0.15 -0.06% Dec. 11, 2013 8:59 am Volume : 2.74M P/E Ratio 101.00 Market Cap GBp42.81 Billion Dividend Yield 1.52% Rev. per Employee GBp197,751 PLC, a onetime lender to Denver City Center that took control of the properties after a prior owner defaulted in 2009.

The transaction is an example of how large investors are extending their reach beyond top-tier markets to cities with strong regional economic growth.

“There’s just a lot of positive activity” in Denver, said Andrew Friedman, a managing director at Shorenstein, adding that the city has seen growth in numerous industries. “It comes back to energy, health care, technology, recovering housing…there’s a good broad-based driver.”

Denver has been a bright spot in a U.S. office market that has been sluggish in recent years. Denver-area office rents rose 4.2% in the 12 months ending in September to an average of $21.28 per square foot, according to research firm CoStar Group Inc. CSGP -0.82% CoStar Group Inc. U.S.: Nasdaq $183.96 -1.52 -0.82% Dec. 10, 2013 4:00 pm Volume (Delayed 15m) : 106,228 AFTER HOURS $183.96 0.00 0.00% Dec. 10, 2013 4:51 pm Volume (Delayed 15m): 1,565 P/E Ratio 235.85 Market Cap $5.33 Billion Dividend Yield N/A Rev. per Employee $216,497 More quote details and news »

Such performance wouldn’t stand out during a boom, but it is noteworthy in today’s tepid national recovery. Denver ranked fifth among metropolitan areas in the U.S., according to CoStar, behind San Francisco, San Jose, New York and Austin.

Investors are attracted to the market’s rising rents and occupancies as well as the relatively cheap sales prices in Denver, said Walter Page, director of research at CoStar. For instance, office sales have averaged $173 per square foot in Denver thus far in 2013, compared with $390 per square foot in San Francisco, according to CoStar.

“The big picture is that investors have been mainly priced out of the core coastal markets,” Mr. Page said. “A market like Denver with really pretty good rent prospects… stacks up pretty well.” CoStar estimates rents will rise 5% a year over the next two years, as opposed to less than 4% nationally.

Other cities seeing a new set of large investors include Minneapolis and Seattle, where one of its tallest towers sold earlier this year to Canadian pension fund-backed investor Ivanhoe Cambridge.

Fueling the strength of Denver’s market is growth in an array of industries led by energy and technology sectors that have gradually helped push down vacancy throughout the city. Antero Resources Corp., an energy company specializing in gas and oil drilling, is taking more than 65,000 square feet in a new building set to open next spring.

For its newly acquired property at Denver City Center, Shorenstein is betting such growth will continue, as the property stands to be about 25% vacant once some current tenants move out, said Mr. Friedman of Shorenstein. The properties—the 29-story building at 717 17th Street and the 42-story tower 707 17th Street—were built in the late 1970s and early 1980s, and Shorenstein plans to do renovations of the lobby and plaza. The purchase doesn’t include a hotel that takes up the first 20 floors of 707 17th Street.

One hurdle for the company: Much of Denver’s growth hasn’t been in the tall towers in the city’s downtown, where the new purchase is based, but rather in a trendier, emerging part of the city known as LoDo, three-quarters of a mile away.

Mr. Friedman acknowledges LoDo has been the strongest market, although he said “the rest of downtown’s not going to go away.”

The Lower Downtown area, once populated by lofts and artists, has become one of the most expensive office districts in the city, where vacancy in the third quarter fell to 7.1% from 9.4% a year earlier, according to brokerage Newmark Knight Grubb Frank. That is far tighter than the overall downtown’s 13.7% vacancy rate, down from 15.5% in the third quarter of 2012.

“All of downtown is good, but the farther you get away from Union Station, the less good it is,” said Jamie Gard, an executive managing director at Newmark. Still, Mr. Gard said that Shorenstein’s buildings are “only eight blocks away. You’re seeing the demand creep up to them and past them.”

The sale of Denver City Center also marks the end of an unintended four-year run as office landlord for Barclays, which had been a lender on the property but took control when a prior owner, a Morgan Stanley real-estate fund, defaulted on $2 billion in debt in November 2009. Morgan Stanley bought those properties as part of its $6.5 billion acquisition of Crescent Real Estate Equities Co. in 2007, a peak-of-the market purchase that quickly lost its value when the recession hit.

Barclays then partnered with John Goff, a founder of the company that sold Crescent to Morgan Stanley, and has gradually sold off the company’s properties since then.


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Shorenstein Acquires Denver City Center

Denver, CO – December 3, 2013 – Shorenstein Properties LLC has acquired Denver City Center, two adjacent office buildings encompassing 1.3 million square feet located on 17th Street in the heart of downtown Denver..  Terms of the transaction were not disclosed.  The seller was a subsidiary of Barclays plc.
 
The purchase includes the office portion (floors 21 through 42) of 707 17th Street, a 42-story LEED Silver-certified Class A office building, and Johns Manville Plaza, an adjacent 29-story LEED Gold certified office building located at 717 17th Street.  Also included in the purchase is parking for 589 vehicles.  Not included in the purchase is the Marriott Denver City Center located on the lower 20 floors of 707 17th Street..   

“Denver City Center’s rich amenities, access to public transit and excellent location make it an appealing corporate address for a broad range of tenants doing business in Denver and we only look to enhance its appeal through our management and operational expertise,” said Douglas Shorenstein, Chairman and CEO, Shorenstein Properties LLC

Both properties are served by Denver’s light rail system and share a large plaza area, considered to be one of the finest in Denver, with extensive landscaping and outdoor seating.  The buildings also share unparalleled views of the Rocky Mountains and downtown Denver and are located less than five blocks from Denver’s Uptown and Lower Downtown (LoDo) neighborhoods.  

Johns Manville Plaza was built in 1978 and 707 17th was completed in 1982.  The buildings were renovated in 2013.  The buildings are currently home to 40 companies including the world headquarters of Johns Manville, a leading manufacturer of building products and part of the Berkshire Hathaway group of companies.  
 
This is Shorenstein’s first acquisition in Denver since the early 1990s when it purchased Millennium One and Two, a 330,000 s.f. office complex in Englewood, for its inaugural investment fund.  Shorenstein completed the acquisition of Denver City Center on behalf of its tenth fund, Shorenstein Realty Investors Ten, L.P., which it formed in 2010 with $1.233 billion of committed capital.


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Shorenstein Signs Fitness SF in Market Square’s 1TENth

Twitter HQ Lands Big Fitness Center

by J.K. Dineen

Twitter workers will soon have a state-of-the-art gym in which to work off the excesses of their IPO earnings.

Shorenstein Properties celebrated the blockbuster IPO today by signing a lease with a high-end fitness center that will anchor the back building at Twitter’s headquarters.

Fitness SF will open a 23,000 square foot gym at One 10th St., the 300,000-square-foot building that Shorenstein is currently renovating. The building is the companion to 1355 Market St. in the two-building complex known as Market Square. Twitter occupies about half of the 750,000-square-foot Market Street building and is expected to take over all of the One 10th St. building, although that lease has not been finalized.

The exercise facility will be Fitness SF’s sixth Bay Area location. The group recently bought a 31,000-square-foot facility in the Fillmore.

While Twitter has its own fitness center, General Manager Don Dickerson said the Market Square gym would be offer much that the typical corporate workout center doesn’t have. It will have three studios, a designated pilates room, and lots of functional training and personal training classes.

“It’s a great opportunity for us to serve all the tech workers coming into the area,” he added.

The gym will open in the fall of 2014.

At Market Square, Fitness SF will join a collection of retail and food businesses including Bon Marché, the next project from AQ’s Matt Semmelhack and chef Mark Liberman, and a new iteration of the long-gone SoMa eatery Cadillac Bar and Grill. In addition, the redevelopment will have an eclectic food emporium called The Market.


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The New York Times

 

Twitter Helps Revive a Seedy San Francisco Neighborhood

By Kristina Shevory

SAN FRANCISCO — The middle stretch of Market Street here has befuddled mayors, investors and entrepreneurs for decades.

Studded with check-cashing joints, strip clubs and dollar stores, the seven-block strip known as the Mid-Market had resisted cleanup efforts and resolutely remained the same: a seedy place to visit day or night. Even the area’s community groups said they were fearful.

Mid-Market is home to some of the highest vacancy rates in the city for office or retail, despite its proximity to City Hall, which is a few blocks away.

So it seemed implausible that a young company, heralded as one of the technology industry’s next big things, would want to make its headquarters in Mid-Market. But in April 2011, that young company, Twitter, dispelled rumors that it was leaving San Francisco for a nearby city suburb and instead announced it was relocating to Mid-Market. In June 2012, it moved in.

Twitter leased space from Shorenstein Properties, a real estate firm based in San Francisco, known for its blue-chip office towers in the Financial District here. Shorenstein bought an 11-story building in 2011 fronting Mid-Market that had been vacant for five years. For them, it made sense to buy the undervalued Art Deco landmark built in 1937, which had some of the most spacious floor plans in the city at a time when office space was tight. Twitter signed a lease until 2021 for 295,000 square feet in the building and could expand that as its work force grows. “In our gut, we believed if we changed it, they would come. We thought it would be a real catalyst for the neighborhood,” said Charles W. Malet, chief investment officer for Shorenstein Properties.

Now 15 other companies, like Spotify, Square and Yammer, emboldened by Twitter’s move and a city tax incentive that largely exempts them from city payroll taxes if they relocate to the Mid-Market, have committed to take 1.3 million square feet in the area, which the city has renamed Central Market. Apartment towers with 5,500 units are in the works, and arts groups, chefs, retailers and even a venture capital firm have taken up residence.

“You had a once vacant and blighted area that is now a gravitational center for some of the most innovative companies in the world,” said Todd Rufo, director of the San Francisco Office of Economic and Workforce Development.

Not to be outdone, the rest of San Francisco is in the middle of an impressive building boom. Developers are building office towers downtown for the first time in five years, many confident enough to build without signed leases for the space. Other buildings are undergoing extensive renovation. Branches of technology companies, old and new, like Google, Amazon, Microsoft and Yahoo, are expanding or moving to the city and now make up more than half of demand for office space. (During the tech bubble in the late 1990s, tech accounted for only a quarter of demand.)

“People tend to build when they can lease and make money,” said Meade N. Boutwell, a senior vice president at commercial real estate brokerage C.B.R.E. in San Francisco.

In 2013, San Francisco became the second-most-expensive city in the country, behind New York, in which to rent office space. Rents rose from to $53.84 per square foot from $46.12 in the third quarter, according to C.B.R.E. Vacancy levels stand at 8.2 percent, down from 9.7 percent the same time last year. Four years ago, it was 15 percent.

Rob Speyer, co-chief executive officer of Tishman Speyer, a big real estate developer based in New York, said, “San Francisco has led the U.S. commercial real estate market out of the financial crisis.”

Tishman Speyer is betting heavily on the city by starting construction on two speculative office buildings with debt-free financing. After buying a parking lot in an area called South of Market, or SoMa, the firm began building the city’s first speculative office tower since the recession.

Nearly 18 months into construction, Neustar, a data analytics company, agreed to lease four of the building’s 10 floors to consolidate its Bay Area offices.

“This is a strategic decision for 10 years, not three,” said Mark F. Bregman, Neustar’s senior vice president and chief technology officer.

Tishman Speyer is also gambling on another former parking lot, where a 26-story office tower is taking shape and should open in two years. No leases have been signed yet, but Mr. Speyer said the decision “took less courage than others.”

Mr. Speyer added: “There were literally no construction starts, vacancy was dropping into the low single digits and rents were increasing 30 percent a year. It was obvious to us the market could support not just one but several buildings.”

The emphasis on San Francisco signifies how Silicon Valley, an area extending south from just below San Francisco to San Jose, Calif., no longer has a grip on technology companies. About 18 months ago, tech companies started moving or expanding here to be closer to their employees.

Venture capitalists, traditionally sequestered in the valley to be close to start-ups and entrepreneurs, are also setting up outposts in San Francisco. Some of the biggest, like Kleiner Perkins Caufield & Byers, have opened offices here to give them a place to incubate their seed companies and to hold events to meet new ones.

Christina Lee, a marketing and communications partner at Kleiner Perkins in Menlo Park, Calif., said “the partnership is more active in the city than in the last four decades.”

The tax incentive offered by the city gives companies moving to the Mid-Market neighborhood a break from paying the city’s 1.5 percent payroll tax for six years on employees hired after its move. Before the city passed the incentive, it was estimated Twitter would save about $22 million over six years. The city would not provide updated savings figures, saying it was confidential information.

The city also now offers all companies a tax break on stock options when they are exercised. And now that Twitter is poised to issue its initial public offering next Wednesday, some analysts have estimated that San Francisco could lose millions of dollars more in revenue if Twitter’s employees begin cashing in their options.

Karen Wickre, a spokeswoman for Twitter, defended the tax breaks the company had received. “The mayor and board of supervisors realized the existing tax structure taxed job creation, so to keep start-ups like ours in the city, they created a limited exemption for the Mid-Market zone,” she said. “The tax exemption was certainly a factor, but so was the chance to stay in the city in a landmark building.”

Although the payroll tax break gets much credit for drawing companies to the neighborhood, its spacious buildings also attracted companies at a time when the vacancy rate in SoMa, where many of the tech companies have opened offices, is 3 to 4 percent, according to Jones Lang LaSalle, the real estate services company.

So the Mid-Market area began to look attractive to developers. TMG Partners and DivcoWest, San Francisco real estate firms, bought a 16-story 354,000-square-foot government building in 2011 a block away from Twitter’s new office. Even though it is outside the payroll tax exclusion zone, the company renovated it for leasing. Dolby Laboratories, the audio company, agreed to purchase it for $110 million in 2012.

“People look at that and say, ‘What a deal,’ but we saw a transitioning neighborhood and foresaw it taking off in three to five years, not two,” said Matt Field, a managing director at TMG Partners. With 700 employees scattered in three aging rental buildings in San Francisco, Dolby needed a central building and did not want to leave the city where it was founded. Very few buildings were large enough and could be renovated for laboratories.

“You really have to be looking forward if you’re buying this building in this neighborhood. We’re buying for the future,” said Lewis Chew, chief financial officer for Dolby.

Across the street from Twitter, Crescent Heights, a Miami developer, is erecting a 754-unit apartment complex that is the biggest of the new residential developments in the neighborhood. Its first 26-story tower opened last month, and a second building, with 37 stories, will open next year.

After Twitter announced it was moving to the area, the developer scrapped its original plans and tailored the apartments for the tech workers who would be employed nearby. Residents of NEMA, short for New Market, as the development is called, will have amenities like a saltwater pool, landscaped terraces, valet parking and dog-walking services.

“We wanted to participate even more in the renaissance of the area. We wanted to set an example and provide the most creative offerings,” said Bruce Menin, principal at Crescent Heights.


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Twitter Building Books another Restaurant Tenant

By Renee Frojo

Another new restaurant has staked its claim on Market Square — a.k.a. the Twitter building — in Mid Market, joining other planned food outlets: Bon Marché and the massive food emporium called simply the Market.

The proposed restaurant, a new iteration of San Francisco’s long-gone Cadillac Bar and Grill, is expected to seal the deal on Friday, according to sources close to the property.

Cadillac’s former general partner, Mike Rodriguez, is said to be the man running the show. Details of the project, including its name, have yet to be released.

Cadillac Bar and Grill, once a popular Mexican restaurant on Fourth and Howard Streets, was demolished in the mid 1980’s to make way for the Moscone West expansion and the Fifth and Mission garage. While now seemingly long forgotten by San Franciscans, the Cadillac appeared to have built a solid reputation and loyal clientele during its years in business.

In 1984, an old article in the New York Time’s described it as a “large, raucous and informal” hangout for journalists that turned into an “outpost for the upwardly mobile.” Another profile in Highbeam Business Magazine told of how the restaurant strove to create an authentic Mexican image and menu.

The soon-to-be resurrected restaurant’s proposed new location at 1355 Market St. — now home to some of the hottest tech companies, including Twitter, Yammer and One King’s Lane — has become one of the most sought-after spaces in the city for new restaurants.

It’ll join brasserie Bon Marché, the next project from AQ’s Matt Semmelhack and chef Mark Liberman, who are the only other tenants to sign onto the ground floor of the Market Square building so far. It’ll also be next to Mid-Market’s first grocer — a 22,000-square-foot locally owned store with multiple vendors called The Market.

Both those projects aren’t expected to start until next year.

Shorenstein Properties, which is developing the space, has been courting restaurateurs to take a slice of the ground floor, which boasts 74,000-square-feet of retail space that could house up to seven restaurants.

With an estimated 4,500 residential units under construction and another 5,700 jobs expected from the influx of tech companies, it wouldn’t be a bad place to set up shop.

So who will be next? We can’t wait to find out.


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Austin Developer Breaks Ground on Domain 7 Office Tower

By Jan Buchholz

Endeavor Real Estate Group is moving quickly on the Domain 7 office tower in the Domain mixed-use project in Northwest Austin.

Earlier this summer, the Austin-based developer said that it would start construction this fall of the six-story, 222,000-square-foot Class A office space.

Just a couple of days into the fall season, Endeavor confirmed that construction has started and is projected to be complete by October 2014.

Endeavor has lined up some big-name financial partners, including San Francisco-based Shorenstein Properties and Deutsche Asset & Wealth Management.

The partnership also has broken ground on Domain 2 across the street from Whole Foods Market, which is scheduled to open in January after sitting vacant for months. HomeAway Inc. will be the anchor tenant of Domain 2, as revealed earlier this year in an Austin Business Journal story.

Austin-based Nelson Partners is the architect for Domain 7, which features expansive glass curtains. The project includes 944 parking spaces.

Endeavor will handle leasing at Domain 7. Negotiations are ongoing with several lead tenants, according to Jonathan Tate, vice president of Endeavor in charge of marketing the development.


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San Francisco’s Once-Blighted Market Street Reborn as Tech Hub

By Dan Levy

An office shortage in San Francisco’s traditional technology district is aiding the revival of a blighted neighborhood known as Central Market, as young companies migrate to a new hub with fast-growing rents.

Asking rates on Market Street between Fifth Street and Van Ness Avenue — northwest of the popular technology area called South of Market — jumped 18 percent in the second quarter from a year earlier to an average of $46.48 a square foot, data from brokerage CBRE Group Inc. show. Internet firms have driven gains, with mobile-payment service Square Inc. moving this month to a converted bank data center.

The once-bleak stretch of empty buildings has had $2.4 billion in development and property sales since 2011, including projects by Hudson Pacific Properties Inc. (HPP:US), AvalonBay Communities Inc. and Shorenstein Properties LLC, according to CBRE. San Francisco’s surging job growth and scant new office supply sparked the renewal, along with a 4.4 percent vacancy rate in South of Market that constrained growth there.

“We knew there was going to be overflow, but nobody thought it would be like this,” said Victor Coleman, chairman and chief executive officer of Los Angeles-based Hudson Pacific, the landlord at 1455 Market St., the 1 million-square-foot (93,000-square-meter) data center that lured Square as an anchor tenant. “This situation is pretty unique.”

‘Grand Boulevard’

The vision of Market Street as a “grand boulevard” dates to San Francisco’s earliest days under U.S. control in 1847, said Anthea Hartig, executive director of the California Historical Society. An “urban cacophony” reigned on the city’s preeminent thoroughfare for almost a century with four sets of streetcar rails and ornate theaters and restaurants lining both sides. Television, automobiles and suburban flight took their toll by the 1950s, leading to a long decline.

Now, quoted rents of $55 a square foot at that building and $57 a square foot at Shorenstein’s Market Square, a former furniture mart where Twitter Inc. moved last June, have soared to levels similar to those in South of Market, CBRE data show. In both properties, floors spanning a city block allowed for creative conversions with abundant common areas and value-added amenities.

Shorenstein’s renovation plan for the mart, a 1930s Art Deco landmark, followed quickly by Twitter’s lease, boosted investor confidence in Central Market and set the stage for the resurgence that also includes 4,500 new housing units and retail development close to Union Square, the city’s marquee shopping area, according to San Francisco Mayor Edwin Lee.

