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okay well good morning everyone thank you so much for joining us I appreciate you staying on mute just to help us to cut back on any background noise if you're new to zoom you do have the ability to turn on your video or turn off your video at the bottom left hand corner you can also mute or unmute yourself from there there's also the ability to raise your hand though today we're going to ask you to put your questions in the chat just because currently we have about 65 of you and we expect a few more and that'll make it a little bit easier for us to manage it if we use the chat as our question-and-answer Bank thankfully our wonderful mark Orkut and lowercase are both here to help us to monitor that and we imagine you'll have lots of questions as we go so please feel free to put those in there both as our speakers talk and as we get to the question and answer session Kristin Connelly our fearless leader is here to moderate the discussion and I'm going to turn it over to her shortly but first I wanted to say hello and welcome to the economic development task force of these big Leadership Council we have two wonderful co-chairs who lead this task force Amalia and Elaine and they're both here with us so I just want to kind of look over at them and ask is there anything you'd both like to say or if you feel comfortable this getting started all right I'm getting two thumbs up thank you and Molly and Elaine and they were really supportive of this really innovative idea to start to start talking about what our offices might look like and what the future might hold as we start to think about recovery so I'm excited to be here and I'm excited to turn it over to Kristin all right thank you so much Lindy you are our zoom wizard and have led the effort to get us to this place where we can still convene at a time when we can't physically be together and I'm so grateful so this is a barnburner of a turnout for an economic development task force meeting 67 and strong and growing so well I'm just really excited to our two presenters this morning are both members of the East Bay Leadership Council board in fact perhaps our longest serving member at Dell baccaro and are one of our newest members Brian Turner the format this morning is that Brian and Eadie have each prepared a 10-minute presentation and we're going to be sharing with you and then after you so Brian's gonna go first and then EDD will go and then I'll be moderating a Q&A as Lindy mentioned we're going to be taking your questions through the chat function just in order to manage the the large number of people on the on the screen I didn't want to give you a tip I would suggest that you actually in the top right corner of zoom select speaker view and that will actually make the speaker very large on your screen and a lot of the other folks will get smaller so that's something that I've I've used as I've managed my my zoom life both for work and volunteering and as a school board member so I recommend that speaker view and but but I think that's about it before we get started of course many of you on this have my cell phone so if you feel like I'm doing an inadequate job you can text me in addition to chatting to me but I'm really excited about the work that we're gonna be able to do together this morning so first up I want to introduce Brian Turner who's the CEO of buildings IOT which is really three tech companies in one I'll let Brian talk to you a little bit about his company headquartered in Concord and work all over the country and and and globally they know they've clients in Mexico and Canada in other places so um I just really appreciated that you know Brian's been really forward-thinking because is I know that is I look to the six criteria that governor Newsom has identified for what it's going to take to reopen our economy preparing for the workplace so that everyone is safe where they're providing childcare where kids are going to school where businesses are operating is really something that I want to lean into as an organization I'm not a public health officer that's not my lane but I want to make sure that we're harnessing the great resources of our members helped solve this problem and help us move forward during this very time so without further ado I'm going to turn it over to Brian Turner welcome Brian all right thank you it's good to see everybody virtually I know it might be hard to believe but it is hard to shut me up I know I'm pretty quiet in the meetings and most of you probably have no I'm there but when we do get on topics like this that we're pretty passionate about it I can go along so Lindy do you have the slides ready to roll yes I do put them on the screen now all right great so buildings IOT as Kristen said is really four different entities buildings IOT is a largely a management firm that and basically we own all the other entities but we also have a software development company up in Ottawa Canada where we develop cloud-based SAS software that that allows people to monitor and control and operate their buildings and not just the heating and air conditioning but a lot of different intelligent aspects of rebuilding from from IT all the way to the different systems that are that are controlling the environment and then we have control Co which is our large longest standing company which is a distribution company that sells products into this space and then we have an integration company that actually goes and deploys technologies like this and we have an IT group that actually does manage services righty so we have a lot of stuff around technology for for buildings and and so a lot of this stuff is stuff we've been talking about for a long time and it's interesting what's going on so let's go ahead and start through these first couple slides are pretty easy to talk through so this is this is what we left you know eight weeks ago or feels like eight