Square’s Growth

Twitter, the microblogging service that said last week it filed to go public, is paying $30 a square foot for 210,000 square feet and a $55 rate for an additional 85,000 square feet, said a person with knowledge of the lease who asked not to be identified because the terms are private. The company also has exclusive use of a roof deck, the person said.

At 1455 Market, Square is paying $39 a square foot on average for 330,000 square feet, while online car-hire service Uber Technologies Inc. is renting 88,000 square feet at a $48 rate and is set to move early next year, the person said.

Jim Prosser, a Twitter spokesman, Square’s Lindsay Wiese and Uber’s Andrew Noyes declined to comment on the leases.

Square was committed to staying in the city after it outgrew its space in the San Francisco Chronicle building just south of Central Market, the company said in an October statement announcing the move. The new offices are more than four times larger and offer “an open, collaborative space, a roof deck, chef’s kitchen and other amenities,” Square said.

Chronicle Building

“We’re grateful for San Francisco’s commitment to technology, and we’re thrilled the city will remain our home,” Square’s founder, Jack Dorsey, also chairman of Twitter, said in the statement.

The payments company developed its prototype device at Hearst Corp.’s historic newspaper offices, at Fifth and Mission streets. Yahoo! Inc. is keeping its financial district office and expanding to the space vacated by Square, which grew to more than 600 employees from half that a year ago.

Central Market’s office vacancy rate was 14 percent in the second quarter, down from 25 percent in the first quarter of 2011, before the Twitter lease and Market Square renovation, according to CBRE. About 515,000 square feet of the district’s 3.7 million total was available for rent as of June 30.

South of Market, home to Google Inc. and Salesforce.com Inc., had the city’s lowest vacancy rate in the second quarter and average rents of $55.65 a square foot, up 12 percent from a year earlier. The district has 6.3 million square feet of offices.

Tax Break

Apartment projects under way in Central Market include developer Crescent Heights’s NEMA luxury towers on 10th Street and AvalonBay (AVB:US)’s Ninth Street high-rise. About 500,000 square feet of new retail and offices by Hudson Pacific, and joint venture partners Cypress Equities LLC and Carlyle Group LP, are rising near Fifth Street. Additional retail projects are coming, Lee said in a City Hall interview.

San Francisco’s April 2011 enactment of a payroll-tax break for companies that relocated to certain Central Market properties included Twitter’s building and spurred other technology tenants to follow, said Oz Erickson of Emerald Fund, a locally based housing developer. The benefit encouraged development of nearby properties as investors anticipated spillover demand, he said.

“The Twitter tax break provided exactly the right stimulus to keep valuable, high-paying jobs in San Francisco,” said Erickson, who is converting an office tower on Van Ness Avenue two blocks north of the tax-break zone into 400 apartments. “If they hadn’t kept Twitter, they wouldn’t have kept Square, and we wouldn’t be enjoying this employment boom.”

Technology Jobs

Across the U.S., the technology industry is growing at four times the pace of the broader economy, Jones Lang LaSalle Inc. said in an Aug. 15 report. San Francisco ranks as the nation’s top technology office market, based on factors such as job growth and venture-capital funding, the brokerage said.

Employment rose 27 percent in technology manufacturing and services, and the city’s $736 million in venture-capital funding beat Silicon Valley’s total and doubled New York’s, according to data compiled by the brokerage.

Just two years ago, Central Market had more vacant storefronts and single-room residence hotels than any neighborhood, with 31 percent of households earning less than $15,000, triple the city average, a multiagency survey found.

Reconciling that poverty with “all this money coming into the neighborhood” remains a challenge to a continued revival, said Ellyn Parker, project manager at Central Market Partnership, which oversaw the survey. Homeless people began living in alleys and plazas to be near clinics for mental-health and substance-abuse services, she said.

‘Abject Filth’

“It’s a fragile population that doesn’t have anywhere else to hang out,” Parker said.

Some new tenants have seen crime, poor sanitation and “abject filth” up close, said Peter Fenton, a partner at Benchmark, a Menlo Park, California-based venture firm that opened an office at Sixth and Market to be close to startups. The tenants aren’t interested in a “whitewash” of urban grit, just basic public safety, he said.

“There was a gunshot victim half a block from our office a week ago,” Fenton said in a telephone interview. “We get a report on the block where we are that shows routine stabbings. The city has to make a decision as to whether or not they want to get serious about violent crime and public urination.”

1912 Facade

Up the street at Twitter’s headquarters, plans for a new restaurant, artisan market, shops, public courtyard and a second office phase will bring total investment in the project to $300 million, Doug Shorenstein, chairman of the San Francisco-based developer, said in an interview.

The ground floor of Hudson Pacific’s 901 Market St., a 250,000-square-foot office and retail project, is being renovated within a 1912 facade for anchor tenant Nordstrom Rack. The building’s most recent tenant, HotelTonight.com, has offices on the fourth floor that wrap around the corner of Market and Fifth streets and overlook the 125-year-old Powell Street cable-car line. Sofas outnumber work benches, and a well-stocked bar sits next to a ping-pong table.

The online booking service signed a lease in October at $51 a square foot, the person with knowledge of the Twitter and Square leases said.

Seven blocks up Market Street, the former Bank of America Corp. data center, purchased by Hudson Pacific for $95 million, is undergoing improvements such as $7 million in new windows that will change the look and feel of interiors including Square’s space, Coleman said. The company moves in on Sept. 30.

“The reality was that the city didn’t have a lot of square footage available, so growth had to go in this direction,” he said. “People told me I bought the ugliest building in San Francisco, but that’s great because the only way to go is up.”


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Developers Bet Big on Seattle

By Eliot Brown

Seattle’s growing technology sector is giving area developers grand visions.

Developer Wright Runstad & Co., a locally owned office builder, is planning to start demolition on Monday to clear the way for the first phase of a massive 36-acre office and apartment development in Bellevue, Wash.

First planned in 2007, the complex is the latest in a string of projects to move forward in the Seattle area.

Tech giants such as Amazon.com and Microsoft are fueling construction around Seattle. A rendering of Wright Runstad’s development in Bellevue.

Wright Runstad and partner Shorenstein Properties plan to convert a former grocery distribution center about one mile from Bellevue’s downtown into a $2.3 billion district of midrise office buildings, stores and apartments connected to the region by a planned light rail. The first components to be built include two office buildings with 490,000 square feet.

For those buildings, the partners don’t have tenants secured or construction financing lined up. They are moving ahead with demolition on a bet that the area’s expanding tech sector, which includes giants Amazon.com Inc. and Microsoft Corp., will fill its offices.

“We have just got this entrepreneurial culture that drives a huge amount of growth,” says Greg Johnson, Wright Runstad’s president.

Mr. Johnson said if demand in the region’s office market is as strong through 2014 as it is today, he expects to move ahead regardless of preleasing.

The progress in Bellevue—a 10-mile drive from downtown Seattle—shows how commercial construction is coming back to life in the handful of cities buoyed by strong tech and energy sectors.

Across the U.S., construction of office buildings remains at anemic levels. Research firm Reis Inc. estimates about 30 million square feet will be completed in 2013, half the average during the 2000s.

But cranes dot Silicon Valley, speculative towers without preleasing are under way in San Francisco and expanding oil and gas companies have led to a flurry of development in Dallas and Houston.

In Seattle, Amazon alone has been leasing hundreds of thousands of square feet every few months, and has started work on the first of three new downtown towers, with 3.3 million square feet.

Google Inc. and Facebook Inc. also have taken more space in the area, helping drive down the vacancy rate to 10.5%, down from 13.1% in 2009, according to real-estate services firm Kidder Mathews.

More than 3 million square feet of office space is under way in the region, according to Kidder Mathews. Meanwhile, developers are planning to start construction on well over 1 million square feet of space, including multiple projects in downtown Bellevue that could compete with Wright Runstad’s project.

Of course, building new towers doesn’t mean tenants will fill them. Developers such as Wright Runstad might face trouble leasing because demand for office space has been dominated by Amazon and a handful of other companies, says Richard Briscoe, a senior vice president at Kidder Mathews. “The net demand from anybody other than a few major players has been pretty limited,” he says.

Wright Runstad and Shorenstein, though, say demand is strong and that they are hoping other dynamics will help lure companies to their project. Mr. Johnson says the developer hopes to create an urban feel in a suburb, as tenants are increasingly eager for something more lively than a suburban office park.

“What we’re hearing time and time again is urban, urban, urban,” he says.


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Shorenstein Invests in Chicago Mixed-Use Redevelopment Venture

Chicago, IL – August 14, 2013 – Shorenstein Properties LLC has confirmed its acquisition, in a venture with collaborative workspace provider WeWork and locally-based partners Shapack Development and AJ Capital Partners, of 210-20 N. Green Street, a former meat processing facility in the city’s Fulton Market district. Terms of the transaction were not disclosed.
 
The 83,000 square foot, six-story building was built in 1893 and expanded in 1920.  It has operated as Amity Packing Co. since 1974 and as a meatpacking facility since it was built.  Former owner and occupant Amity Packing is relocating.
 
Shorenstein and the partners intend to extensively renovate and reposition the property as a boutique mixed-use commercial building with 19,000 s.f. of retail space and 64,000 s.f. of creative office space. 
 
WeWork signed a lease to occupy all of the office space when the renovation work is completed next year, bringing the building to 77 percent preleased prior to opening. The retail space will be available for lease.
 
Located west of Chicago’s Loop, Fulton Market is a rapidly evolving and popular mixed-use district with many trendy restaurants, galleries and residential lofts.  The opening of a CTA Pink/Green Line station at the corner of Lake and Morgan Street last May significantly improved the area’s public transit access, and this has led to the migration of significant office users into the area as redeveloped buildings become available.  Recent announcements include Google, Sara Lee Corporation and bicycle component manufacturer SRAM.
 
Shorenstein completed this investment on behalf of its fund, Shorenstein Realty Investors Ten, L.P.
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About Shorenstein Properties LLC
San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties.  Since its beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of co-mingled institutional capital.  Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.
 
About WeWork:
WeWork (www.wework.com) empowers entrepreneurs, start-ups, and independent contractors to succeed by providing a collaborative community and services ranging from affordable healthcare to payment processing to discounts on Zipcar, hotels, and local businesses that allow them to focus their energy on growing their businesses. With multiple locations in New York, San Francisco, Los Angeles, and now Chicago, WeWork is rapidly growing its community to become the largest network of small businesses in the U.S.
 
About AJ Capital Partners:
Adventurous Journeys Capital Partners, based in Chicago, is an accomplished team of hospitality and real estate investors whose innate passion is to create a one-of-a kind portfolio of timeless assets. The company’s mission is to achieve optimal risk adjusted returns for its investors who are seeking long-term capital investments. The group develops, owns, and operates commercial and hospitality assets and businesses around the world.  AJ Capital Partners continues to grow its portfolio of luxury lodging investments, firmly establishing the group as visionary leaders in the lifestyle-driven investment industry. For more information, please visit http://www.ajcpt.com
 
About Shapack Development:
Shapack Development (www.shapack.com) is a Chicago-based real estate development company that acquires, develops and repositions commercial properties throughout Chicago neighborhoods including the Gold Coast, Bucktown, Lincoln Park and Fulton Market. Shapack focuses on commercial and mixed used development with a speciality in luxury retail, restaurants and office. Within Fulton Market, Shapack is redeveloping the Chicago Allis Manufacturing Building into Soho House Chicago.

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NW Urban: Will the Eastside get a Pearl District?

With its new Spring District, Bellevue looks to create an authentic urban neighborhood from scratch in the Bel-Red corridor.

By Knute Berger

The Bel-Red corridor linking Bellevue and Redmond has long been a kind of no-man’s land, mostly a mix of retail, office parks, strip malls, auto dealers, greenery and charmless warehouses. Tucked between two Eastside economic powerhouses, it features utilitarian spillover businesses with romantic names like Discount Tire Outlet.

Bel-Red is slated for huge change, however. A long-in-the-works rezone was able to draw Sound Transit’s $2.8 billion East Link light rail expansion through the heart of the corridor — the zoning was designed to emphasize transit-oriented development before the route was even decided. The rail route and Bel-Red plan dovetail nicely. The 14-mile route will start in downtown Seattle, cross the I-90 floating bridge, hook north through downtown Bellevue, then zip along the Bel-Red corridor to Overlake and the main Microsoft campus in Redmond. Trains are scheduled to roll by 2023.

The corridor plan seeks to remake a suburban pattern into an urban one. Matt Terry, the former longtime planning and development director for the city of Bellevue, now retired, describes it as “radically different” from the current layout. It will be denser, walkable, more sustainable. It’ll feature mixed-use, offices and much more housing. It’ll be taller than traditional sprawl, but with shorter high-rises than downtown, and a new grid will begin to tie it together on a more human scale. This is where Bellevue wants much of its projected growth absorption under the Growth Management Act to go.

The time frame suggests stately progress in an area seeing rapid change, but it’s a huge project. Will it be transformative? Quite possibly. Rail and a new arterial running the length of the corridor (along NE 15th) will provide better connections with downtown Bellevue, helping to extend urban-style development eastward. Still, the Bel-Red corridor as it is today is mostly classic sprawl, with a long way to go from ‘burb to urb’.

The potential, even without rail, is enormous. A rapidly densifying, diversifying workforce needs more room and more options, especially so close to Microsoft which has many employees at both ends of the Bel-Red. Ultimately, the corridor forecast is for 5,000 more housing units by 2030. “I’m convinced people want to live in that corridor,” predicts Terry. “The housing market will be very strong.”

One of the biggest, most ambitious projects to watch is the so-called Spring District, a 36-acre site being developed by Seattle’s Wright Runstad & Company, in a joint venture with Shorenstein Properties of San Francisco. The city calls it a “Catalyst Project” that will boost the Bel-Red redevelopment. It’s a ground-breaking vision that will break actual ground this fall.

The Wright Runstad land is a large patch at the west end of the corridor. (See photo at left.) The city was looking for a major developer to buy the property that Safeway was planning to sell when it moved its distribution center to Auburn. Wright Runstad, which has a long history of development in the city of Bellevue, was the winning bidder at $68 million. They came with a major project in mind that fit the city’s goals. The former Safeway site offers as close to a blank slate as you can get these days for developing an entire urban neighborhood from the ground up. Deputy director of the city’s planning department, Dan Stroh, says it would be hard to find a more prime spot for such a project. “The locational dynamics are powerful for that site,” he says.

The southwestern corner of the proposed Spring District is at NE 12th and 120th Ave. NE, near Lake Bellevue and the intersection of I-405 and SR 520. The site is surrounded by parking lots and restaurants (like the Crab Pot and I Love Sushi) and the shoreline development makes it virtually invisible to the public. As the crow flies — or the urban adventurer walks — its only a quarter mile to the nearest Whole Foods, if you short-cut through parking lots. If the development turns out as planned, a 20-year private investment of some $2-3 billion will create 5.3 million square feet of space, including over 1,000 new multi-family residences, offices for high-tech workers, commercial and street-level retail businesses, a hotel, parks and plazas. The East Link rail line will run through the north end of the property and give the site its own Spring District station.

The Spring District is a planned community that eschews the usual culs de sac and suburban chateaus in favor of density, walkability and every other sustainable buzzword you can think of. Wright Runstad president Greg Johnson explains that he wants the Spring District to be “an authentic neighborhood in Bellevue.” In short, if the Bel-Red is an Eastside oyster, the new development will be its Pearl District.

But it will have to be a cultivated Pearl.

The issue of “authenticity” is intriguing. Johnson’s comment is not a suggestion that Bellevue doesn’t have authentic neighborhoods already, though the suburbs are often criticized for sterile commercialism. He is referring to the bar Wright Runstad has set for itself as it ambitiously goes about creating something more than a cluster of successful buildings. Making an entirely new place seem authentic is tough to do when you’re not revitalizing a downtown neighborhood like Capitol Hill’s Pike-Pine or even Bellevue’s Old Main Street, a neighborhood that comes with readymade character in the form of older or historic and re-habable structures.

Of course, the suburbs tend to celebrate the culture of the new. Though there have been examples of adaptive re-use in downtown Bellevue — the old Belle Lanes bowling alley became a Barnes and Noble, the John Danz theater is now a Mars Hill Church — Bellevue has no landmarks board. The shiny-new, factory-fresh development feel is authentic in a suburban kind of way.

The raw material here in the Spring District is rough. Metro and Microsoft’s Connector service have bases here. There are large bottling plants, like Coca Cola, and huge power transmission towers march nearby. The Spring District-to-be is close to some of Bellevue’s auto row dealers, the ones who sell Porches and Mercedes. Apart from empty sidewalks, there’s not much evidence of walkability in sight. This landscape is designed for cars, trucks and, yes, the Porsche.

It is surprisingly verdant, however, with maturing street trees and pockets of green belt. In fact, Terry says the Bel-Red is the headwaters of numerous streams —  Kelsey Creek for one — that have been largely paved over or in other ways hidden by 50 years of development. Part of the larger plan for the Bel-Red is to reclaim the streams and turn them into green areas and trails with park amenities that can begin the process of reconnecting people and the land. The very name Spring District suggests this connection with water, not to mention the whole hope springing eternal thing.

All eyes are on the district to see how it comes together and whether this “catalyst” actually catalyzes anything. Things are shifting. For Sale and For Lease signs are common and white boards for the project have already been posted — and graffiti tagged. How’s that for authenticity? It feels like a place poised for change -— that much is authentic anyway.

Authenticity is tough to define, even harder to attain by design — like trying to “plan” spontaneity. Seattle land use attorney, Crosscut contributor and author Chuck Wolfe has a new ebook (Urbanism without Effort,” Island Press, $3.99) on the very topic of how to navigate the tension between “authentic and prescribed urbanism.” He writes: “It is time to look at cities in a more holistic way that better explicates today’s often irrational fusion of the planned, the spontaneous, and the natural…” His book offers examples from around the world of cool urban stuff that didn’t necessarily spring from a drawing board.

Authenticity is connected to place and history and evolves out of need and improvisation (think Pike Place Market). Developers themselves are usually focused on other things, making money, for one. Plus, because of the scale and long project time frames they tend to like predictability. When making an investment over a 20-year horizon to build a new district from scratch, change can be nervous-making, but room must be made for the inhabitants to shape a new place. Creating opportunities for that is the trick.

Developers must also respond to large market shifts that are beyond their control. The demographics of Bellevue and Redmond are very different today then they were 20 years ago. The influx of immigrants and the tastes of the high-tech workforce, for example, have changed significantly and will likely continue to do so. Greg Johnson notes that Wright Runstad developed the main Microsoft Redmond campus decades ago. Back then companies wanted office parks and Bill Gates ordered up something akin to a college campus.

But pastoral settings are becoming passe. Google workers, game developers and Amazonians are young and tend to be more urban focused. Migrant knowledge workers flow from denser cities. Quiet offices have given way to open floor plans. Cubicles are out, bullpens are in. Sprawling low-profile buildings are traded for high-rises. Companies seek newer, hipper urban zones — South of Market in San Francisco, or Fremont in Seattle. Amazon towers sprouting in Seattle’s Denny Triangle will bring the “office park” greenery indoors with futuristic “bio-domes.” Johnson observes that the location of high-tech companies today is no longer decided by a company’s chief financial officer with his sharp pencil, but rather by the human resources department with its desire to please and retain younger employees who are expensive to recruit.

 

Wright Runstad has to design for an evolving market and a moving target.

The Spring District will roll out in three phases, roughly south to north, with the last phase arriving right about the time light rail service begins in the early 2020s. The first phase (2014-18) will occur at the southwest edge of the district. Johnson envisions a grand staircase entrance there. The plan calls for 10, four-to-six-story multi-family buildings with more than 500 units. Johnson anticipates they will be 10-20 percent cheaper than their closest equivalents in downtown Bellevue’s core. The first should come online sometime in 2015. “It’ll look more like Ballard or Fremont than the Eastside,” he says. That is, New Ballard and New Fremont.

The units will target tech workers. Some ground-floor apartments will have direct access to the street, good for dog lovers which Bellevue apartment dwellers apparently are. A large piece of the District’s big park will be put in early, a public space essential to making the whole district work. As a private development, the Spring District is creating most of its own on-site infrastructure. It also wants to collaborate on the design of the East Link station.

Johnson wants a real diversity of buildings — varied heights and angles, view corridors that allow for people to see deep into the neighborhood and find their way. The park is being designed to allow a long view through the district, a key in helping people feel connected. Johnson describes the planning hierarchy as: pedestrians, bikes, transit, cars. Sidewalks will be wide with some rain protection, the parking will be placed under buildings or on the street — no big surface-level parking lots.

This hierarchy bears no resemblance to the existing site or adjacent development. To make it work, pedestrian connections, for example, will have to be improved. One local urbanist says that an early risk for the Spring District is its becoming a kind of urbanist orphan surrounded by suburban seas.

Stroh thinks that’s unlikely, in part because the Spring District is big enough to stand on its own. “It has its own gravity, critical mass,” he says. He also cites its location and thinks that the rail station will keep it connected to other neighborhoods. But it also won’t be alone for long: another, large master planned community called Pine Forest is already in the application phase directly west of the Spring District.

In spite of its transit focus, the District will also bring more traditional auto traffic. The Bel-Red plan calls for expansions of a couple of major arterials (120th and 124th) and an expanded 520 interchange. Wright Runstad is going ahead with the initial phase, but reached an agreement last fall with Kemper Freeman of Bellevue Square and other project skeptics to conduct a major study of eventual traffic impacts. If the District is built out, it could bring over 2,000 new residents and 13,000 office workers. Even with rail, the demand for access and parking will probably be considerable.

The city is still in the process of deciding how to fund some $300 million in Bel-Red infrastructure improvements. There’s been skepticism about various revenue-generating options, such as property tax increases or Local Improvement Districts, where property owners help finance improvements that will raise their property values. Solving that piece of the puzzle will be key to the corridor’s transformation, and the Spring District’s success.

In the search for how to nurture a whole new neighborhood, Johnson has traveled the country to look at other development projects, the kind touted by groups like the Urban Land Institute: South of Market and Mission Bay in San Francisco, LoDo in Denver, Victory Park in Dallas, the Pearl in Portland. Johnson has picked up lots of “Do/Don’t Do” details along the way. Like DON’T put roads on either side of rail stations because that impedes pedestrians. Or, DO put public spaces on the south side of buildings to take advantage of light and sun. And use timeless materials like metal, stone and brick, not “orange-colored composites.” If you don’t have historic architecture to work with, at least the materials can be “authentic.”

“As a developer,” Johnson says, “we think about space that people adopt as their own.” That’s the unpredictable element — human behavior, changing tastes, new folks with different senses of space and expectations. And small things can have a big impact.

Early on, Crossroads Shopping Center put in a large chess board at the heart of the mall. It became a magnet for techies and also appealed to immigrants from Russia who were flowing into the area in the 1990s. The soccer field at Microsoft has proven popular with South Asian employees and workers from soccer-loving countries. Microsoft also added a Commons so employees can mix in a Crossroads-y type environment. While the Spring District isn’t a corporate campus or a mall, it will have some of those elements. The vision of the evolving market and new residents will help shape and reshape the details. Maybe the Spring could use a cricket pitch in its park.

Johnson, who came to Wright Runstad from San Francisco in 2001, has a degree in engineering, an MBA from the Wharton School and the gleam of a man engaged in a fascinating game. In fact, he likens development to playing World of Warcraft, a multi-player computer game with many levels, hidden treasures, shifting alliances and moving targets. And Bellevue has many players in that game, not the least of which is competitor Kemper Freeman who recently announced his own billion-dollar retail/residential/hotel expansion in downtown Bellevue.

Wright Runstad may want to extend downtown along the light rail-lined Bel-Red corridor, but no one is about to forget the man who is ensconced at the downtown’s center. Political struggles over Bellevue’s future, who controls it, infrastructure funding, and the make-up of the city council that presides over it will doubtless continue.

Greg Johnson thinks the Spring District is a pretty safe bet. It would work, he allows, even without light rail because of its proximity to the freeways and two giant employment centers. But rail “galvanizes the vision” and opens up the real urban potential of the corridor, which is what the city of Bellevue is after. It’ll certainly give observers a whole new way to measure and grade the transformation of the Eastside.
 


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Andrew Neilly

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Shorenstein Receives LEED Gold Certification for 188 Spear Street in San Francisco

San Francisco, CA – July 30, 2013 – Shorenstein Company LLC announced the LEED Gold certification of 188 Spear Street, a newly redeveloped Class A office building located in San Francisco.  The building achieved Gold certification under the LEED Core and Shell rating system.

188 Spear Street was acquired by Shorenstein in 2009 and began redevelopment in 2011.  The redevelopment, designed by Brereton Architects, includes a four-floor vertical expansion as well as a lobby relocation and remodel.  The relocated lobby provides a new canopied street-front entry on Spear Street.  The property is located in San Francisco’s south Financial District.  At 216,000 square feet, it is now home to two leading technology firms and is currently 97% leased.

The LEED Core and Shell rating system is designed to meet the needs of commercial property development and redevelopment projects.  This rating system addresses the sustainability of base building elements including the site selection, mechanical and electrical systems, plumbing, fire protection, and building envelope.  Core and Shell enables certification of building interior space by tenants under the LEED for Commercial Interiors rating system.

Some sustainability highlights of 188 Spear Street include:

  • Vertical expansion of the existing structure increased building square footage by 50% within the same footprint
  • Double-glazed high efficiency windows replaced the single pane punched windows on the original structure and are incorporated into the curtain wall glazing of the vertical expansion floors
  • Low flow restroom fixtures and automatic faucets to reduce domestic water consumption
  • Supply and return air fan system configured with an array of controllable fans to optimize ventilation and HVAC energy use
  • Direct electrical sub-metering for tenant spaces
  • Recycling program for the diversion of construction materials from landfill
  • Card-accessed secure bicycle storage with bi-level bike racks to maximize bike parking capacity

Shorenstein continues its commitment to develop assets to the USGBC LEED standards for sustainability. With this redevelopment, the company now owns more than ten million square feet of LEED-certified property at the Silver level or higher.  Twenty-one properties under ownership are currently LEED-certified, seventeen at the Gold level and one at the Platinum level.  Shorenstein is in the formal process of pursuing LEED certification for four additional properties, including three additional Core and Shell projects.

Shorenstein’s commitment to sustainability extends well beyond its LEED program.  The firm is a partner in EPA’S ENERGY STAR® program and 78 percent of the company’s managed portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, with a commitment to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

 

About Shorenstein Company LLC

San Francisco-based Shorenstein Company LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties.  Since its beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of co-mingled institutional capital.  Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.

 

About Brereton Architects

A leading San Francisco architecture and interior design firm, Brereton’s (www.brereton.com) practice currently spans across fourteen western and mid-west States with an emphasis on Bay Area clients. Consistently ranked in the San Francisco Business Times list of top design firms we leverage expertise in workplace, design, technology and sustainability to enable design.  Partnering with our clients we create dynamic & compelling office environments with consideration for the individuality and unique environment of each business and their associated schedules and budget requirements.  Individualized attention is inherent in our success.


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Bellevue OKs Design of Two Spring District Office Buildings

By Marc Stiles

The city of Bellevue has approved the design of the first two office buildings planned for the Spring District, a 36-acre development east of downtown.

The city’s Weekly Permit Bulletin, dated Thursday, states the buildings will be 11 and nine stories, have ground-floor retail and total nearly 525,150 square feet. There also will be underground parking for 1,272 vehicles.

Seattle-based real estate developer Wright Runstad & Co. is developing the Spring District with financial partner Shorenstein Properties of San Francisco.

Wright Runstad officials were unavailable Friday to comment on when construction might start. Company President Greg Johnson has said he plans to start demolishing a big warehouse on the property this summer, and that construction of the office buildings could begin before space is leased to tenants.

Another Seattle company, multifamily developer Security Properties, is buying 2.5 acres in the district from Wright Runstad and Shorenstein. Security Chief Development Officer John Marasco this spring said his company is planning a 316-unit apartment project, and that the plan is to be under construction by next year.

The Spring District sits east of Interstate 405 at state Route 520. In addition to commercial space and residences, it will have open space and a light rail stop, which is scheduled to open in 2023.


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Shorenstein JV to Build 2 Office Properties in Austin

By Gail Kalinoski

Construction has begun on one of two new office buildings at The Domain, a 304-acre mixed-use community in northwest Austin, Texas, being developed in a joint venture between Shorenstein Properties, L.L.C., Deutsche Asset & Wealth Management and Endeavor Real Estate Group.

The cost of developing the two buildings – Domain 2 and Domain 7 – is about $45 million, according to Chad Marsh, managing principal with Endeavor Real Estate Group, a longtime owner and developer at The Domain. Domain 7 is a spec building while Domain 2 already has a long-term tenant signed up, he added.

HomeAway, Inc., a leading online marketplace for vacation rentals, has agreed to lease all the office space – about 114,600 square feet – in Domain 2, a five-story, 139,675-square-foot building, for 11 years, Brian Sharples, HomeAway co-founder and CEO, said in a news release. The 25,000 square feet on the ground floor will be leased to retail tenants. The site also includes structured parking.

The building is expected to be ready for HomeAway by September 2014, Marsh said. The build-to-suit property will be the fourth permanent office for HomeAway in Austin and will be twice the size of its downtown location, Sharples said. It will be home to about 750 employees. Workers at a Research Park office leased about 18 months ago as a temporary location will move to The Domain.

“They were out in the market looking for some temporary space,” Sharples told Commercial Property Executive. “We pitched them on the idea of The Domain.”

Sharples added in the HomeAway release that the company’s employees expressed a desire for an office in North Austin. The company, which started eight years ago in Austin with a staff of six, now, has more than 1,300 employees.

“With easy access to a new Whole Foods, shopping and other tech companies, The Domain provided the best answer for our growing and geographically dispersed HomeAway family,” Sharples said in his company’s release.

Marsh said they have had some interest already in space at Domain 7, which is expected to start construction within 45 days and be completed in October 2014. The six-story building will have 221,886 square feet of space. It will feature 33,000-square-foot floor plates and include structured parking.

“The goal is that we’re out in front of the next wave of construction,” he told CPE. “There’s a lot of pent-up demand for space here. Companies are moving here and companies are growing. There could quickly become a paucity of space.”

Marsh said there is an option for the JV to develop a third building. But he said they are taking a wait-and-see approach before beginning any plans for the third office building.

For Shorenstein, this is the San Francisco-based private real estate company’s first investment in Austin. Its Texas holdings include three Houston office properties.

“We see this as an excellent opportunity to make our first investment in Austin, a market which we have considered for some time due to its strong employment growth and office demand drivers,” Douglas Shorenstein, chairman & CEO, said in a Shorenstein news release. “The opportunity to participate, with highly regarded partners and substantial pre-leasing, in a multi-building development in a unique, mixed-use environment such as The Domain was highly attractive.”

Endeavor and Deutsche Asset & Wealth Management, formerly known as RREEF Real Estate, have been working together on developments in The Doman for eight years, Marsh said. He said Endeavor and Deutsche had previously constructed three office buildings at the site. They still jointly own two and the third was sold to KBS Realty Advisors, Marsh said. Working with Columbus Realty Partners, Marsh added that Endeavor and Deutsche have also been developing multi-family units at The Domain. More than 700 units have already been built or are under construction. Eventually the site could hold as many as 4,000 apartment or condo units.

Endeavor had originally partnered with Simon Property Group and built Phase One of The Domain with about 700,000 square feet of restaurants, office space, upscale retail, apartments and hotel. Simon later bought Endeavor out and also built Domain Crossing, an additional 350,000 square feet of retail, restaurants and apartments. Marsh concluded that Endeavor and Deutsche still own about 170 acres, including the site where the joint venture with Shorenstein is developing the office buildings.


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Shorenstein Invests in Austin

Austin, TX – July 9, 2013 – Shorenstein Properties, LLC has entered into a new venture to capitalize the development of two office buildings located within a 304-acre mixed-use community known as The Domain in northwest Austin, Texas.  The venture, terms of which were not disclosed, was completed with Deutsche Asset & Wealth Management (formerly RREEF Real Estate) and its developer, Austin-based Endeavor Real Estate Group. The transaction includes an option to participate in the development of a third building. This represents Shorenstein’s first investment in Austin. 

The two fully designed and entitled office buildings, to be known as Domain 2 and Domain 7, are five and six stories and total 139,675 s.f. and 221,886 s.f., respectively.  The venture will break ground on Domain 2 later this month and has preleased 100 percent of the office space to HomeAway, Inc., the world’s leading online marketplace of vacation rentals.  HomeAway is headquartered in downtown Austin and will expand its operations to Domain 2 upon completion in 2014.  Domain 2 includes just over 25,000 s.f. of ground floor retail, which is available for lease, as well as adjacent structured parking. 

The venture will commence construction of Domain 7 later this summer. The building has been designed to feature 33,000 s.f. floor plates, includes structured parking, and is available for lease.

Commenting on the purchase, Douglas Shorenstein, Chairman and CEO, Shorenstein Properties, LLC, said:  “We see this as an excellent opportunity to make our first investment in Austin, a market which we have considered for some time due to its strong employment growth and office demand drivers.  The opportunity to participate, with highly regarded partners and substantial preleasing, in a multi-building development in a unique, mixed-use environment such as The Domain was highly attractive,” he added. 

Shorenstein completed the capitalization on behalf of Shorenstein Realty Investors Ten, L.P.

 

About Shorenstein Properties LLC

San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties.  Since its beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of co-mingled institutional capital.  Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.

About Endeavor Real Estate

Endeavor is an Austin-based, full service commercial real estate firm formed in 1999 by former executives of Trammell Crow. The company is focused on the acquisition and development of retail, office, industrial, and multi-family properties. With more than 70 employees, Endeavor is one of the largest real estate firms in central Texas.

About Deutsche Asset & Wealth Management – Real Estate

Deutsche Asset & Wealth Management’s real estate investment business (formerly RREEF Real Estate) has been investing in real estate assets for more than 40 years.  As part of the Alternatives and Real Assets platform, this business today has more than 450 employees located in 21 cities around the world and $48.8 billion[1] in assets under management as of December 31, 2012, and offers a diverse range of strategies and solutions across the risk/return and geographic spectrums, including core and value-added real estate, real estate securities, real estate debt and opportunistic real estate.  The real estate investment business employs a disciplined investment approach and aims to deliver superior long-term risk adjusted returns, preservation of capital and diversification to its investors, which include governments, corporations, insurance companies, endowments, retirement plans, and private clients worldwide. To learn more about Deutsche Asset & Wealth Management’s real estate investment capabilities, go to www.rreef.com.

About HomeAway, Inc.

HomeAway, Inc. (NASDAQ:AWAY), based in Austin, Texas, is the world’s leading online marketplace of vacation rentals, with sites representing over 742,000 paid listings of vacation rental homes in 171 countries. HomeAway® offers an extensive selection of vacation homes that provide travelers with memorable experiences and benefits, especially more room to relax, for less than the cost of traditional hotel accommodations. The company also makes it easy for vacation rental owners and property managers to advertise their properties and manage bookings online. The HomeAway portfolio of websites includes HomeAway.com, VRBO.com and VacationRentals.com in the United States; HomeAway.co.uk and OwnersDirect.co.uk in the United Kingdom; HomeAway.de in Germany; Abritel.fr and Homelidays.com in France; HomeAway.es, Toprural.com in Spain; AlugueTemporada.com.br in Brazil; and HomeAway.com.au in Australia.

In addition, HomeAway operates BedandBreakfast.com, the most comprehensive global site for finding bed-and-breakfast properties, providing travelers with another source for unique lodging alternatives to chain hotels. For more information about HomeAway, please visit www.HomeAway.com.




[1] Excludes infrastructure securities assets under management, which were previously reported under the RREEF Real Estate business.


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Long Sought Supermarket Coming to Mid-Market

By Randy Shaw

Fulfilling its commitment to bring a supermarket to Market Square (aka the Twitter building), Shorenstein Properties has reached agreement with the Small Foods company to operate a 22,000-square-foot grocery store on the building’s ground floor. The project brings the first supermarket to the Mid-Market/Tenderloin area in at least fifty years, with the closest market to Tenderloin residents long located up a steep hill at California and Hyde (which had a Safeway, Cala and now a Trader Joe’s).The Shorenstein Company deserves tremendous credit for keeping the prized retail space vacant for over 18 months while one market after another withdrew plans to operate the space. The Small Foods deal follows last week’s purchase of the Hollywood Billiards building near 6th and Market, two major steps toward the area’s transformation.

For all the progress in San Francisco’s Mid-Market since the city enacted its payroll tax exemption to attract Twitter to the area, hope appeared fleeting that the planned supermarket site at Market Hall would find an operator. The recent problems at Fresh & Easy raised questions as to the economic viability of smaller sized supermarkets, and the Shorenstein Company had difficulty obtaining an operator.

But in Small Foods, Mid-Market has gotten exactly the type of operator the area needs. Small Foods promotes locally produced organic food, and brings in local food suppliers to create a Pikes Market-type of environment (no, do not expect salmon to be thrown about at the fish counter as in Seattle).

Affordable for Tenderloin Residents?

Does the Market Square supermarket satisfy the Tenderloin’s long need for such? Some will see organic produce being sold and conclude it’s too expensive for Tenderloin residents.

But the very low-income residents of the Tenderloin—like the tenants my organization (the Tenderloin Housing Clinic) houses—cannot economically sustain any supermarket. The proposed supermarket on TNDC’s still undeveloped site at Eddy and Taylor would require customer support from the thousands of working Tenderloin residents who can afford organic produce and quality food but currently must leave the community to get it.

Nor does Small Foods preclude the future TNDC market, which, if built, could be a smaller 10,000 square feet. To the contrary, TNDC’s market would add to the neighborhood’s food choices. The same is true with the possible ground floor market at Market Street Place; given the thousands of Tenderloin residents lacking supermarket options, as well as the thousands of new residents moving to Mid-Market, multiple markets can thrive.

Does the market alone solve the Tenderloin’s food security challenges? Of course not. We need more community gardens like what TNDC has growing at Larkin and McAllister, and other strategies to get healthy food to those on very low fixed incomes.

But many Tenderloin residents prefer and can afford organic produce and quality food, and they will benefit greatly from the Small Foods market. It is an enormous step forward for the area, and further confirmation that Mayor Lee’s vigorous support for the area’s transformation is succeeding.


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Twitter Building Lands Grocery Anchor, Mid-Market’s First

By J.K. Dineen

The burgeoning Mid-Market neighborhood is set to get its first full-service grocery market, a 22,000-square-foot retail center that sources describe as a cross between a locally owned Whole Foods and a smaller version of the Ferry Building marketplace.

The market, which is expected to be unveiled today or tomorrow, will be located in the Twitter building at 1355 Market St., which is also home to Yammer and One King’s Lane. The deal comes five months after the owners of AQ restaurant announced that they would be opening a French-inspired brasserie and bar in the building, which is owned by Shorenstein Properties.

The store, which like the Ferry Building will feature an eclectic array of local, organic food producers, will be operated by San Francisco-based Small Foods. Small Foods operates a 2,500-square-foot grocery store and cafe in an early 1900′s brick warehouse building at 522 2nd St.

The store will have a captive audience in the tech workers populating the Twitter building. It will also attract business from the 3,000 units of new housing going up in the neighborhood. This includes NeMa, a 754-unit apartment complex Crescent Heights is building directly across 10th Street from the where the new food market will be. That project opens in October.

On its website, Small Foods states: “Finally a smarter way to shop for better quality, locally produced, healthy and convenient food and beverages in an inspiring store setting. As consumers continue to trade up for quality, Small Foods meets this demand and is committed to supporting many local foods suppliers and manufacturers of the Bay region.”

Cornish & Carey Newmark Knight Frank represents Shorenstein Properties. The Business Times will have the complete story once the announcement is made.


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Source

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Expanding Beyond Traditional Markets

By Natalie Dolce

SAN FRANCISCO-Prime and core assets have attracted much interest in recent years, driving cap rates down and prices higher, say panelists at ULI’s Real Estate Finance and Investment 2013 conference in a panel titled “New Directions and New Strategies in Real Estate Investing.” But the question on panelists mind is whether investors continue to concentrate on prime assets, or will they look further afield in the search for yield.