weeks I guess it's like been six but this is what we left right so very collaborative work environment there was a lot of pressure and and expectation that there was in person collaboration lots of meetings lots of personal you know in yeah I would say what we're talking about now invading personal space is a thing of the past that was accepted and not just accepted but I expected especially with the new work cultures and all the different designs that were going into commercial real estate and and the layouts and furniture and all that stuff and what we're about to go back to is this right so you know we're we we got a tape ourselves off and we've got to wear masks in the office and even those people on the top right might be too close even with their masks on right so and they might be getting socially shamed by a co-worker across the way for being too close this kind of stuff is is actually happening I'm sure just if you if you guys are getting out and walking you'll notice if you walk by somebody now now you're offended if they don't cross the street to get to the other side right and you might not even look at them you know it's it's crazy how how this this pandemic has really affected the personal and the human psyche and so that's gonna have that's going to go back into the works workplace especially as we return and you know I want to say today most everything I'm going to talk about today is obvious it's gonna seem obvious you're gonna think every building already does this you're gonna think the technology has been around to do this already for years and you will be right you'll be absolutely right that that nothing I'm going to talk about today is new and that's also something that I think is important for this audience is to understand you don't have to buy something brand new you know some kovat of the day solution there really isn't a covent of the day solution there there's no quick fix here I can't just sign up for a hundred dollars a month for a SAS product and I'm now I'm now safe right this is it's more fundamental than that and it's one of the reasons why I think it will be hard you know organizations like us who are in this in we are in this business and it's difficult for us to do these things unless we own their own building and invest at all with the money ourselves and these technologies and so as as as we get dealt with our landlords this is a constant fight and at the negotiation table we get the landlords to a lot of times agree to do things and then once they get a sign they rarely do them right it's just that the ROI model has been tough when we're talking about this kind of technology okay next so one of talk about here is when we look at the harbor school for public health they put out a study a couple of years ago and this is a couple years ago this isn't as a result of the response to the pandemic this is just trying to make a healthy environment in buildings and and the types of things you would need to do in order to in order to make a healthy building so there's personnel measures there's air quality measures and their surface disinfection measures and and we're going to talk specifically about the first two the the study is great it's it's probably available anybody's welcome to go download it and just kind of get an idea but the the pictures on the right are very real right so you know can a plant actually survive and live inside your space if it can't it might tell you something about the air quality in your building but number two is that bottom picture there of all the air handling equipment and all the ductwork that gets on a roof that most most of you probably don't ever see or pay attention to on a facility you know you expect the air quality is there there you expect the temperature controls there you expect those things to be there you don't really look into all of the parts and pieces and technology that has to be put in in order to deliver that so we'll go ahead and bounce to the next one so we'll start with personnel measure so OSHA is already ahead of us on this they've got guidance for preparing workplaces recovered and this is just a small sample and this talks specifically about what you can do that you have to take active measures to keep people 6 feet from each other while they're working and and that you have to have engineering administrative controls and PPE right so you have to offer them all of those things and before you're allowed to bring them back to work now these are guidelines and OSHA is very specific and very clear to say these are not mandates but it will not surprise me if they become mandates before we're actually allowed to go back to work especially in states like California where where we're being a little more conservative in our reentry plans and then establishing alternating days extra shifts etc so let's go ahead and go into the next one so one of the things we're looking at is what kind of technology so you can have policies right but policies are only as good as the humans who follow them and what we what we've known about human nature humans get lazy if the policies are in place let's say for 18 months or 24 months which is you know some of the timeframes I've heard that we're going to have some sort of social distancing practice in place then we're gonna have to actually monitor it because in order to have policies that aren't monitored it doesn't really make a whole lot of sense and so there are simple things that you can buy today they're I wouldn't say they're off-the-shelf they're not going to go down to Home Depot and get them but they are technologies are really readily available we're working with a commercial office customer in Toronto who is deploying occupancy detection in their elevator lobbies but also their elevator calves so they're they're saying hey no more than four people allowed on an elevator at any time when we come back and that each of the four people has to stand in the corner so it sounds funny but that's what they want and so they're going to have actual people counting inside each cap and so if five people enter the cab the doors won't close but something else if the elevator is moving and there's more people on the floor are waiting to be picked up and there's ten people there then the elevator system will get that information from the occupancy system and instruct other elevators to go there because as you might imagine we've been so focused on energy savings and making buildings more energy efficient but sometimes we make decisions to actually increase capacity inside of an elevator so in order to use less elevator energy we actually have smart elevator algorithms that are that are using that are saying hey that elevator it was on its way to floor six we'll just have a go to floor eight to pick up this people there then come to 464 people there and we'll only use that one elevator and be very efficient versus having two elevators moving right and using that energy so so there that that strategy is going to have to change right at least for this interim you know re-entry program and again we don't know how long that re-entry is going to be lasting individual offices open for plans so we've got a open floor plan I'll show later that's designed for big twenty people when you really look at trying to give everybody six feet of work space I might be able to get ten in there maybe eleven if I'm lucky so that means we're gonna have to start building some teams and maybe we use our access control to actually enforce it so hey your car just doesn't work in let you in the building at all between the hours of 7 a.m. to 11 a.m. and then at noon you're you're now allowed to work from noon to 4:00 inside the building you got your early friends and late friends we go back to our kindergarten days and and so we're really trying to think about all of that for our own company as well as well as the clients that we were advising and then you're going to have to have a lot more secure VPN connections you've got to give your employees the technology because we're going to be telling them hey if you feel sick at all you know you can't figure out it's an allergy or a flu you can't come in you need to work from home right you might feel well enough to work but you're not allowed to come in so we need to make sure we have all of our employees ready and ready to set up to work from anywhere all the time in a secure fashion so that their work is not inhibited I know we're running short on time we've got a few more slides to run through so I'm not going to read through all of these but effectively this is ASHRAE standards so you may have heard the CDC report that that insinuated that the first infection was caused by ventilation and moving the disease from one table of the next in a restaurant I to me that's that's not a responsible message because one we don't know how close those people were in the restaurant there was no social distancing going on and it and there's a lot of studies that show that well while increasing your filtration and your ultraviolet and all of that stuff does greatly reduce the transmission it's it's not a it's not a one shot kills all you can't just say hey we've added filters and now no no virus this will spread but you can add filters and that does improve it you can have a hundred percent outdoor conditions outdoor air and no recycled air etc there are problems with that and I'm happy to answer some of those questions later for example I would say 95% of our air handling equipment and all buildings in the United States are not designed for 100% outside air and they can't condition that space and so if I have a hot day which we're heading into I'm not going to be able to bring in 100% fresh air and be able to provide the temperature control that I need right I just won't be able to do it so we've got to be a little smarter than just say open your outside air ganders let's go ahead and move to the next one so one of the things we can do is and all these images here are funny but this is reality of what we deal with in in offices every day right how many times you get I'm hot I'm cold I don't feel comfortable I'm getting a headache I come back after lunch I'm sluggish right all of these things are very real things that we've been dealing with for ever in the workplace and there's ways to resolve it but the ways are expens ve and so one of the things that that I'll leave you with and obviously we can measure co2 we can measure VOCs and we can know how well these things are working we can tell you how many air changes you're getting we can tell you those things but if you're a tenant how do you do these things is this really the responsibility the owner of the building not really right it's it's kind of a shared responsibility you have a responsibility to your employees if you're a tenant and then the the building owner has a responsibility of their tenants and so it's a shared to me it's a completely shared investment in creating that healthy workforce our work space let's go ahead to the next one Wendy so this is a just a quick floor plan of our office it's it's a it's called 8,000 square feet of leasable space but really it's about 6,200 square feet with the wonderful multiplier that building owners get to apply so all the green dots are where we're going to be putting occupancy detectors and so these are going to tell us not only that there's presence you know in the motion or in this case we're actually using pulse radar so it's actually measuring the fact that they're breathing and that they have a pulse so we know it's actually a person and not just something that's warm the other thing is we have cameras and we have access control but and we'll have gas detection so every one of these zones will end up with gas detection pretty much around this big red dot here and these Wi-Fi sections so everywhere we have a Wi-Fi zone we'll