Panelist Donald Wise, president and CEO of Metzler Real Estate, said that the firm’s recent acquisition of  555 Mission was the epitome of buying a project that checks all those boxes that any off-shore investor would be interested in. Between the newness of the construction, the quality of the tenancy, the emergence of a growing neighborhood, it is just that prime and core project. However, Wise says that going forward; Metzler Real Estate has been doing some “soul searching” about where we are going from here.

Carl Shannon, senior managing director of Tishman Speyer, served as moderator.

 “What we are trying to do is looking at a broader range of markets,” he said. Markets like Denver, Chicago, Seattle and Texas’ Houston and Austin, were a few mentioned. In addition to that, he said, Metzler is also looking for smaller placements. “We are comfortable taking leasing risks as long as we have a sense of comfort in the local employment market, which was certainly the case here in San Francisco and in other markets we are looking at like in Houston. The risk premium is justified at least for now.”

When Moderater Carl Shannon, senior managing director of Tishman Speyer, asked panelist Charles Malet, chief investment officer of Shorenstein Properties, where his company was playing today, the answer was “across the risk spectrum.” On the buy side, Malet said, “we try to pay close attention to tenant demand.”

Paying attention to that, Malet continued, “has led us to in some markets like Chicago, Boston, San Francisco and Los Angeles.” And the firm also alters the type of office it is looking for. For example, in Los Angeles, Shorenstein looks at more of the creative office type product as opposed to a 40-story to 50-story high rise.

In secondary markets, Shorenstein pays attention to the market fundamentals and tenant demands. “Houston is just on fire. Employment growth there has been phenomenal,” he said. He also mentioned that the firm recently purchased an asset in Minneapolis, “which is one of those cities that has invested in infrastructure and there has been a lot of downtown development.” He added that “Those are common themes that drives tenant demand.”

Dirk Hallemeier, managing director of West Coast investments at MacFarlane Partners, is still playing in the primary markets and hasn’t really gone to secondary as of yet. However, he explained that MacFarlane is now “taking more risks within the deal.”

He explained that “If we are just going to the beauty contest, we aren’t going to win, so we are tying up land earlier on in the game, taking over entitlements ourselves and are taking entitlement risks.”

As far as MacFarlane’s underwriting metrics, it is definitely a market by market discussion, he said. “Our general belief is cap rate growth and rent growth go hand in hand.”

And in terms of pricing those entitlement risks, Hallemeier explained that he prices the whole lifecycle of the deal. “We then look at it and say ‘if we can get hurt, can we still do this?’ We look at it from a bunch of angles.”

One who doesn’t take development risk or buy land is Brendan MacDonald, partner of Clairvue Capital Partners. “We have had to stay one step ahead of the core buyers to generate the types of returns that we need,” he said. In 2010, he explained, Clairvue was providing capital to suburban office in places like Boston and D.C. In 2011, it was providing capital to grocery anchored shopping centers. And while the firm has only done 10 investments–because it invests in portfolios, there are more than 400 assets in our portfolios–the company has an advantage in seeing where the strength lies within the portfolio geographically, he said. “In the last six months, there has been a pronounced shift in the markets we have been investing in. Lenders are getting significantly more aggressive. We have seen capital moving into the secondary markets. We have had to go further out with good operators with good assets in markets the core buyers haven’t gotten into.”


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Shorenstein Receives LEED Gold Certification for 2000 West Loop South in Houstin, Texas

Houston, TX – June 3, 2013 – Shorenstein Properties, LLC announced it has received LEED certification at the Gold level, Existing Building Operations and Maintenance (EBOM), for 2000 West Loop South, a Class A building located in the heart of Houston’s Uptown District.

2000 West Loop South is almost 357,000 square feet of Class A office space in a prime location near the Houston Galleria.  Amenities include a fitness center, a deli, and onsite management provided by locally-based Means Knaus Partners L.P.  The building carries an ENERGY STAR rating of 81.

LEED for Existing Buildings:  Operations and Maintenance addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs and systems upgrades.  The system helps building owners and operators measure operations, improvements and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

Some of the highlights of the sustainability program at 2000 West Loop South include:

  • Retrofit of lighting systems throughout the building and garage for increased energy efficiency including LED lighting;
  • Installation of high efficiency water fixtures and implementation of a new satellite based irrigation system to reduce water consumption;
  • Implementation of a pest control management plan which greatly reduced or eliminated the use of chemicals and bio-degradable products;
  • A comprehensive green cleaning program, featuring sustainable cleaning chemicals, recycled products and green cleaning equipment to reduce particulates and promote comfort;
  • The diversion of construction waste from landfills to recycling facilities;
  • Automated control of heating, ventilation and air conditioning and the optimization of outside air intake;
  • Installation of motion sensor lighting in offices.

With this certification, Shorenstein now owns more than ten million square feet of LEED-certified property at the Silver level or higher.  Twenty properties currently owned by the company are LEED certified, sixteen at the Gold level.  The company is in the formal process of pursuing LEED certification for three additional properties.

Shorenstein’s commitment to sustainability also extends well beyond its LEED program.  The firm is a partner in EPA’S ENERGY STAR® program and 78 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

About Shorenstein Properties LLC:

San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties.  Since its beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of co-mingled institutional capital.  Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.

About Means Knaus Partners L.P.

Means Knaus Partners L.P. (MKP) (http://www.mkp-us.com) is a privately-held, commercial real estate firm that manages, leases, acquires, renovates and develops institutional quality real estate projects with its valued clients and partners. We put particular emphasis on professional services that can lower business costs, optimize asset performance and create sustained real estate value for our clients and partners. At MKP, we are owners, and we think like owners. We understand how important it is for property management teams to maximize revenue and value. MKP evolved out of the Paragon Group, with its roots as an operating unit going back to 1981 and was established as a private real estate investment and management company in 1998.


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BOMA Bay Area Earth Awards Celebrates Green Building

By Susan Piperato

When the 2013 BOMA Bay Area Earth Awards were announced on May 16, the event offered yet further proof that San Francisco is well on its way to becoming America’s first zero-carbon city. Already the city has the country’s largest urban concentration of Energy Star-certified commercial office buildings on a square-footage basis and is the sixth in the nation in the number of Energy Star-certified buildings—despite being smaller than many other major American cities.

With the Earth Awards, BOMA’s San Francisco and Oakland/East Bay chapters have joined forces in making Bay Area commercial officeproperties arguably the greenest in the nation, measuredby many standards.

BOMA’s Earth Awards recognize commercial property owners and managers for the most comprehensive resource management practices—including recycling, energy and water conservation, air quality and toxic reduction programs, support for public transit and tenant education programs that promote sustainability. The BOMA Earth Awards, along with their preceding recycling competitions and other sustainability initiatives, have encouraged sustainability in San Francisco’s commercial real estate community by spreading knowledge of how to operate greener buildings in numerous ways, from parking garages to rooftops gardens. Buildings that have competed for green distinctions have elevated their value to all stakeholders. 

This year’s First Place winner in the Large Commercial Property category went to One Front Street, managed by Jones Lang LaSalle. The building, also known as Shaklee Terraces, is a 38-floor office tower located at 444 Market Street in San Francisco’s Financial District. The building was completed in 1979, and is now LEED and Energy Star certified. Since 2011, as part of City Park’s green initiative, One Front Street has featured rooftop solar panels producing enough power for 394 houses and with the equivalent offset of 211 trees.

Winning an Earth Award, says Nicole Hom, JLL’sgeneral manager for the building,“helps establish One Front Street and strengthens Jones Lang LaSalle as an energy-efficiency and sustainability leader in the commercial real estate industry.

“Best practices to ensure building efficiencies are constantly evolving,” notes Hom, “which is why the BOMA Earth Award Competition is so important because it helps member buildings stay informed of the latest practices and raises awareness within the industry.”

The Russ Building, a neo-Gothic office tower constructed in 1927 at 235 Montgomery Street in San Francisco’s Financial District, took the top prize for a Medium Commercial Property. The 32-story California Historical Landmark building was the tallest in San Francisco from 1927 to 1964 and boasted the city’s first indoor parking garage. The Russ Building’s sustainability initiatives include having been retrofitted to Energy Star specifications, maintaining LEED-compliant cleaning procedures, offering tenant sustainability and education programs and meeting BOMA’s 7 Point Challenge.

“Even though the Russ Building is over 80 years old, energy efficiency and sustainability are important to our daily operation and it was an honor to be recognized for our efforts,” says Bill Whitfield, the building’s general manager for Shorenstein Realty Services LP.  The property management team at the Russ is passionate about doing our part to minimize negative environmental impact and consistently strives to demonstrate our commitment. Shorenstein encourages and supports a focus on sustainability at the Russ and at all of its properties across the nation. The BOMA Earth Award is acknowledgment that we are running at peak performance and a reminder to remain focused and creative as we continue to evaluate ways to be green.”

The BOMA Earth Awards are grouped according to building size (large, medium and small), with additional recognition for innovative practices. The winners of the 2013 BOMA EARTH awards are:

Large Commercial Property Winners (over 500,000 sq. ft.):

1st Place: One Front St., San Francisco, Jones Lang LaSalle

2nd Place: Hills Plaza, San Francisco, Jones Lang LaSalle

3rd Place: One Maritime Plaza, San Francisco, CBRE Inc.

Medium Commercial Property Winners (300,000 to 500,000 sq. ft.):

1st Place: The Russ Building, San Francisco, Shorenstein Realty Services

2nd Place: 650 California St., San Francisco, Tishman Speyer

3rd Place: 2100 Powell, Oakland, Hines Interests Ltd. Partnership

Small Commercial Property Winners (under 300,000 sq. ft.):

1st Place: 150 California St., San Francisco, CBRE Inc.

2nd Place: 501 Second St., San Francisco, The Swig Company

3rd Place: 633 Folsom St., San Francisco, The Swig Company

Innovation of the Year:

Landscaping for the Community: 101 California St., San Francisco, Hines Interests L.P.

Recognition of Innovation:

Cleaning with Orbio: 101 California, San Francisco, Hines Interests L.P.

A Garden for the Tenants: 1001 West Cutting Blvd., Richmond, Wareham Development

Tenant Loop Condenser Water Retrofit: One Maritime Plaza, San Francisco, CBRE Inc.

Temperature Sensors for Steam Traps: The Mills Building, San Francisco, The Swig Company

The Earth Awards are just one of many innovative green programs offered by BOMA to its members. Other past and current programs include the High-Rise Recycling Program, BOMA Energy Efficiency Program (BEEP) seminars that teach principals of energy management and use of the Energy Star Portfolio Manager Tools, BOMA 360 Performance Program to measure and improve management of six distinct operational domains, BOMA International’s Experience Exchange Report, which has been benchmarking building performance for more than 90 years, and classes towards LEED accreditation.


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Transwestern Named Exclusive Leasing Agent for Downtown Houston Tower [800 Bell]

By Shaina Zucker

San Francisco-based Shorenstein Properties LLC assigned Houston-based Transwestern as the exclusive leasing agent for 800 Bell, a 1.2 million-square-foot office tower in Houston’s Central Business District.

The property, which Shorenstein recently acquired from Irving, Texas-based Exxon Mobil Corp. (NYSE: XOM), includes a 45-story office tower and a seven-story parking garage covering two city blocks on the corner of Travis and Bell streets.

The tower was built in 1962 as the headquarters of Humble Oil & Refining Co., a predecessor to Exxon Mobil. Exxon Mobil will vacate the building in 2015, giving Shorenstein the opportunity to deliver improvements via an extensive redevelopment, details of which will be released soon.

“We are very excited about this unique opportunity,” Eric Anderson, executive vice president at Transwestern, said in a statement. “It is not very often that we can be a part of something as significant as enhancing the downtown Houston skyline. Shorenstein has a reputation for delivering successful signature redevelopment projects, such as Market Square in San Francisco, which includes the headquarters of Twitter, Yammer and One Kings Lane.”

Anderson; David Baker, executive vice president; and Paul Wittorf, vice president, will market and lease the property.


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Districts Lifted by Tech Glitz Companies Flock to Once-Marginal Neighborhoods, Creating Hot New Markets

By Eliot Brown

For decades, the area just south of San Francisco’s City Hall was a grimy strip of aging midrise buildings pockmarked with payday-loan shops and panhandlers. But over the past two years, technology companies have gobbled up office space in the area, known as Mid-Market. Now, young software engineers fill the streets, cranes for new apartment towers rise on long-vacant lots, and among the many new retailers are a candy store that sells toffee for $22.95 a pound.

Tech companies have been a rare bright spot for the U.S. office market, which continues to face headwinds as banks and insurers cut back on space. But unlike typical corporate users, the tech firms are eschewing skyscraper-filled downtowns for neighborhoods long considered marginal, where office-vacancy rates have plummeted to levels far healthier than central business districts.

In Seattle, a onetime manufacturing district called South Lake Union has been dotted with new construction since Amazon.com Inc. AMZN -0.77% moved its headquarters there three years ago.

Manhattan’s fastest-growing office district is Midtown South, an area traditionally home to nonprofits and back-office work.

In the fourth quarter, Midtown South, which includes areas such as the Garment District, Union Square and SoHo, had a vacancy rate of 7.2%, compared with 11.7% in Midtown, according to Jones Lang LaSalle Inc., JLL -0.29% with much of that growth coming from tech. This area also includes the Meatpacking District, a restaurant and retail hot spot where landlords are now seeking office rents as high as $100 a square foot. In the past, such prices were reserved for Midtown skyscrapers with views of Central Park.

Similar transformations are playing out in Chicago’s North Loop and Boston’s Seaport District, where the growth of startups and established tech companies are expanding the bounds of the traditional business district.

“Work is now much more dispersed,” said Mitchell Moss, a professor of urban planning at New York University. “Some of the most sophisticated companies are not in traditional office districts.”

Of course, the longevity of the shift is far from clear, as a tech boom filled with startups is volatile by nature. Some parts of these same neighborhoods flourished during the late 1990s only to reel after the dot-com bubble burst. In San Francisco’s South of Market area, office rents plummeted 54% from the beginning of 2001 to the end of 2002, and vacancy in that time rose to 39% from 18.8%, according to Jones Lang LaSalle. Tishman Speyer Properties LP was forced to sell a pair of towers nearby on Market Street in 2003 for less than half the $192 million it paid four years earlier.

But for now, demand is surging, and real-estate developers are following along. For years, Douglas Shorenstein, scion of a prominent San Francisco real-estate family, focused on glitzy high-rises like the city’s Bank of America BAC +0.57% tower. In 2011, his Shorenstein Properties LLC paid $110 million to buy Market Square, an 11-story art deco building that used to be a wholesale furniture mart. The hulking building, mostly vacant when purchased, is now more than 90% leased with tenants including Twitter Inc.’s headquarters. The ground floor is set to include a chic new brasserie-style restaurant.

Shorenstein Properties is remaking a second part of the property into a glassy office building that aims to fetch financial district-level rents. “People want to be in space that feels more comfortable—more residential in feel than boxy, cubicle farm, institutional,” said Mr. Shorenstein, the chief executive.

Tech companies have been lured to these areas by lower rents, an edgier flavor and the buildings’ large, open floor plans. Just as technology companies boast amenities like games and lounge areas for their employees, location is also a big factor in attracting workers.

Corporate social-networking company Yammer, owned by Microsoft Corp., MSFT -0.33% moved to Market Square in January. The company considered the financial district but concluded employees would want to be around other tech firms in a hip neighborhood, said Mark Woolway, an executive vice president. “They don’t want to work in a generic office building,” Mr. Woolway said of downtown San Francisco.

South of Market, a onetime industrial hub, saw office vacancy fall to 5.5% at the end of 2012 from 17% in early 2009, as startups and established technology companies have added workers and space. Downtown San Francisco’s vacancy, by contrast, fell to 10.4% from 12% over the same period, according to Jones Lang LaSalle.

Mid-Market, to the northwest, has attracted at least nine new tech companies in the past two years, including digital-payments firm Square Inc. and Twitter. In all, that means an estimated 5,700 new jobs in the district as companies fill their space, according to San Francisco Mayor Ed Lee, who pushed through a tax break for the area in 2011. “I thought it would be five years at the least” before the redevelopment would take off, Mr. Lee said.


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Source

sfgate.com

 

AQ’s Matt Semmelhack and Mark Liberman to open Bon Marché in Market Square

By Paolo Lucchesi

Matt Semmelhack and Mark Liberman — the team behind the celebrated AQ in SoMa — are the first restaurant tenants of the big Market Square development (a.k.a. the Twitter building), where they plan to open a street-level, all-day brasserie and bar named Bon Marché.

The name refers to several things. Le Bon Marché is the famous Parisian department store, which dates back to the 1830s, making it one of the world’s first (and most beautiful) department stores; its name influenced a Seattle branch in the early 20th century that eventually became a part of Macy’s. The retailer and department store context is a sly wink to the Market Square building’s former life as the S.F. Furniture Mart. Plus, the French connection is a nod to the building’s Art Deco roots, Semmelhack says, which they’ll try to maintain.

Of course, with Bon Marché, there’s also the translation to “good market” — and the location is directly on Market Street and the mid-Market neighborhood.

Liberman will be the executive chef, and the food will be contemporary Californian brasserie fare. What does that mean? Like traditional brasseries, the 125-seat Bon Marché will be open all day, and the plan is to create a bustling environment and bar scene. There will be a large menu and a big emphasis on a raw bar (yes, there will be seafood plateaus), though the food will be more modern twists on classics, similar to what they do at AQ — familiar reference points, envisioned in new, fun ways, Semmelhack says. The price point will be lower than AQ.

Chef Mark Liberman preparing one of his dishes at AQ. Photo: The Chronicle

On the bar side, plans call for a full liquor license, and like AQ, cocktails are hoped to be a strong point. While the food will skew toward the modern and Californian, the bar program will likely slant toward the French brasserie classics a little more. Also, AQ’s beverage director Kristen Capella wants to have the largest sparkling wine collection in the country.

Since it’s an all-day affair, Bon Marché will offer coffee and simple breakfast in the mornings; they’re playing with ideas on making physical changes throughout the day to the restaurant — or a possible 60-foot bar — to utilize the space for the appropriate time of day.

BCV Architects, who did the reimagined Ferry Building (among others), is spearheading the design of the ground floor of Market Square, and it’s likely they’ll be involved in Bon Marché as well. The 7,300 square foot restaurant space is full of “soaring” ceilings and fat concrete columns, with entrances from Market Street and both the old and new lobbies. A full build-out is required, and it will be a few months before construction even begins, so the entire project is still 18-24 months away, and that’s the earliest ETA.

Shorenstein Properties, the developers/visionaries behind the entire Market Square project, still have a few more restaurant/bar spaces available, so it should be interesting to see who snatches them up now that the first lease has been signed. Meanwhile, Semmelhack and Liberman are still working on their other new project, next door to AQ, which now carries the moniker of TBD.


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CA Technologies Snags Shorenstein’s Santa Clara Towers Space

By Nathan Donato-Weinstein

CA Technologies Inc. has agreed to take a big chunk of space in Santa Clara Towers II, the 11-story office tower and former McAfee headquarters that fronts Highway 101 in Santa Clara.

The New York-based software developer will lease just under 75,000 square feet at 3965 Freedom Circle, it confirmed Tuesday.

CA Technologies, formerly known as Computer Associates, will occupy the highest four floors, and its logo will be visible at the building’s top.

“As one of the largest software companies in the world, we are looking to raise our visibility in the Silicon Valley,” said spokeswoman Jessica Cassady.

Cassady said the publicly traded firm would consolidate space occupied by several companies it acquired in recent years, including Nimsoft, Arcot and Cassatt. Offices located in Campbell, Redwood City and Sunnyvale will make the move this summer. She added that the company’s South San Francisco offices would remain.

“With this step to consolidate offices, we anticipate that it will be a catalyst in attracting top talent, generating ideas and driving innovation,” she said.

Terms of the deal were not disclosed, but asking rent on the building was $2.50 per square foot. The 204,000-square-foot office tower has been emptying out since McAfee signed for a nearby campus owned by The Sobrato Organization in a deal inked in 2010. The building is next door to its multi-tenant twin tower at 3945 Freedom Circle.