have a gas detection zone and then all the green dots are occupancy we'll be able to know exactly how many people are in there when they're in there how far apart they are from each other etc that's what we can do as a tenant and then I can use that information to then communicate with my building owner to let them know what the conditions are like in our space to let them know if we believe that we're not getting enough adequate ventilation to let them know if we think that there's VOCs that are traveling through their outside air ducts because if you open your outside air next to an exhaust and the exhaust is putting stuff out from your kitchen and then you're bringing that right back into your fresh air intake it can really cause problems so you'd have to be able to at least monitor this stuff talking to Ed earlier or late last week he acknowledged what we commonly believe is that most building owners of buildings that we're in which were 1200 Concord which is a six story building they're not they're not that smart they don't invest that kind of money because the ROI has been tough to get on a dollar per square foot basis so what what I'm really interested in interested in your feedback whether you want to send to me individually or not is what happens with this do we actually see a paradigm shift from corporate real estate commercial real estate from Class A and Class B all the way to strip strip centers shopping centers do we do we shift the paradigm from human capital from from financial capital as the most important thing on our line or does the human capital side of us start to fit into the equation and I'm not talking about right now I think human capital is very high on that on everybody's radar right now I'm really curious if it's gonna actually stick you know six months after we've reentered right because what we found in the past is every everybody talks a good game about this stuff we want to care about our employees but at the end of the day when we start doing the ROI model we always take it back to financial and the stuff we can measure and human productivity is difficult to measure a scale and it's difficult to put into a spreadsheet so that's one of my things that I'm grappling with and trying to figure out if if this thing will really last but there are technologies today that we can - absolutely deploy and get your your facilities ready for for monitoring your systems so that that's what I got for now thanks for the time so I went over Lindy told you I would not I'm hard to shut up so I mean you're you're right in the wheelhouse Brian of what people what the 70 all have odd things to learn about that and we're gonna leave that there there is it there are some questions and that will get to you that have been put in the chat for you Brian but we'll wait until after Ed's presentation so with Brian wondering about will there be a commercial real estate paradigm shift we have our own public ro whose longest-serving member of the East Bay leadership board and the charge for the East Bay commercials I'm gonna turn it over to you Ed and I'm grateful for what you're gonna be sharing with us this morning I will set a timer and we'll try to stay a little bit closer on that and we'll be have some time for questions take it away hey thanks Kristen thanks Brian very informative yes I think that's going to permanently change commercial real estate there will be a question of money we can go into that later by the way just to covet updates everybody knows shelter in place for the inner Bay has been extended through May there's going to be some exceptions for outdoor activities or Kristin if you could a person if you could research that for us if anybody needs to find a mask one tip is go to your dry cleaners who are essential dry cleaners made me and my wife two custom masks that have the two cloth filters so what I'm going to talk about is commercial real estate before and after before is let's say marks one and before first two months the commercial real estate market which is a reflection of the economy remember buildings follow the economy it's the economic drivers that create jobs that create activity not the building or the other way around so in the case of February if we go back to ten million years ago it seems to February we were still in the 11th year of expansion February was actually one of the better job creation months over 230,000 jobs and commercial real estate reflected that so there are records in San Francisco Silicon Valley elsewhere as to what was happening in commercial real estate housing prices were still through the roof and there was only a few exceptions meaning retail was in a previous trend of brick and mortar decreasing restaurants and some other related product so so the before was just that everybody in February 5th February 10th thought more of the same by the way a caveat for any forecasters such as myself or other people no one really knows this is a very different event and it's hard to predict September October let alone May in this case so again going to do the before commercial real estate was doing well they can see rates in most of the Bay Area cities were in single digits the only exception again besides retail was suburban office suburban office and some of the locations still had 12 or fifteen percent let's say Shadeland and Walnut Creek let's say parts of Concord and others such suburban markets in Fairfield and what we call the Outer Ring but the downtown real estate was reflecting all the job creation so would then what happened so then we had the storm euphemism for kovat so the storm hit let's say in real practical terms in early March shelter-in-place occurred and 30% unemployment record job unemployment and stay-at-home shelter rules everything slowed down everything was it was a drastic before and after how does that affect real estate next slide so I was able to talk to Chris Thornburg quite extensively earlier in