Phil Mahoney and Randy Gabrielson of Cornish & Carey Commercial Newmark Knight Frank represented the landlord, Shorenstein Properties LLC. Commercial real estate services firm Studley represented CA Technologies.

Mahoney said the building’s high-image location — it is highly visible to the throngs of drivers traversing the Valley on Highway 101 at the Great America Parkway exit — was an attraction point.

“In addition, the speed at which they could occupy was very important because they were coming out of a number of different buildings,” Mahoney added.

The Great America Parkway corridor has seen higher tenant and investor interest in recent quarters, with companies inking big deals in the neighborhood including Palo Alto Networks, Dell and Arista.

Class A office space vacancy in Santa Clara saw about 219,000 square feet of absorption in 2012, according to new data from Colliers International. Vacancy in the fourth quarter stood at 19.4 percent.

CA Technologies has about 14,000 employees around the globe, and reported revenue of $4.81 billion in 2012.


Shorenstein Press Center

Source

The Registry

 

Shorenstein Properties Completes BOMA’s 7-Point Challenge

San Francisco, CA– In an effort to further its green and sustainability practices, Shorenstein Properties LLC has been recognized as having completed the Building Owners and Managers Association (BOMA) International’s 7-Point Challenge. BOMA recently concluded the five-year challenge, which encouraged commercial real estate companies to reduce their use of natural resources, non-renewable energy sources and waste production. Benchmarks in the 7-Point Challenge included: decreasing energy consumption by 30 percent across portfolios by 2012; employing the ENERGY STAR® metrics to benchmark energy performance and water usage; providing education to engineers, owners and operators; performing energy audits to implement low-risk and low-cost strategies; and improving operations and building maintenance systems. Finally, as part of the plan, BOMA asked members to work to position themselves as leaders and solution providers to owners, tenants and the greater community.

At the Challenge’s conclusion, an evaluation of Shorenstein’s performance demonstrated a 32 percent decrease in energy consumption across the company’s national portfolio of office properties. To achieve the energy and environmental objectives of the 7-Point Challenge, Shorenstein’s property and asset management teams:

  • Conducted an “Energy Savings Tour” — an energy efficiency evaluation of all properties that resulted in a 5.1% decrease in energy use in 2011, the equivalent of taking more than 1,000 homes off the electric grid or 940 cars off the road.
  • Designed and completed a “Flip the Switch” sustainability education program, targeting all tenants in all markets;
  • Established eleven “G.R.E.E.N.” Initiatives specifically focused on improving building energy performance – these were in addition to the other twenty-eight initiatives related to non-energy related areas of sustainability;

Additional steps taken by the company in the last twelve months include:

  • Hiring a full-time Sustainability Program Manager;
  • Developing ongoing tenant engagement programs to provide information, tools, and incentives to enhance the sustainability of our tenants’ office places;
  • Expansion of companywide benchmarking to include water, and waste;
  • And, committing to reduce energy consumption by an additional 20 percent by 2020 as part of the Department of Energy’s Better Buildings Challenge.

Shorenstein is a partner in EPA’s ENERGY STAR® program and 80 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval. For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

“BOMA’s 7-Point Challenge was designed to encourage our industry to voluntarily address energy and environmental issues. Shorenstein Properties was excited to participate as this challenge fit well with our overall operating strategy and platform,” said Stan Roualdes, Executive Vice President for Property Management and Construction. “We worked diligently to meet the commitment we made and, five years later, we are very proud to be recognized for our efforts and the effect we have had, and will continue to have, on our environment, buildings and tenants.”

“Shorenstein is now a proven leader on energy efficiency and environmental issues and we look forward to working with them to tell their 7-Point Challenge sustainability story for the whole industry to learn from,” said BOMA International Chair and Chief Elected Officer Joseph W. Markling, managing director of Strategic Accounts with CBRE. “Market transformation is achievable when organizations like Shorenstein step up to the challenge.”


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Andrew Neilly

T 925.930.9848

 

Shorenstein Receives LEED Gold Certification for Palisades Office Park in Atlanta, GA

San Francisco, CA – January 23, 2013 – Shorenstein Properties LLC announced it has received LEED certification at the Gold level, Existing Building Operations and Maintenance (EBOM), for Palisades Office Park, a Class A complex in Atlanta’s dynamic Central Perimeter office market.

Palisades Office Park is almost 640,000 square feet of Class A office space in four buildings within a 23-acre park like setting featuring a four-acre lake.  Other amenities include a conference facility, fitness center, two-hole putting green and a café.  The buildings carry an ENERGY STAR rating of 84.

LEED for Existing Buildings: Operations & Maintenance addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs, and systems upgrades. The system helps building owners and operators measure operations, improvements and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

Some of the highlights of the sustainability program at Palisades Office Park include:

  • Parking deck retrofit using 32-watt spring lamps instead of 175-watt HID, and the addition of photo cells to control outer row lights during day light hours.
  • Water heater retrofit resulting in a 50% reduction in electricity use.
  • Conversion of lobby lights and all outside lighting to LED.
  • Use of lake water for irrigation.
  • Electronic monitoring of all cooling tower water usage.
  • Motion sensors in offices to control lighting.
  • Low flow fixtures in restrooms. 
  • Landscaping program uses mulch mowers and plants and trees with low water needs.
  • New waste management practices resulting in a 58% waste diversion rate.
  • Program to recycle batteries, computers, and other electronic equipment for tenants and management.

This brings to 23 the number of properties that have successfully achieved LEED certification at the Silver level or higher under Shorenstein’s ownership and management. Nineteen properties currently owned by the company are LEED certified, fifteen at the Gold level.  The company is in the formal process of pursuing LEED certification for four additional properties.

Shorenstein’s commitment to sustainability also extends well beyond its LEED program.  The firm is a partner in EPA’s ENERGY STAR® program and 78 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

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About Shorenstein Properties LLC:

San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties. Since it’s beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of commingled institutional capital. Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.


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Yammer Moves into Market Square

By Patrick Hoge

Yammer Inc., the social networking platform for businesses, officially moved into its new headquarters in San Francisco’s Mid-Market Street neighborhood Monday with a ribbon cutting and coming out party.

Purchased last year for the impressive sum of $1.2 billion by Microsoft Corp. (NASDAQ: MSFT), Yammer was co-founded in 2008 by PayPal founding COO David Sacks and Adam Pisoni, who are Yammer’s CEO and CTO, respectively. The company has 330 employees in San Francisco, 445 globally.

Yammer’s new space occupies 80,000 square feet, taking the entire third floor at 1355 Market St., the 11-story, 1937 Art Deco edifice where Twitter Inc. also moved its headquarters last year. A company spokeswoman said the space could likely accommodate another 100 people if needed.

The structure is part of a two-building complex called Market Square which the Shorenstein [Properties] is completely renovating, and its revival has helped spark a dramatic economic renaissance in the surrounding neighborhoods.


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800 Bell

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San Francisco Developer Plans Major Re-Do for Exxon Mobil Tower with Possible Tunnel Expansion

By Ralph Bivins

Shorenstein Properties, a prominent San Francisco-based developer, on Monday confirmed it has acquired the 45-story Exxon Mobil building in downtown Houston for a major redevelopment that may include linking the building into the downtown tunnel system.

Shorenstein recently received rave reviews for redeveloping a historic building in San Francisco for the headquarters of the Twitter company.

As part of the deal, Exxon Mobil agreed to lease back the entire building until 2015, when it will relocate its employees to its new corporate campus near The Woodlands.

The Exxon Mobil building, located at 800 Bell at Travis, was built in 1962 as the headquarters of Humble Oil & Refining, a predecessor to Exxon Mobil.

The sales price was not disclosed. As part of the deal, Exxon Mobil, the seller, agreed to lease back the entire building until 2015, when it will relocate its employees to its new corporate campus just south of The Woodlands.

The Exxon Mobil tower and its seven-story garage cover two downtown blocks. The 1.2 million square foot building is downgraded by real estate because it is not connected to the tunnel system that links many of the first-class office buildings and hotels in downtown Houston.

Although nothing is official yet, Shorenstein is expected to spend many millions to connect the building to the tunnel system, if possible, and make major upgrades to the office tower.

“We purchased this property markedly below current replacement cost, which gives us the opportunity, once the current user vacates, to employ all our company’s core skills in capital transaction execution, redevelopment, leasing and operations to increase the property’s value by establishing its long term position and further enhancing its reputation in the market,” Douglas Shorenstein, chairman and CEO of Shorenstein Properties said in a statement.

The price paid for the building was not disclosed, but people in the real estate community said it was around $50 million. By comparison, the Shell Plaza in downtown recently sold for around $550 million.

Shorenstein’s budget for renovating the property is expected to be significant because the company specializes in owning only prime “Class A” buildings and does not typically hold any dog-eared buildings in its portfolio.

Shorenstein owns dozens of office buildings across the nation including two others in Houston near the intersection of San Felipe and Loop 610: the 28-story Five Post Oak Park building, which is across the street from the St. Regis Hotel, as well as the 21-story 2000 West Loop South tower on the freeway’s west side frontage road.

The company’s founder, the late Walter Shorenstein, was a major supporter of the Democratic Party and was an advisor to presidents Lyndon Johnson, Jimmy Carter and Bill Clinton.


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Andrew Neilly

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Shorenstein Properties Completes Purchase of 800 Bell Street in Houston

SAN FRANCISCO, CA – January 04, 2013 – Shorenstein Properties announced it has closed on the purchase of 800 Bell Street, a 1.2 million square foot office tower in downtown Houston.  The seller was Exxon Mobil Corporation, which currently also occupies the building.  Shorenstein purchased the property for Shorenstein Realty Investors Ten, L.P., a fund formed in 2010 with $1.23 billion in committed capital. 

Specific terms of the transaction were not disclosed, but simultaneous with the purchase, which closed recently, ExxonMobil has leased back the entire building into 2015, when it plans to relocate the building’s occupants to a new corporate campus under construction north of Houston. 

800 Bell covers two city blocks in Houston’s central business district.  The purchase includes a 45-story office tower and a seven-story parking garage.  The property was built in 1962 as the headquarters of Humble Oil & Refining Company, a predecessor to ExxonMobil.

Shorenstein plans to undertake significant improvements to the property after ExxonMobil’s departure.

Douglas Shorenstein, Chairman and CEO of Shorenstein Properties, said:  “This acquisition is in line with our strategy of buying vacancy in markets exhibiting strong current demand and future growth.  We purchased this property markedly below current replacement cost which gives us the opportunity, once the current user vacates, to employ all our company’s core skills – in capital transaction execution, redevelopment, leasing and operations – to increase the property’s value by establishing its long term position and further enhancing its reputation in the market.”

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Andrew Neilly

T 925.930.9848

 

Shorenstein Properties Completes Purchase of Downtown Minneapolis Complex

Minneapolis, MN – November 20, 2012 – Shorenstein Properties completed the acquisition of 33 South Sixth in the heart of downtown Minneapolis.  The seller was Brookfield Office Properties Inc. and the terms of the transaction were not disclosed.

Shorenstein made the purchase on behalf of Shorenstein Realty Investors Ten, L.P., a commingled fund formed in 2010 with $1.23 billion of committed capital.   This is Shorenstein’s second acquisition in Minneapolis.  In 1992, the company acquired LaSalle Plaza for its first investment fund; that property was sold in 1997.

Built in 1983, 33 South Sixth occupies an entire city block bounded by Nicollet Mall, Hennepin Avenue and Sixth and Seventh Streets.  The project contains 1,606,000 square feet of commercial space including a 50-story tower with 1,117,000 square feet of Class A office space that sits atop a 489,000 square-foot, four-level retail podium.  Also included in the transaction is a 687-stall, three-story parking structure and a ground lease encumbering the adjacent 583-room Minneapolis Marriott City Center Hotel.

Commenting on the purchase, Douglas Shorenstein, Chairman and CEO of Shorenstein Properties, said:  “This property is in a superior office and retail location in a dynamic city.  Minneapolis is growing faster than many larger metro areas, and it has wisely invested in its future success by developing the infrastructure necessary to attract more businesses and residents to downtown.  We are pleased to have Target, which has done so much for Minneapolis, as our major tenant.  We plan to work with our tenants and the community to add value to the city and to this important property by using our extensive expertise operating class A office properties.”  

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About Shorenstein Properties LLC:

San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties. Since its beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of commingled institutional capital. Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.


Shorenstein Press Center

Shorenstein Buys Minneapolis Building Anchored by Target

By J.K. Dineen

Shorenstein Properties has completed the acquisition of 33 South Sixth St. in Minneapolis, a property is anchored by retail giant Target.

The seller was Brookfield Office Properties Inc. The terms of the transaction were not disclosed, but market sources put it at $205.5 million.

San Francisco-based Shorenstein made the purchase on behalf of Shorenstein Realty Investors Ten, L.P., a commingled fund formed in 2010 with $1.23 billion of committed capital. This is Shorenstein’s second acquisition in Minneapolis. In 1992, the company acquired LaSalle Plaza for its first investment fund; that property was sold in 1997.

Built in 1983, 33 South Sixth occupies an entire city block bounded by Nicollet Mall, Hennepin Avenue and Sixth and Seventh streets. The project contains 1.6 million square feet of commercial space including a 50-story tower with 1.1 million square feet of Class A office space that sits atop a 489,000 square-foot, four-level retail podium.

Also included in the transaction is a 687-stall, three-story parking structure and a ground lease encumbering the adjacent 583-room Minneapolis Marriott City Center Hotel. Target is the largest tenant in the office portion of the project, occupying about 800,000 square feet. Target’s headquarter is at 1000 Nicollet Mall.

“This property is in a superior office and retail location in a dynamic city,” said Douglas Shorenstein, Chairman and CEO of Shorenstein Properties. “Minneapolis is growing faster than many larger metro areas, and it has wisely invested in its future success by developing the infrastructure necessary to attract more businesses and residents to downtown. We are pleased to have Target, which has done so much for Minneapolis, as our major tenant. We plan to work with our tenants and the community to add value to the city and to this important property by using our extensive expertise operating Class A office properties.”


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Shorenstein Shifts to New Millennium

Tenants seek amenities to match their lifestyles

By J.K. Dineen

Shorenstein Properties has gone creative.

Once synonymous with the marble lobbies and breathtaking views of button-down financial district highrises, the company now finds itself building bike repair shops for hipster employees of Twitter at Market Square in the gritty Mid-Market.

Over the last 18 months, the San Francisco-based real estate investment company has sold upwards of $3.6 billion of mostly downtown, fully-leased real estate across the United States. Meanwhile, it has been buying hulking warehouse-style buildings, such as the former San Francisco Furniture Mart building in San Francisco and the West Mart property in Chicago, that lend themselves to creative, collaborative companies.

Company Chairman Douglas Shorenstein said the shift doesn’t reflect so much a change in company philosophy as a response to a transformation in the way tenants — technology firms and professional services companies alike — want to use space. It’s a logical extension of the philosophy his father Walter Shorenstein, who died in 2010 at age 95, instilled at every level of the company.

“My father started off as a leasing broker, and the essence of what he did was build and acquire properties that he could keep leased. That is our guiding principle today,” said Shorenstein. “Everything we do today and everything we have done revolves around that concept. If we can’t lease it, it’s not going to be a good deal. If we can lease it and keep it leased through cycles, we’ll be fine. That was lesson No. 1 through 101. There were no other mantras. If we understood that one fact or aspect, everything flowed from it.”

Two driving factors

Today, Shorenstein, who is chairman of the San Francisco Federal Reserve and has run the company for two decades, said he is excited by two driving factors that inform his business. The first is the rush of “businesses from the suburbs to the urban core cities.” The second is his company’s ability to reposition vacant buildings to appeal to what he sees as “a deep demand of how tenants want to use space.”

“Those two factors are driving what we are doing today and it’s fun when it’s working. We’ll hit another cycle and we’ll have to deal with it, but right now this is a fun time to sell cash flow and buy vacancy and create the cash flow. And that’s what we’re set up to do,” said Shorenstein. “I think this is one of the most fascinating periods that we as an organization have seen — and I’ve been through lots of cycles.”

Shorenstein is currently investing a $1.2 billion fund, its tenth fund since the first in 1992. During the subsequent 20 years the firm has invested $6.5 billion, targeting San Francisco, Boston, New York, Washington D.C., Chicago, Los Angeles and a few other cities. The first two investments in the latest fund are strikingly similar to Market Square. In Chicago, Shorenstein bought the 1.3-million-square-foot West Mart Center, built as the world’s largest collection of apparel showrooms. In Boston, Shorenstein bought Seaport Center, a converted 1909 Wool Warehouse across the Fort Point Channel from downtown Boston.

Market Square mirrors N.Y. purchase

The interest in large floor plates and repositioning older buildings for collaborative work environments has its roots in a 2005 acquisition in New York. At that time Shorenstein bought a 50 percent stake in the Starrett-Lehigh building in Manhattan’s Chelsea neighborhood for $219 million. The 1931 converted warehouse leased quickly. “We saw the demand for that product and it opened my eyes,” said Shorenstein. When the partnership sold the building in 2011, it went for $900 million.

Shorenstein said that his father would not have likely gravitated toward Market Square, the former San Francisco Furniture Mart building at Ninth and Market streets, a warehouse that had been largely vacant for a decade. But when he informed his father that the company was looking at acquiring it, his father had a simple response.

“His only question to me was, ‘Do you think you can lease it?’ My answer was, ‘I think so.’ Part of the genius of my father is that he understood what he didn’t understand. The market had moved.”

Shorenstein Properties Board Member T. Gary Rogers, previously chairman and CEO of Dreyer’s Grand Ice Cream and past chairman of Levi Strauss & Co., said, “The Starrett-Lehigh was an unusual bet for them, but they researched the heck out of it.”

“When they saw the furniture mart building on Market Street, they saw a similar building,” he said. “They took it, beat up and on its last legs, and turned it into the hot new thing. It wasn’t luck. It was preparing, being ready, seeing where the opportunity was and striking at the right time.”

Building true mixed use

By late 2011 Shorenstein had leased all of the office space in the 700,000-square-foot historic front building — one of two buildings that make up Market Square — landing the headquarters of Twitter, Yammer and One King’s Lane. Meanwhile health clubs, restaurants and retailers are jockeying to move into the 200,000 square feet of retail that take up the ground floor of both the historic building at 1355 Market St. and the 400,000-square-foot back building at One Tenth St., which Shorenstein is renovating with a new lobby, glass facade, and electrical and mechanical systems.

“We have demand from really interesting, top-flight retailers. Our challenge is how do we put the uses together, between restaurants, health clubs and spas, food services, coffee, all these different uses,” said Shorenstein. “The demand exceeds the space that we have.”

The company had a similar success at 188 Spear St., a largely vacant SoMa building that Shorenstein bought in 2010. After a total renovation and four added floors, Shorenstein did deals with a division of Amazon and New Relic.

Shorenstein said the company inventory usually ranges between 20 million and 30 million square feet. Right now the firm’s holdings are on the lower end of that spectrum.

“We’ve sold a lot of our stabilized buildings, but we are buying vacancy,” he said. “If we are at the point in the cycle when we are a net seller, we will come down into the low 20s; if we are a net buyer, we will come back up. We float within that range.”

Shorenstein splits his time between San Francisco and New York. He personally tours every building the company makes an offer on, which keeps him on the road a lot.

“If I don’t see it and spend some time getting to know it, we don’t do the deal,” he said.


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The Seattle Times

 

1201 Third Avenue, Downtown’s 2nd-Tallest Tower Sold

By Eric Pryne

Downtown Seattle’s second-tallest building, 55-story 1201 Third Avenue, has been sold for $548.8 million, county records indicate.

It’s the biggest sale in King County so far this year, topping the $480 million that the 42-story Russell Investments Center fetched this spring.

Russell’s buyer paid more on a per-square-foot basis, however,

The sellers of 1201 — a partnership of Seattle developer Wright Runstad, Boston-based Beacon Capital Partners and Shorenstein Properties — put the building on the market this summer.

The buyer is an entity affiliated with MetLife Real Estate Investments and Clarion Partners.

Wright Runstad built the office tower at Third Avenue and University Street in 1988. It was Washington Mutual’s headquarters for years.

Wright Runstad will continue to manage the 1.1 million-square-foot tower, President Greg Johnson said. Marketing materials circulated this summer indicated the company also hoped to retain a small ownership stake, but Johnson said that didn’t happen.

The price breaks down to about $499 per square foot, about 10 percent less than the Russell Investment Center and several other prime downtown office towers have fetched over the past year.

But 1201 is older, and has more vacant space. About 23 percent of the tower is available for lease, according to commercial real-estate database Officespace.com.

Wright Runstad and its partners decided to sell to take advantage of intense investor appetite for prime Seattle-area properties, Johnson said.

What’s fueling that appetite?

To institutional investors, well-leased commercial real estate looks good right now compared with other potential investments, said Seattle real-estate economist Matthew Gardner.

Seattle’s relatively low unemployment rate and job growth put it near the top of investors’ lists. And they antipate occupancy will remain high and rents will rise, Gardner added.

Institutional investors once ignored Seattle, he said, but “we’re no longer an outlier.”


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Shorenstein Properties Appoints Sustainability Program Manager

San Francisco, CA – November 2, 2012 – Shorenstein Properties LLC announced it has appointed Jaxon Love as Sustainability Program Manager.  He will be based in the company’s San Francisco office and will be responsible for running Shorenstein’s comprehensive in-house sustainability program, which includes the company’s corporate operations as well as all properties under management.

Prior to joining Shorenstein, Mr. Love was a Fellow of the Environmental Defense Fund’s Climate Corps program.  Prior to that he held positions at Pacific Gas and Electric Co., and EcoNorthwest, an economic consultancy.  He holds an M.B.A. in Sustainable Business and a Masters in Accounting from the University of Oregon.

 Mr. Love is a member of BOMA San Francisco’s Energy and Environment Committee and the U.S. Green Building Council’s Northern California chapter.

“We continue to make Shorenstein-owned buildings some of the most energy and resource efficient, environmentally sensitive and sustainable workplaces,” said Stan Roualdes, Executive Vice President, Construction and Property Management services.   “We believe we now have one of the most comprehensive sustainability programs in the country and have found the right person in Jaxon to move the program forward.”

Shorenstein currently owns twenty LEED-EBOM certified properties and, this year alone, has successfully achieved LEED certification at the Silver level or higher for eleven properties in its nationwide portfolio.  Earlier this month, the company announced LEED certification for Main Plaza in Irvine, Calif., and Umpqua Plaza in Portland, Ore.  

In addition to analyzing its existing portfolio and benchmarking against LEED and other standards, Shorenstein has a goal of meeting, at minimum, LEED Gold certification guidelines for all future construction projects.

Shorenstein’s commitment to sustainability also extends well beyond its LEED program.  The firm is a partner in EPA’s ENERGY STAR® program and 80 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a supporter of and active participant in the Environmental Defense Fund’s Climate Corps Initiative.


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Yahoo! Finance

 

Iffy Job Growth Curbs Office Real Estate

That supposed big drop in unemployment isn’t filling up desks around the U.S. Empty office space still abounds from the recession — and paltry leasing activity is now blunting optimism for a broad-based office property recovery.

The jobless rate ducked from 8.1% in August to 7.8% in September, its lowest since early 2009. But the change arrived on the backs of workers coping with weak economic conditions: Seasonally adjusted, employment jumped by 873,000 — but 582,000 of the new positions were part-time jobs taken on to make a buck, Labor Department data show.

Characterizing office real estate demand as “very weak,” property researcher Reis (REIS) says tenants nationwide leased nearly 5.45 million square feet in the third quarter this year, compared with just more than 5.33 million a year earlier and nearly 4.46 million a quarter ago.

“Until we get a meaningful pickup in employment, it’s going to be an uninteresting recovery in terms of office demand and rents,” said Alan Pontius, a managing director at property brokerage Marcus & Millichap Real Estate Investment Services.

“There are examples of some markets performing better than others,” said Pontius, who oversees the office and industrial group. “But any way you slice it, you’re talking about a national vacancy rate of 17%.

Cubicle Quandary The U.S. average office vacancy rate has inched down only 50 basis points since peaking in late 2010 and early 2011. It slipped 10 basis points from the second quarter to 17.1% in the third, according to Reis, and that was down 30 basis points from a year ago. Meanwhile the average asking rent nudged up 0.2% from the second quarter to $28.23 a square foot, a 1.4% hike from a year ago.

On the positive side, Reis said in its preliminary report on the third quarter that firms have now leased more space than they’ve vacated for seven straight quarters. But at best, office market fundamentals show only middling performance.

The dearth of new jobs is catching the blame. An average of some 146,000 jobs a month have been created in the first nine months of this year, according to the U.S. Bureau of Labor Statistics.

Events in Europe — such as debt crises and resultant austerity measures — have also fed uncertainty for months, says Asieh Mansour, a senior managing director of research for property brokerage CB Richard Ellis.

She adds that more recent worries include a slowing economy in China and the U.S. journey toward the Jan. 1 fiscal cliff. That’s a concoction of higher taxes and cuts in federal spending that economists have warned could spawn a recession unless lawmakers and the president find a way to avert it.

“We’re noticing that (those influences) are impacting the certainty of tenants, in terms of locking in leases and expanding into new space,” Mansour said. “So leasing has slowed.

Micro Managing Amid a continuing spirit of frugality, cost-conscious companies are packing more workers into smaller spaces — it’s a fundamental shift in how they use their square footage. That could mute office absorption even if hiring strengthens, Mansour says. She notes that on average, an office worker today occupies about 190 square feet, down from 225 a few years ago.

“I think a lot of firms want to hit 150 square feet,” she said.

The ho-hum recovery is perpetuating a split personality among office markets nationwide.

“There are certain markets that have had pretty good rent growth over the last year-and-a-half to two years,” said Charles Malet, chief investment officer of San-Francisco-based Shorenstein Properties, which owns 21.5 million square feet of office space primarily in major coastal markets. “But there are plenty of others that just aren’t seeing it. It’s really a story of haves and have-nots.

Where The Jobs Are The “haves” happen to be landlords in big coastal markets and elsewhere that have a higher concentration of technology and energy companies, he says. New York, San Jose, Calif., and Boston are typical of that group. Building owners in small markets with more diverse economies, or exposure to struggling sectors, are still challenged.

The average vacancy rate of 13.4% in tech-heavy San Francisco in the third quarter was 130 basis points lower than a year earlier, according to Reis. Meanwhile average asking rents there surged 4.1% to $40.54 annually per square foot, the biggest gain among the 82 office markets Reis monitors.

By contrast, the vacancy rate in Dayton, Ohio, increased 70 basis points year over year to 27.3% in the third quarter. Asking rents slipped 0.3%, to $14.47 a square foot.

Besides San Francisco, other markets with notable vacancy and rent improvements over the last year include Austin and Houston in Texas, and Seattle. But like Dayton, metro areas such as Colorado Springs, Colo., and Las Vegas have barely improved or even deteriorated.

Pontius says that unfortunately, technology and energy are the only sectors driving real office demand. That’s the case even though occupations that typically fill offices, such as professional and business services, have posted job growth over the last several months.

“The gains just aren’t meaningful enough to move the needle on a national average in many metros,” he said.

‘Burbs Brighten, A Little On an encouraging note, observers suggest that suburban office buildings are showing some life. Vacancy rates are still very high, but the average slid to 17.3% in the third quarter from 18% a year earlier, according to CB Richard Ellis (CBG). Leasing activity stayed consistent in the third quarter, Mansour says. (The property brokerage pegged the average downtown vacancy rate at 12.4% in the third quarter.) Offices in central business districts generally have higher occupancies over time than suburban properties, she says. But Mansour adds that in past recoveries, suburban office owners typically saw fundamentals improve before their downtown counterparts, as expanding but cautious small businesses sought cheap space.

That didn’t happen this time because small businesses haven’t added jobs, Mansour says. Instead, big publicly held corporations — along with companies that prefer downtowns — have driven leasing. Google (GOOG) is moving its trimmed Motorola Mobility unit’s headquarters next year to downtown Chicago from the suburbs, for example.

Shorenstein has seen an uptick in tenant interest in its suburban office properties in Portland, Ore., Malet says, and over the past year occupancy in the buildings has climbed by about 5%, to over 80%.

“It’s a pretty good bellwether of the economy — there are lots of little, local types of tenants — and it was completely dead for two years,” he said. “It’s not significantly better, but it is better.”


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Shorenstein Properties Completes Purchase of 801 Gateway in South San Francisco

San Francisco, CA – October 9, 2012 – Shorenstein Properties LLC announced it has completed the purchase of 801 Gateway Boulevard, a five-story, 136,075 square foot Class A office building located close to Highway 101 within the Gateway North office campus in South San Francisco.   New York-based Torchlight Investors, a distressed debt workout specialist was the seller. 

Shorenstein purchased the property for its tenth value added investment fund, the $1.23 billion Shorenstein Realty Investors Ten, L.P.  Terms of the 801 Gateway transaction were not disclosed.

“This is a high quality property which we believe holds tremendous appeal for a wide range of tenants – both single and multiple users — seeking a highly accessible and efficient office environment in one of the most vibrant office markets in the country,” said Douglas W. Shorenstein, chairman and CEO of Shorenstein Properties. 

The building is close to South San Francisco’s Caltrain station, is a 10-mile drive south of downtown San Francisco along Highway 101, is a less than a ten minute drive from SFO, and has quick access to BART, MUNI and the newly opened San Francisco Ferry at nearby Oyster Point. 

Earlier this year, Shorenstein Properties acquired Seaport Center, a 461,000 square foot, two-building office complex in Boston’s Seaport district for Fund Ten. Fund Ten also includes 350 West Mart Center, a 1.3 million square foot office complex in Chicago’s River North submarket.  Through its ninth fund, Shorenstein owns Market Square in San Francisco, home to the headquarters of social network, Twitter, business social network provider Yammer and internet retailer, One Kings Lane, and is currently developing The Reserve, a 380,000 square foot creative office campus on a 20-acre site formerly housing a USPS distribution facility in West Los Angeles.

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About Shorenstein Properties LLC:

San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties. Since it’s beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of commingled institutional capital. Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.


Shorenstein Press Center

Shorenstein Snags South San Francisco Property for $35 Million

By J.K. Dineen

Shorenstein Properties has acquired 801 Gateway Blvd., a largely vacant five-story, 136,000-square-foot building located within the Gateway North office campus in South San Francisco.

Shorenstein bought the property for its tenth value added investment fund, the $1.23 billion Shorenstein Realty Investors Ten, L.P. Terms of the 801 Gateway transaction were not disclosed, but brokers familiar with the deal put the price at just under $35 million.

The purchase is in keeping with a recent Shorenstein trend of buying vacancy and selling well-leased buildings. The San Francisco-based company has sold more than $3.5 billion in real estate over the last 18 months while repositioning and leasing up largely empty buildings like 188 Spear St. and Market Square in San Francisco.

New York-based Torchlight Investors, a distressed debt workout specialist, offered the building for sale. Cushman & Wakefield’s capital markets team of Richard Ingwers, Grant Lammersen, Bradford Rogers and George Eckard represented the seller. The steel frame building, designed by Hellmuth Obata + Kassabaum, was completed in 2001.


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Shorenstein Receives LEED Gold Certification for Main Plaza in Irvine, California

San Francisco, CA – October 5, 2012 – Shorenstein Properties LLC announced it has received LEED certification at the Gold level, Existing Building Operations and Maintenance (EBOM), for Main Plaza, a 614,000 square foot Class A office complex at 1920/2010 Main Street in Irvine, Calif.

 This brings to eleven the number of properties that have successfully achieved LEED certification at the Silver level or higher under Shorenstein’s ownership and management this year.   The company currently owns twenty LEED-EBOM certified properties. 

 LEED for Existing Buildings: Operations & Maintenance addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs, and systems upgrades. The system helps building owners and operators measure operations, improvements and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

 The sustainability program at Main Plaza included:

  • Maximizing energy efficiency by installing an automated building energy management system, retrofitting all lighting fixtures and adding photo sensor controls to the perimeter of the garage and motion sensors in common areas and tenant spaces, resulting in a five point increase in the building’s ENERGY STAR score (92);
  • Installing low flow water fixtures in all restrooms;
  • Adopting LEED-compliant cleaning procedures and cleaning supplies;
  • Promoting recycling through an in-building program for paper, glass, aluminum and cardboard;
  • Employing an electronics recycling program to divert computers, cell phones, batteries and other small electronics from the waste flow;
  • Providing bike parking at no cost to tenants.

 Shorenstein’s commitment to sustainability also extends well beyond its LEED program.  The firm is a partner in EPA’s ENERGY STAR® program and 80 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

 ###

 About Shorenstein Properties LLC:

San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties. Since it’s beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of commingled institutional capital. Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.


Shorenstein Press Center

Umpqua Bank Plaza Earns LEED Gold Certification

By Wendy Culverwell

Shorenstein Properties LLC has received the U.S. Green Building Council’s seal of approval for its sustainability initiatives at Umpqua Bank Plaza.

The 281,000-square-foot Class A office building, 1 S.W. Columbia St., earned the council’s LEED Gold for Existing Building Operations and Maintenance.

San Francisco-based Shorenstein is one of Portland’s largest landlords. The Umpqua award is its fourth LEED certified building in Portland. The others are Kruse Oaks III in lake Oswego, Congress Center in downtown and First & Main, also in downtown. Shorenstein sold First & Main to American Assets Trust last year.

The 19-story Umpqua Bank tower was constructed in 1975 as Benjamin Franklin Plaza. It was renamed for its anchor tenant, Umpqua Bank, when the bank relocated to Portland in 2005. It is Portland’s 20th largest office building by rentable square feet.

The sustainability program includes reducing energy use, exceeding fresh air ventilation standards, using meters to minimize water used in irrigation and building cooling systems, recycling computers and other durable goods and automated lighting control systems in tenant suites.

Shorenstein controls more than 1 million square feet of Class A office space in downtown Portland and in Lake Oswego’s Kruse Way market.


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Andrew Neilly

T 925.930.9848

 

Shorenstein Receives LEED Gold Certification for Umpqua Bank Plaza in Portland, Oregon

San Francisco, CA – October 4, 2012 – Shorenstein Properties LLC announced it has received LEED certification at the Gold level, Existing Building Operations and Maintenance (EBOM), for Umpqua Bank Plaza, a 281,000 square foot Class A office building at One SW Columbia Street in downtown Portland.

 This brings to ten the number of properties that have successfully achieved LEED certification at the Silver level or higher under Shorenstein’s ownership and management this year.   The company currently owns nineteen LEED-EBOM certified properties.  This is the company’s third LEED certified building in Portland.  The others are Kruse Oaks III in Kruse Way, Lake Oswego, and Congress Center, also in downtown Portland.  (A fourth LEED certified building, First & Main, was sold last year.)

 LEED for Existing Buildings:  Operations & Maintenance addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs, and systems upgrades.  The system helps building owners and operators measure operations, improvements and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

 The sustainability program at Umpqua Bank Plaza included:

  • Maximizing energy efficiency to meet an ENERGY STAR score of 88, making the property 38 percent more efficient than comparable properties;
  • Exceeding fresh air ventilation standards by more than 30 percent;
  • Deploying submeter technology to minimize water use in irrigation and building cooling systems;
  • Achieving Innovation in Operation credits for diverting 100 percent of durable goods such as computers and furniture from the waste stream; reducing mercury content in lamps to less than 50 picograms per lumen hour; and having 100 percent of the building’s parking under cover to reduce the urban heat island effect.

 The building also earned LEED points for using lighting control systems in tenant suites and for its efficient use of natural light. 

 Shorenstein’s commitment to sustainability also extends well beyond its LEED program.  The firm is a partner in EPA’s ENERGY STAR® program and 80 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

 ###

 About Shorenstein Properties LLC:

San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties. Since it’s beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of commingled institutional capital. Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.


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Shorenstein Family Buys SoMa Building from TMG and Farallon

By J.K. Dineen

San Francisco’s Shorenstein family has acquired 208 Utah St. for about $25 million, a deal that gives the investment group a classic brick-and-beam foothold in trendy Showplace Square.

The seller was San Francisco-based developed TMG Partners Farallon Capital Management, LLC, a global investment firm that manages capital on behalf of institutions and individuals. The buyer was the Shorenstein family, rather than a fund Shorenstein Properties controls.

TMG Partners and Farrallon Capital Management bought the building in 2010 for just under $8 million and immediately went to work on securing new tenants for it, including Metaswitch Networks and Warner Bros. Renovations included improvements to the lobby and common areas as well as sandblasting and opening up tenants suites to take full advantage of the building’s interior spaces.

The partnership spent at least $2.5 million on the improvements, according to permits on file with the city’s department of building inspection.

Daniel Cressman, Mike Taquino and Kyle Kovac of Newmark Knight Frank Cornish & Carey Commercial Capital Group represented the seller in the transaction.

“The building is a well-positioned asset in the thriving SOMA market,” said TMG Partners chairman and CEO Michael Covarrubias. “Both TMG and Farallon are pleased to have improved the property by reprising much of the original historic integrity while updating the building’s systems and technology to support cutting-edge media tenants.”


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208 Utah

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San Francisco’s Tech Boom Lifts Shorenstein

By Blanca Torres

Within weeks of completing an extensive renovation and addition, Shorenstein Properties has tapped into the San Francisco tech boom to nearly fill its 220,000-square-foot building at 188 Spear St.

New Relic, a maker of tools to manage web applications, signed a 55,000-square-foot lease for the new top three floors of the building. The company is moving from 14,000 square feet at 101 Second St. to accommodate its explosive growth — its employee count has nearly tripled since September 2011.

The other big tenant moving in is Amazon, which discreetly agreed to take 83,000 square feet of space.

“It is every developer’s dream to be leased up and completed at the same time,” said Jim Collins, who handles leasing in 188 Spear for Shorenstein along with Tom McDonnell. “It’s a hot market.”

Shorenstein bought the building in 2009 from Prudential Real Estate Investors for $25 million when it consisted of 147,000-square feet in eight stories and was completely vacant.

The developer invested $21.4 million to upgrade the existing structure and add four new floors totaling 72,000 square feet. Hathaway Dinwiddie, the general contractor on the project, wrapped up construction on the expansion in mid-July.

With the two most recent leases coming on top of more than 50,000 square feet in several earlier deals, the building is now 90 percent leased. One floor is still available, along with about 3,400 square feet of ground floor retail.

Snapping up 188 Spear was Shorenstein’s first major splash in the San Francisco office market since 2005 and was seen as a risky move — especially building speculative space in the midst of a recession.

“Shorenstein certainly took a risk by purchasing the asset and moving forward with the building addition when they did, but they delivered it at the right time,” said Colin Yasukochi, director of research for CBRE.

Indeed, South of Market continues to be a hotbed for fast-growing technology and social media companies. Vacancy was down to 7.5 percent during the second quarter with average asking rates at $47 per square foot for Class A space, according to CBRE, but several deals are sealing in rents above $50 for marquee locations.

Since the start of the year, numerous firms have signed new leases or expanded in the area. Pinterest took 60,000 square feet in 808 Brannan St. with landlord Flynn Properties Inc.

Box.com, the Los Altos-based provider of online file storage, is reportedly taking 19,000 square feet in Kilroy Realty Corp.’s 100 First St. building.

Twitter added another 85,000 square feet to its new headquarters in Shorenstein’s Market Square at 1355 Market St.

“It’s almost a little bit embarrassing,” said Chris Cook, president of New Relic. “We moved to SoMa in November and we’re basically out of space.”

The company’s all-in-one web application performance tool shows IT professionals the real-time performance of web applications, as well as infrastructure such as servers and networks.

Last September the company only had 50 employees in San Francisco and Portland and about 10,000 customers. Now, the company is up to 140 employees and more than 25,000 customers.

Also last fall, the company landed $15 million for expansion financing in a round led by new investors DAG Ventures and Four Rivers Group.

When the firm took its current location, it seemed as if it would provide room to grow, but New Relic has already outgrown the space and couldn’t add more space at its current location.

“We like the neighborhood we’re in,” Cook said. “It seems like an evolving area for our kind of business.”

New Relic’s Portland office is also multiplying. The firm recently signed a lease to move into a 20,000-square-foot space from a 5,000-square-foot space.

The firm, represented by Peter Hamann of Cresa, looked at space South of Market from the Embarcadero to 8th Street. Cook said it was important to stay close to public transportation and culinary options such as food trucks.

Cook said the company expects to have 300 workers in San Francisco within the next three years. Most of its new hires will be in sales, engineering and marketing.

“Our growth has been historically around 200 percent per year,” said Cook. “We anticipate the growth to continue and we’re trying to get ready for it.”


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T 925.930.9848

 

Shorenstein Receives LEED Platinum Certification for Santa Clara Office Tower

San Francisco, CA – July  24, 2012 – Shorenstein Properties LLC announced that it has received LEED Platinum certification from the U.S. Green Building Council for Cisco Tower, a 283,000 s.f. office building it owns and manages in Santa Clara, Calif. “We are enormously proud of the commitment the property team has made to sustainable operations and appreciate the tenants’ active involvement in both the LEED process and in their own implementation of sustainable operations”, said Stan Roualdes, executive vice president, property management and construction services.

Platinum is the highest possible certification under the USGBC’s rating system for existing buildings operations & maintenance, established in 2009, and Cisco Tower is one of just half a dozen commercial office buildings in the South Bay to have received Platinum certification.   This brings to eighteen the number of properties owned and managed by Shorenstein that have successfully achieved LEED certification at the Silver level or higher in the last three years.  Late last month, Shorenstein received LEED Gold certification for properties in New York and Washington DC.

“This is the second time Shorenstein has received Platinum certification for a building under its management and through our ongoing portfolio-wide sustainability initiatives, we continue to make Shorenstein-owned buildings some of the most energy and resource efficient, environmentally sensitive workplaces in the country,” said Stan Roualdes, executive vice president, property management and construction services.

LEED for Existing Buildings: Operations & Maintenance addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs, and systems upgrades. The system helps building owners and operators measure operations, improvements and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

 In addition to analyzing its existing portfolio and benchmarking against LEED and other standards, Shorenstein has a goal of meeting, at minimum, LEED Gold certification guidelines for all future construction projects.

Shorenstein’s commitment to sustainability also extends well beyond its LEED program.  The firm is a partner in EPA’s ENERGY STAR® program and 80 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

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Shorenstein Receives LEED Gold Certification for Properties in Burbank, Calif., New York and Washington, DC

San Francisco, CA – July 23, 2012 – Shorenstein Properties LLC announced that three more of its nationwide portfolio of Class A office assets have received LEED certification at the Gold level for Existing Building Operations and Maintenance (EBOM) from the U.S. Green Building Council.  The properties and certifications are:
 
•    Media Studios North, a 932,190 square foot, five building media and entertainment campus in Burbank, Calif.
•    850 Third Avenue, a 613,000 s.f. Class A office building in New York
•    1875 K Street, a 176,000 s.f. Class A office building in Washington, DC

This brings to seventeen the number of properties owned and managed by Shorenstein that have successfully achieved LEED certification at the Silver level or higher in the last three years.

“LEED certification is one of a number of benchmarks used by our property management team to help us realize our stated goal of pursuing sustainability and achieving ongoing efficiency in all aspects of our operations,” said Stan Roualdes, executive vice president, property management and construction services.  “We continue to make Shorenstein-owned buildings some of the most energy and resource efficient, environmentally sensitive workplaces in the country,” he added.

LEED for Existing Buildings: Operations & Maintenance addresses energy efficiency, whole-building cleaning and maintenance issues (including chemical use), recycling programs, exterior maintenance programs, and systems upgrades. The system helps building owners and operators measure operations, improvements and maintenance on a consistent scale, with the goal of maximizing operational efficiency while minimizing environmental impacts.

In addition to analyzing its existing portfolio and benchmarking against LEED and other standards, Shorenstein has a goal of meeting, at minimum, LEED Gold certification guidelines for all future construction projects.

Shorenstein’s commitment to sustainability also extends well beyond its LEED program.  The firm is a partner in EPA’s ENERGY STAR® program and 80 percent of the company’s portfolio has either qualified for the ENERGY STAR® label or is pending approval.  Shorenstein is also a corporate partner in the Department of Energy’s Better Buildings Challenge, where it is committed to reducing energy intensity by 20 percent in properties it owns and manages by 2020.  For the past several years, the company has also been a participant in the Environmental Defense Fund’s Climate Corps Initiative.

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Mid-Market Flooded with New Investment

By Dan Fost

“We will see a meaningful difference here within the next one to two years,” says Meg Spriggs of AvalonBay, which is building apartments at 55 Ninth St.

Twitter moved into its grand new headquarters in Market Square this month, and other tech companies like Yammer and One King’s Lane are right behind it. Their arrivals herald a turnaround for some of the most deteriorated stretches of Market Street — but others still languish.

The catalyst for much of the new investment in the area was Twitter’s decision to move to Market Square and the city’s creation of a payroll tax exemption to lure other tech tenants as well. Since April 2011, when Shorenstein Properties finalized the 215,000-square-foot lease with Twitter, investors have spent more than $500 million in the neighborhood.

The upswing, driven by the impending arrival of tech companies and their workers, also includes the addition of retail projects, an arts scene and nightlife and market-rate residential apartments. The transformation under way is likely to come about in phases along distinct stretches of Market Street.

One area of activity is in a concentrated section of Market Street, north of Seventh Street and running to Tenth. The area around Fifth Street where Cypress Equities and the Carlyle Group plan to build a 260,000-square-foot retail project called CityPlace will also pick up quickly once that project is built. A zone between Sixth and Seventh streets still bears more of a resemblance to the surrounding Tenderloin, and improvement to that area is likely to come more slowly.
North area sees big changes

Meg Spriggs, vice president of development for AvalonBay Communities, which is building a $125 million, 273-unit project at 55 Ninth St., said “the development of the Mid-Market area will be in phases.

“The first phase will be from 10th down to 11th Streets. We will see a meaningful difference here within the next one to two years. The blocks from Seventh to Fifth will be the second phase … the five-year-plus plan. Eventually, the Tenderloin will transition as well, likely towards the end of the second phase of Mid-Market development.”

Mark Woolway, executive vice president of corporate affairs at Yammer, agreed.

“Gentrification will be a gradual process,” said Woolway. But he can see the start of it, right in the building in which Yammer plans to move 400 people by year’s end.

“I really think that building is going to be the epicenter of startup activity in the country,” Woolway said.
The role of the arts

Twitter and other tech tenants aren’t the only catalysts for Mid-Market investment. The influx of arts organizations will also help.

American Conservatory Theater bought the shuttered and dilapidated Strand Theatre at 1127 Market St. between Seventh and Eighth this year, and envisions a campus with schools, offices and performances. That investment builds on its 2011 opening of the Costume Shop, a 49-seat performance space, at 1117 Market St. at Seventh Street.

“We are hoping that if people have more options in terms of proximity to entertainment and shopping and restaurants, then that will help the people who need help. … As organizations like ACT come in, we hope it will have a positive impact on the Tenderloin,” said Ellen Richard, executive director of American Conservatory Theatre.

The Strand will give ACT a 300-seat theater to complement the 1,000-seat Geary, and Richard also hopes to move ACT’s offices — now at Geary and Market Streets — into the Strand. Architects are still working on the plans, but it will likely cost upwards of $15 million, and won’t be ready until the fall of 2014, Richard said.

And ACT may still look into buying 950 Market St., which it considered before closing the deal on the Strand in February.

Other arts organizations that recently moved into Mid-Market include nonprofit SF Camerawork, a fine art photography gallery that opened a 36,000-square-foot space at 1011 Market St. earlier in the year.
24-hour activity

The arts help bring evening activities to the neighborhood — and having more amenities such as restaurants are a key part of that.

One of the restaurants proving that Market Street is ripe for business is Pearl’s Deluxe Burgers, which opened last fall at the blighted corner of Sixth and Market streets. The gleaming eatery packs in diners at all hours and is meeting the owners’ sales projections.

The problems that husband-and-wife owners Young and Sylvia Yi were warned about have mostly not materialized. “We’re happy with our decision to open a Pearl’s there,” said Sylvia Yi.

The city kicked in money, both from its Central Market Cultural District Loan Fund and the San Francisco Redevelopment Agency, and Urban Solutions, a nonprofit that helps small businesses, also helped.

“Yes it’s gritty, and yes, there are definite problems there, but at the same time, I got sold on the idea that this is one of the last areas of San Francisco that can be developed and turned around,” Yi said. “… I saw this as an opportunity to give back to my roots and do something positive in that area.”

Though stretches of Market Street still feel desolate at times and the range and quality of amenities has a long way to go, the burgeoning nightlife scene will strengthen once new residents move into the area. Crescent Height has 754 rentals and Trinity Properties has 418 rentals under construction, and AvalonBay expects to break ground on 273 units next month. That’s 1,400 units within a two-block area by 2014.

“We’re going to wake up a couple of years from now and (Mid-Market) will have a completely new look and feel,” said Chris Roeder, managing director of Jones Lang LaSalle, which represents the owners of One Ninth St., now under development. “Retail will take off. Housing is booming. It’s going to be a new 24-hour live-work area of the city. It’ll be really appealing to the younger worker, the younger generation.”
Office options

While residential and retail projects are important for the area’s vitality, it’s also important that enough office space comes online to meet the demand from tech companies.

DivcoWest and TMG Partners bought One Ninth St., — formerly known by its address of 1275 Market St. — for $44 million last year from State Comp Insurance, which moved about 850 workers to suburban offices. Jones Lang LaSalle is fixing up the building with plans to show it to large technology tenants this summer. “It’s going to be an unbelievable project with large, 30,000-square-foot floor plates, parking, 12 roof decks, and nice ceiling height, perfect for creative users,” said Roeder. At 350,000 square feet, Roeder said it’s “one of the biggest blocks in the city.” It should be ready for occupancy by September and full within a year.

In addition to activity at One Ninth St. and Market Square, the office space above the Warfield Theater has a new tenant, after the building was recently bought by Taiwanese investors. Venture Capital firm Benchmark Capital is leasing 10,000 square feet to be closer to its portfolio companies, including Twitter and Yelp, and many see this move as a sign of things to come.

All that good news has made Shorenstein even more confident about the area.

Shorenstein has upped its investment beyond the Market Square building and is now fixing up 330,000 square feet in the building behind Twitter’s headquarters, at 875 Stevenson, and has plans to turn the alley between the two into a vibrant outdoor gathering place.

“It was a tremendous opportunity to put all of Shorenstein’s influences — leasing, development, property management — to work on a large project in our backyard,” said Tom McDonnell, vice president of leasing for Shorenstein Realty Services. “The area is transitional. It wasn’t that long ago that Hayes Valley was more rough than tumble. Then the freeway came down at Octavia Street and beautification started. This is an extension of that neighborhood moving right along Market Street.”


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CoStar Group

 

Shorenstein Signs Online Retailer to Spear Street Property

Amazon.com Leases 83,154 SF

by Dan Bates

Amazon.com, the online retailer, leased approximately 83,154 square feet at 188 Spear St. in San Francisco, CA. It is now the largest tenant in the newly renovated south financial district building.

Shorenstein Properties LLC purchased 188 Spear (at that time dubbed 120 Howard St.) in November of 2009 for $25 million. The 12-story office building totals 218,556 square feet. Upgrades to the building include four additional floors atop the existing structure.

Jim Dublin of Jones Lang LaSalle represented Amazon.com, while Shorenstein was represented in-house by Jim Collins and Tom McDonnell.


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The Seattle Times

 

Developers Plant Seeds for ‘Spring District’ Growth in Bellevue

By Eric Pryne

Seattle developer Wright Runstad spent five long years designing and winning conceptual approval for the Spring District, its giant proposed “urban village” in Bellevue’s quasi-industrial Bel-Red corridor.

Now it’s taking the first steps toward finally building something there.

“We fully intend to be on the crest of the wave” as the local economy rebounds, says Greg Johnson, Wright Runstad’s president.

Earlier this month, the company submitted preliminary paperwork to Bellevue planners for the first two office buildings — one 12 stories, the other 10.

It also has put a tenth of the project’s 36 acres up for sale to apartment developers. Plans call for about 300 units in 6- or 7-story buildings.

Those commercial and residential buildings could break ground in mid-2013, Johnson says.

The Spring District may blossom into much more.

Today the Bel-Red corridor links two of the Eastside’s economic engines, high-rise downtown Bellevue and high-tech Overlake, but lacks the energy of either. City officials want that to change, and the Spring District is a big part of the transformation they envision.

The sprawling project’s master plan, approved last month, calls for up to 4.1 million square feet of office space — nearly half as much as downtown Bellevue — plus 1,000 apartments or condos, a hotel and more than 2 acres of parks and open space.

Later phases would be built around a Sound Transit light-rail station scheduled to open in 2023. Wright Runstad and its development partner, Shorenstein Properties of San Francisco, expect the whole complex will take 15 years to complete.

What’s there now? Big, aging warehouses, part of Bel-Red’s unspectacular commercial landscape of body shops, utilitarian retailers, self-storage compounds and strip malls.

“You drive through here, and it doesn’t really have any identity,” says Rob Aigner, a senior vice president with real-estate firm Harsch Investment Properties, whose office is in the corridor.

Johnson is betting that will change. Just as downtown Seattle stretched into neglected South Lake Union and downtown Portland spilled into the Pearl District, so downtown Bellevue will reach east into Bel-Red and the Spring District, he predicts.

“The pathway of future growth is going to be in this area,” he says.

Ripe for redevelopment

When Wright Runstad and Shorenstein paid Safeway $68 million for the Spring District’s 36 acres in 2007 and unveiled their vision, Bellevue city officials already were eying Bel-Red as a prime redevelopment target.

But the corridor still was zoned for light industry. And light rail to the Eastside was no sure thing.

Considering those uncertainties, “it appeared to be a stretch from a price perspective,” Aigner says.

Over the next few years, however, all the pieces fell into place. In 2008 voters approved taxes to fund Sound Transit’s East Link line to Overlake. At the urging of Bellevue officials, the agency decided to run the line through Bel-Red to serve as a catalyst for redevelopment.

In 2009, the Bellevue City Council changed Bel-Red’s zoning to encourage office and residential development, permitting buildings as tall as 150 feet on most of Wright Runstad’s property.

The original plan was to start building in 2009. The recession pushed that timetable back.

But Johnson says income from warehouses on the property — tenants include Coca-Cola and Amazon Fresh — allowed the developers to stretch out the schedule relatively painlessly while designers from NBBJ completed the master plan and city officials reviewed it.

Now the time is right to build, he says. Office vacancy rates have dropped, especially in downtown Bellevue: “The market is snapping back faster than people had expected.”

Even so, Johnson says, Wright Runstad won’t break ground on the 490,000 square feet of office space in the Spring District’s first phase until it signs a big tenant. And it’s got competition for that elusive big one from at least three proposed office projects in downtown Bellevue.

How does a project in humble Bel-Red compete for tenants — office or apartment — when light rail is still a decade in the future?

“It’s absolutely virgin territory for Class A office,” says Steve Schwartz, managing director in brokerage Jones Lang LaSalle’s Bellevue office.

“It’s not as appealing in terms of having retail or restaurants or entertainment like downtown Bellevue,” says apartment researcher Tom Cain of Apartment Insights Washington.

Johnson ticks off a long list of reasons why the Spring District should succeed, including its location between two big job centers.

And it’s near both Interstate 405 and Highway 520; parts of the district are closer to 405′s Northeast Eighth Street interchange than Bellevue Square is, he maintains.

With more land than is available in downtown Bellevue, Wright Runstad can construct office buildings with bigger floorplates — a plus for some prospective tech tenants, Johnson says.

And, while land prices in downtown Bellevue pretty much dictate concrete-and-steel high-rise construction, the Spring District’s first, mid-rise apartment buildings, which can be built with wood, should be less expensive to construct.

What’s more, Johnson adds, the Spring District isn’t as isolated as you might think. If you cut through parking lots, it’s just a quarter-mile walk from some proposed apartment buildings to the Bellevue Whole Foods.

Cain and Schwartz agree with much of this. Surprisingly few proposed apartment projects are in the development pipeline in downtown Bellevue, Cain says: the Spring District could benefit from that.

The first big office tenant Wright Runstad signs most likely will be “a young tech company with vision, that’s not scared of an edgy, nontraditional environment, that wants to create its own identity,” says Schwartz, whose brokerage lost out on the Spring District listing to the Broderick Group.

But for Wright Runstad to lure that tenant, “they’ve got to sell the dream really hard,” he adds.

Harsch’s Aigner agrees. “A great portion of any success they have will be from creating an identity” for the Spring District, he says.

Like South Lake Union, perhaps. A decade ago, Aigner remembers, people in real estate were wondering who’d ever want to go there.


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Twitter Blog

 

Our New Nest

“The city where we have started and grown will remain our future home.” That’s what we said about 14 months ago when we announced that we were maintaining our roots in San Francisco.

Twitter was born in the City by the Bay, and we’re grateful to Mayor Ed Lee, the Board of Supervisors (especially Supervisors Jane Kim and David Chiu), the Office of Economic and Workforce Development, and the Shorenstein Company for helping us expand locally.

Now our new space is ready, and we’re on the move to Market Square. We’re especially pleased to benefit from the considerable effort Shorenstein has taken to revitalize not only a beautiful landmark property, but a corner of the City that had fallen on hard times.

Among other things, we’re looking forward to meeting our new neighbors. We aim to be a friend and good citizen to the many wonderful social service, arts and charitable organizations based here, and to do our part in renewing an historic — and newly promising — area.

If you’d like to know more about our new neighborhood, an initiative called Creative Currency (@cr8c) is bringing together developers, designers, and other urban revitalizers to support the community organizations that give the Mid-Market District a lot of its heart.

And now, back to nesting.

— Gabriel Stricker (@gabrielstricker), VP Communications


Shorenstein Press Center

Twitter Fills New Nest in Mid-Market

By Ari Burack

Move-in: Twitter was among the first to benefit from Mayor Ed Lee’s payroll-tax break for businesses that moved into the area, which has in recent years been troubled by crime, homelessness and vacant storefronts.

The City’s transformation of the mid-Market Street area has begun after Twitter’s weekend move into a historic Market Square building.

The microblogging company said Monday it had begun occupying its “new nest” at 1355 Market St., where about 800 employees are expected to fill at least three of the 11 floors of the formerly vacant building. Constructed in 1937, the art deco palace is being renovated by the firm Shorenstein, which purchased it last year.

“We’re especially pleased to benefit from the considerable effort Shorenstein has taken to revitalize not only a beautiful landmark property, but a corner of The City that had fallen on hard times,” blogged Gabriel Stricker, Twitter’s vice president of communications.

Excepting planned ground-floor retail space, about 90 percent of the building is now leased out, according to Tom McDonnell, Shorenstein’s vice president of leasing.

While Twitter got the ball rolling, three other firms now plan to move into Market Square: CallSocket, an international call services center; One Kings Lane, a luxury online home furnishings retailer; and Yammer, a social-network provider for businesses.

Twitter was among the first to benefit from Mayor Ed Lee’s payroll-tax break for businesses that moved into the area, which has in recent years been troubled by crime, homelessness and vacant storefronts.

New businesses and the expected addition of thousands of nearby residential units could make it “a really fascinating neighborhood in a short period of time,” McDonnell said.

While some worry about higher rents forcing out poor residents or businesses, Mark Woolway, a Yammer executive vice president, said gentrification would be welcomed in The City’s new “tech epicenter.”

“With that influx of highly paid, very talented workers, the area’s going to transform very rapidly, I think,” he said. Yammer hopes to grow by 300 workers in the next few years.


Shorenstein Press Center

Shorenstein Sells Trophy Asset, Hamilton Square

Commonwealth Partners Buys Trophy Office Building Near White House for $198M

Staff Reports

Designed by award-winning architects Skidmore, Owings and Merrill, the nine-story building at 600 14th Street NW is one of Washington, D.C.’s preeminent buildings. Tenants include IBM, Pepper Hamilton, Managed Funds Association, and Capital One. It is also home to the Hamilton Restaurant, Washington, D.C.’s marquee venue for food and music.

“This landmark attracted considerable interest from domestic and off-shore investors,” John Kevill, managing director of Eastdil Secured, said in a statement. “With an ideal location, historic significance, and the best in modern amenities, it is one of Washington, D.C.’s most prominent addresses.”

The 248,495-sq.-ft. building is a product of the complete redevelopment of the Garfinckel’s Department Store in 1999. Designers retained the building’s original façade and ceiling heights, then added all modern finishes, including: finished ceiling heights in excess of 10 feet on floors one through seven; historic art deco limestone façade with bronze-alloy windows and dramatic lobby entrance; exquisite marble and wood finishes in the lobby, with newly renovated spa-quality locker rooms in the fitness center; green rooftop deck for tenant events that possesses views of the Washington Monument, Lincoln Memorial, Treasury Building and National Mall; extensive column-free space on western portion of each floor, offering tenants the ability to easily configure extra-large conference facilities or board rooms with no obstructions.

“As an iconic building in a prime D.C. location, Hamilton Square will bring superior long-term, risk-adjusted returns for years to come,” Eastdil Secured Managing Director Collins Ege said in a statement. “It would be the crown jewel of any portfolio and makes the perfect first purchase in D.C. for Commonwealth.”

Along with Kevill and Ege, Eastdil Secured Managing Director Nick Pappas and Vice President Sean McDermott helped arrange the sale of Hamilton Square.


Shorenstein Press Center

Mid-Market Sister Building Wins Shorenstein’s Attention

By J.K. Dineen

Shorenstein Properties is shifting the spotlight to 875 Stevenson St.

With the grand, 775,000-square-foot Market Square Art Deco building at 1355 Market St. largely leased out to all-star tenants — including Twitter, Yammer and One King’s Lane — the San Francisco-based investment company is gearing up to renovate and beautify the less attractive sister structure on Stevenson.

The 1974 Market Square South, directly behind Twitter headquarters, is a 350,000-square-foot, 10-story building that has traditionally housed back-office uses for the City and County of San Francisco. Now Shorenstein is putting a new glass façade on the building and is hoping that some of the success seen at 1355 Market St. will start to rub off on its neighbor.

Out of the 775,000 square feet at 1355 Market St., there is only 66,000 square feet remaining, and Twitter is reportedly in negotiations to take it.

On May 12, Shorenstein Properties Chairman Douglas Shorenstein made a rare public appearance at Market Square, giving Mayor Ed Lee and other city officials a tour of the Twitter space. During the tour, Shorenstein said he has been amazed by Market Square.

“This building has surprised me in that it leased up much more quickly than we expected — but we have also had projects that have worked the other way,” said Shorenstein. “It all averages out.”

He said that he thinks revitalization of the Mid-Market area has firmly taken hold. The inventory of space in the Civic Center and on the western side of Market Street, along with other parts of town, will help avoid the rental rate spike that was so unhealthy for the market during the dot-com bubble of 1999 and 2000.

“There are areas that are opening up like Mid-Market, and Mission Bay is satisfying some of the demand,” he said. “So demand is good, but there is some new supply to meet it.”

The success of the Stevenson Street building will likely be closely tied to whether Shorenstein is able to snag tenants to take the 50,000 square feet of retail on the ground floor of the Twitter building. Shorenstein executives said that the company is in deep negotiations with a “cool, local grocer,” a health club, as well as cafes, restaurants and a bank.

Shorenstein also owns the dead-ended Stevenson Street between the two buildings and plans to develop a heavily-landscaped pedestrian-only, European-style street similar to Belden Alley downtown.


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Andrew Neilly

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Shorenstein Properties Completes Purchase of Boston Waterfront Building

Boston, MA – May 18, 2012 – Shorenstein Properties announced it has completed the purchase of the 461,046 square foot Seaport Center [photo link] at 451 D Street in Boston’s Seaport District, located in the CBD along the south waterfront.

Shorenstein made the purchase on behalf of Shorenstein Realty Investors Ten, LP, a commingled fund formed in 2010 with $1.23 billion of committed capital.  The seller was a partnership between The Beal Companies and Rockpoint Group.  Terms of the transaction were not disclosed.

Built in 1909 as a wool warehouse, the nine-story building has since been extensively renovated and today features fiber optic cable, highly efficient energy service, modern heating and air conditioning systems, a two-story atrium lobby, new windows, upgraded landscaping and on-site parking.  The property’s design and infrastructure are well suited for tenants that desire large and efficient floor plates with high ceilings.  The building is 88% percent occupied and major tenants include the Boston Herald, JP Morgan Chase, Monster Worldwide and Verizon.

Commenting on the purchase, Douglas Shorenstein, Chairman and CEO of Shorenstein Properties, said:  “This asset affords us the opportunity to add value to a building with modern infrastructure, great views and flexible floor plates in a rapidly transforming neighborhood growing in its appeal to a wide range of Boston office users.”

Formerly an industrial area, the Seaport District has evolved into a vibrant 24/7 neighborhood over recent years as a result of major transport infrastructure improvements and a host of mixed-use developments.  There continue to be extensive plans for both residential and commercial development in the submarket over the next few years.  Seaport Center enjoys close access to I-93, the Massachusetts Turnpike/I-90 and the Ted Williams Tunnel, and is less than three miles from Logan International Airport.  The new MBTA Silver Line stop is a five minute walk and, at rush hour, there is dedicated shuttle service every 20 minutes servicing South Station.

Last year, Shorenstein acquired Market Square, a similarly well-located, historic building in a transitional market in San Francisco.  That property has enjoyed rapid leasing success among primarily technology tenants.

Seaport Center is Shorenstein’s second asset in Boston.  In 2007, the company acquired 399 Boylston Street in the Back Bay submarket.

About Shorenstein Properties LLC: San Francisco-based Shorenstein Properties LLC (www.shorenstein.com) is one of the oldest and most successful private real estate investment companies active throughout the United States in the acquisition, development, ownership and management of office and mixed-use properties. Since its beginning in 1924, the company has evolved from a regional real estate operating company to an active national investor and manager of commingled institutional capital. Shorenstein provides asset management, leasing, property management and construction services to the properties in its portfolio through its wholly owned property services affiliate, Shorenstein Realty Services.


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GlobeSt.com

 

Shorenstein Closes on Seaport Center Buy

By Paul Bubny

BOSTON-Shorenstein Properties said Friday it has closed on the acquisition of the Seaport Center, a 461,046-square-foot office property along the south waterfront here. San Francisco-based Shorenstein did not disclose how much it paid to buy the property, now its second in Boston, from a partnership of the Beal Cos. and Rockpoint Group; a source familiar with the transaction confirms published reports that the asset went for north of $110 million.

Built as a wool warehouse in 1909 and used as an induction center by the Army during the Second World War, the nine-story property at 451 D St. underwent extensive technological upgrades in the late 1990s. The Beal/Rockpoint partnership performed further renovations after buying 451 D at a discounted $41 million in 2006; today the former Fargo Building features fiber optic cable, a two-story atrium lobby, upgraded landscaping and on-site parking.

According to the Boston Herald, the deal comes four months after the newspaper joined the tenant roster at Seaport Center and brought the property’s occupancy to 88%. Other tenants there include JP Morgan Chase, Monster Worldwide and Verizon.

The formerly industrial area surrounding 451 D had begun evolving by the time Beal and Rockpoint bought the property and began marketing it as Seaport Center. An 800-key Westin Hotel opened across the street shortly after the partnership made its acquisition, and the $800-million Boston Convention & Exhibition Center opened nearby in 2004. A new MBTA Silver Line stop is a five-minute walk from the property. During rush hour, there’s dedicated shuttle service every 20 minutes to Boston’s South Station.

In a statement, Douglas Shorenstein, chairman and CEO of Shorenstein Properties, says, “This asset affords us the opportunity to add value to a building with modern infrastructure, great views and flexible floor plates in a rapidly transforming neighborhood growing in its appeal to a wide range of Boston office users.” The company bought Seaport Center on behalf of Shorenstein Realty Investors Ten LP, a commingled fund formed in 2010 with $1.23 billion of committed capital.

A release from Shorenstein likens Seaport Center to an acquisition the company made in its own backyard last year, also an historic property in a transitional neighborhood: the one-million-square-foot Market Square, which it bought from New York City-based ADCO Group for about $110 million. The property has leased up quickly to a tenant base comprised mainly of technology firms, led by Twitter Inc.

The Seaport Center deal comes a little more than five years after Shorenstein paid just under $91 million for 399 Boylston St., a 228,626-square-foot trophy office asset in Boston’s Back Bay, which it acquired from Rockwood Capital Corp. and Abbey Road Advisors, both of Boston. The 399 Boylston buy marked Shorenstein’s return to the Boston market two years after it exited following the sale of the Bay Colony Corporate Center in Waltham, MA. “We think Boston is a very compelling market right now with the way rents and vacancies are trending in that city,” Matthew Knisley, a Shorenstein VP, told GlobeSt.com in 2007.


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Bloomberg

 

Twitter Rent Surge Makes San Francisco Best Office Market

By Dan Levy

Frank Fudem, a San Francisco broker for office tenants, realized that rents in the city were about to spike as Twitter Inc. agreed to move to a gritty neighborhood and leasing by technology companies started to accelerate.

“Twitter was and is the whole phenomenon,” said Fudem, a partner at real estate services firm Cassidy Turley. “I tell clients to make their deal as soon as they can.”

Twitter’s relocation next month to Mid-Market, an area better known until now for drug deals, graffiti and vagrants, has sent rents up as much as 60 percent in a business district that didn’t exist a year ago. That type of growth is making San Francisco the best U.S. office market as demand from Internet and social-media companies surges.

The city’s five-year investment outlook, based on rent- growth forecasts, beats West Los Angeles, Boston and midtown Manhattan, its closest competitors, according to Green Street Advisors Inc. Office occupancy in the first quarter surpassed the pre-recession peak in 2007, at almost 75 million square feet (7 million square meters), data from Cassidy Turley show. Annual effective rents in the metropolitan area rose 6.8 percent, the biggest gain in the U.S., Reis Inc. reported last month.

“It’s an outright boom,” said Kenneth Rosen, chairman of the University of California’s Fisher Center for Real Estate and Urban Economics in Berkeley. The economist, who advises U.S. banks and real estate investment trusts on market trends, said hiring at social-media and other Internet companies accelerated office-rent gains he thought would occur in 2013.

Below Peak

Pensions, REITs and foreign funds seeking to buy U.S. commercial property can expect values to keep rising because rental rates are still well below the previous peak, said Joe Rodriguez, managing director at Invesco Real Estate, which oversees $48.9 billion of property investments. The Dallas-based company since August has purchased two office-retail buildings in the Union Square shopping district, for $51 million and $30 million, according to Real Capital Analytics Inc.

“It’s worth noting that during the dot-com boom, office rents approached $70 a square foot on average,” Rodriguez wrote in an e-mail, referring to San Francisco’s late 1990s run-up, which collapsed in 2000. “Tech and creative company demand is healthy, and there is a robust venture capital and IPO market for companies that happen to reside in the Bay Area.”

Rents Up 24%

San Francisco office rents rose 24 percent to an average $46.66 a square foot in the first quarter from a year earlier, and are up 39 percent from the market bottom in 2010, according to Jones Lang LaSalle Inc., which tracks rates within city limits. In the South of Market district, a popular location for tech companies and Twitter’s current home, the vacancy rate shrank by more than half in the first quarter to 3.8 percent, the lowest since 2000, the brokerage said.

Yelp Inc. (YELP), the website that allows people to comment on businesses and services, said yesterday it will relocate its headquarters to a historic South of Market tower that’s being renovated. The annual rent on an eight-year lease for 98,144 square feet begins Oct. 1, 2013, at $54 a square foot and concludes at $66 a square foot, the company said in a filing with the U.S. Securities and Exchange Commission.

Boston Properties Inc. (BXP), the biggest U.S. office REIT, and closely held Tishman Speyer Properties LP, owner of New York’s Rockefeller Center, describe San Francisco as their top- performing market. Rents rose 15 percent last year at Boston Properties’ Embarcadero Center complex and recent lease deals were completed at rates of more than $70 a square foot, Douglas Linde, president of the Boston-based company, said on a May 2 earnings conference call.

Limits to Gains

Tishman Speyer, based in New York, will start work on two Class A offices in San Francisco and expects annual rent gains in the “high single digits” when leasing begins in 2014, Co- Chief Executive Officer Rob Speyer said in an interview.

The market may not be as robust as it seems, said David Churton, Twitter’s broker at Jones Lang LaSalle. Most tenant leases, at 7,000 to 10,000 square feet, are smaller than high- profile deals, and technology allows companies to produce more with fewer people and less space, Churton said at a March real estate conference. Macroeconomic disruption in China or Europe might have a negative effect on local growth, he said.

“What if tech falters?” Churton said. “We’re not at peak conditions, but we need to be cautious.”

‘Early Innings’

The boom hasn’t been limited to offices, said Steven Brown, senior portfolio manager at Kansas City, Missouri-based American Century Investments. REITs that own apartments in the San Francisco area will see rents advance as much as 13 percent this year, while revenue per available room at hotel REITs will rise 15 percent. Both will double the U.S. average, Brown said.

“It’s the strongest region in the country, and we’re still in the early innings,” Brown said in an interview.

One of the biggest areas for growth is Mid-Market, a forlorn stretch of the city’s main corridor where Twitter, the global messaging service with 140 million active users, is scheduled to move on June 1. The company’s presence will transform the area into a “legitimate submarket,” said Fudem, the Cassidy Turley broker.

The district resisted efforts by public officials, arts groups and property developers to improve it over the years, said Cathy Simon, an architect who didn’t mind the area’s grittiness while working there from 2000 to 2009.

‘Unsavory Place’

“You had to step over people or somebody’s vomit in the morning,” Simon, a principal at Perkins + Will and designer of the Ferry Building offices and food market, said of her Mid- Market years. “It was an unsavory place, not part of sanitized San Francisco.”

Twitter chose an empty furniture mart as its new headquarters after negotiating a six-year payroll tax exclusion supported by San Francisco Mayor Edwin M. Lee as a way to keep growing firms in the city and build up Mid-Market. The benefit applies to any company that relocates to the district, roughly defined as Market Street between Sixth and Tenth streets, said Christine Falvey, the mayor’s spokeswoman.

Twitter had to consider all options as it experienced “staggering” growth, including moving out of the city, said Ron Conway, founder of San Francisco-based venture firm SV Angel, an investor in the company.

The search overlapped with locally based Shorenstein Properties LP’s acquisition in March 2011 of the old mart for $120 million. As recently as 2007, barbed wire was strung on parts of the property, which includes a 1930s main building and 1970s annex spanning Market Street from Ninth to Tenth streets, to thwart graffiti vandals.

Ripple Effect

The purchase was made before Twitter agreed in May to be a tenant, said CEO Douglas Shorenstein. His firm will spend a total of $300 million on Market Square, as the 1.1 million- square-foot property is now called. An expanded lobby with 17- foot ceilings, six high-speed elevators, a retail area spanning the width of the building, a courtyard, loggia and basketball court are among the improvements, Shorenstein said during a tour of the site.

The combination of a well-regarded developer, whose investors include Yale University’s endowment, and the marquee tech company produced a “ripple effect,” Lee said in an interview. It revived a 749-unit apartment project, now under construction across Tenth Street, and led to two purchases in late 2011 of nearby office buildings that together have 1.4 million square feet, he said.

“That was significant and reverberated across the real estate community,” Lee said.

Market Square Leases

Twitter’s six-year lease at Market Square gives the company three floors with 215,000 square feet at an average annual rental rate of $30 a square foot. In February, call center company Callsocket.com committed to 29,000 square feet in the building at $42 a square foot. Onekingslane.com, a home-decor sales website, followed in March, renting 52,000 square feet at $44 a square foot.

Yammer.com, a social network for businesses, last month signed the most recent lease, taking 79,000 square feet at $48 a square foot, or 60 percent more than Twitter.

Rates in a nearby office property purchased in the wake of Twitter’s announced move will range from the high $30s to the low $50s a square foot, said Stuart Shiff, CEO of DivcoWest Inc., which bought the building in a joint venture with TMG Inc. The closely held San Francisco firms paid $44 million in October for the 385,000-square-foot property, according to New York- based Real Capital. It is scheduled to open in the first quarter of 2013, Shiff said.

‘Head and Shoulders’

For landlords, the city’s market should outperform for at least the next four years, according to Green Street Advisors. San Francisco office properties are forecast to gain 7.9 percent in annual revenue per square foot through 2016, “head and shoulders” ahead of 6.6 percent for West Los Angeles, 6.3 percent for Boston and 5.7 percent for midtown Manhattan, said Jed Reagan, an analyst at the Newport Beach, California-based real estate research company.

“The concentration of tech in San Francisco is driving it as a whole,” Reagan said in an interview. “From our perspective, it’s the hottest market in the country.”


Shorenstein Press Center

Source

Beyond Chron

 

Mayor Lee Touts Market Square on Eve of Twitter Occupancy

By Randy Shaw

San Francisco Mayor Ed Lee toured the new office space for Twitter at Market Square yesterday, declaring that improving Mid-Market is “not just talk. We are on the move.” Doug Shorenstein, CEO of the Shorenstein Co. that owns the historic former SF Furniture Mart, revealed that the building will go well beyond offices for tech companies to include ground floor restaurants, cafes, health clubs, bike repairs, and, most importantly, a 20,000 square foot supermarket. Describing the renovation process as “tons of fun,” Shorenstein credited Mayor Lee for instilling investor confidence in the Mid-Market area, which has experienced its greatest level of investment in nearly a century following the enactment of the Mid-Market-Tenderloin payroll tax exemption one year ago.

When Twitter announced plans to move to Mid-Market, many argued that it would attract other high tech companies. Today, nearly the entire office portion of the former Furniture Mart is rented or in final negotiations, and 80,000 square feet of retail will soon be leased.

Nobody talked about the retail impacts during the debate about the “Twitter” tax exemption. It’s now clear that a project designed to revive and rebrand Mid-Market will have the enormous benefit of including a supermarket for nearby Tenderloin residents.

While negotiations on the supermarket are not final, the Shorenstein Co. is committed to that use. And Doug Shorenstein said he would ensure that the grocery had large glass windows so that it would be visible from the street, and that food would be sold on the sidewalk.

In other words, one of the dullest sidewalks on Market is about to get much more lively and interesting.

Twitter Excited

Twitter CFO Ali Rowghani spoke at the event, saying that the company was “very happy to call San Francisco home. He described a groundswell of enthusiasm among employees eager to work in the community, and said Twitter would have a fulltime community liason.

One reason Twitter employees may be excited is that they have seen the remarkable outside deck off one of upper floors (see accompanying photo). Everyone would want to have that environment adjacent to their work stations, with its sun, great views, greenery and the like.

I had never before seen high-tech offices but they are very 21st Century. They have long tables with all the data machinery inside, and breakfast-type nooks. I was told that everyone carries around laptops so the massive 80,000 square foot floors can fit hundreds of workers in comfortable surroundings.

Twitter expects to move in around 1000 employees in July. The two buildings (875 Stevenson is a separate property behind the Furniture Mart and will be under renovation for the next two years) will eventually house 4000 permanent employees. This is in addition to the 400 construction jobs that will have lasted over three years.

The combined space in the two buildings is nearly 1.1 million square feet, and there are plans to turn the courtyard between them into eating areas.

Market Street Finally Gets Lucky

Among the reasons Mid-Market has been on the skids for over fifty years is bad luck in the nature of its property owners. Far too many had no vision for the street, and no willingness to invest in its future.

But because Angelo Sangiacomo and the Shorenstein Co. had the ability to finance massive projects without needing the bank financing that would have prevented others from building, the new Trinity Plaza and the renovated Market Hall could go forward. And had Twitter not decided to come to Mid-Market, none of the other positive developments would have followed.

Mayor Lee noted that the 720-unit Crescent Heights rental housing project at 10th and Market across from Market Hall was stalled until the Twitter deal was done. He also noted a huge interest by small businesses in an area that for years had little going on.

Many doubted that Mid-Market could ever revive. But as I long argued, what was missing was a new purpose for the area, which had lacked such since