the week last week most of you are familiar with him from Beacon Economics for me UCLA so he just gave me some simple numbers and I can do more detail offline first of all first corner is really a tale of three months the first two months we were heading along at a 5% plus GMP or 3 3 to 5% march was the terrible month half of March so it's going to turn out that March will probably be a negative 1 to 2% on an annualized basis contraction second corner storm hits now March has already passed an hour in April May June April is terrible so people are predicting a 30 percent contraction in GNP this second quarter that's only for the corner when you analyze it divide it by four if that if we recover in third or fourth quarter it will be an annualized 7.5 percent negative other countries will do worse but again to repeat one sentence the United States prior to the co vid was in a pretty healthy economic situation there are disconnects here and there there were bumps here and there in terms of how in prices some areas had oversupply when in general the United States economy was in good shape third quarter what happens if third quarter happens if third quarter can have several scenarios I'm gonna go in that in a section second and then go into that how it applies to commercial real estate job hiring or not next slide so what's different about this crisis is that the kovat 19 is a stop pause crisis caused by health mandates let's assume that the health mandates were required that's not the question it is not an economic event insofar as a bursting asset bubble so what happened in 2007 2008 there were two major asset bubbles that burst and actually the housing bubble believe it or not across the country started bursting in late 206 and we didn't feel the effects for a year that then had all kinds of ramifications for retail and then the next bubble that burst in 208 was Wall Street and where they were doing exotic conduit loans another third-party securitization that all collapsed so those were two asked two bubbles that caused then the subsequent Great Recession it's so again the current one is at the other times we had a recession so for instance if you might remember 92 we had a double-dip recession at the same time we went into Iraq and then hurricanes or earthquakes like 1906 or other parts of the country causes recessions that's not happening here this is a stop pause crisis note by the way some of the counties in the greater Bay Area outside of the inner Bay nafiz already moderated its stay at home and slows and so has Yolo County Sacramento and areas like that so assuming we partially own this is I wrote this on Saturday so assuming we open in June one and wholly by fair quarter with some restrictions what happens to the economy and commercial real estate people go back work to but which industries previous trends as I mentioned are going to be accelerated so there's going to be some black and white but it's mostly going to be an acceleration of previous trends what are those trends so the new buzzwords everybody's hearing now we're gonna have a v-shape which means quick we're gonna have a u-shape which means not so quick but still come back or we're gonna have a down shape recovery depression l-shape means more time than a V shape or u-shape but not as bad as a depression well what if I answer you on the next slide with all the above next slide so a B shape we recover quickly so what people are thinking now there's going to be opportunity taken here is that tech biotech life sciences all artificial intelligence industries such as what Brian is in last mile logistics contract manufacturing contract manufacturing is where and these have pre existed prior to kovat but now they've been accelerated here and elsewhere other country so it's where you have a independent manufacturing warehouse that can then switch gears between different products so one startup company might only need the manufacturing line for 20 hours another then can rent it for the 10 hours after so these can go 24 hours so think of Tesla or other companies that are switching to creating ventilators or Detroit so that's the equivalent of contract manufacturing you're going to see more flexible contract manufacturing processes therefore you will see that is a positive for a real estate in that area warehouse last mile logistics are if you look at Safeway Walmart Target they're all looking for a lot of warehouse space right now the only flying that anointment down the road will be for instance JCPenney has over a six million feet of warehouse across the country if they go bankrupt as is predicted because they're not making their bond payments in the next two weeks that could release that warehouse space infrastructure contractors you're gonna see a lot of talk about infrastructure investment no matter who's in and power whether it's the federal government state or county so you're gonna see money being pushed into road transit and other infrastructure improvements you can already see some of the highways are being accelerated by working during the day any company associated with building infrastructure engineers contractors will be a beneficiary of this robotics good or bad we're gonna automate more right now you already have some restaurants delivering food by robots you're gonna see robots in more Amazon type warehouses doing the internal you're gonna see more social media software so anything to do with AI we predict will come back sharply starting in the summer September so that part will be a v-shape now there is a multiplier effect everybody that then is related to that will also prosper you shake it's gonna take time next category so that's going to be single-family housing you're already seeing stories at in Washington Seattle New York in San Francisco where the Millennials and other people wish they had a home away from downtown it's unfortunately in dense areas where the kovat is taking more has more effect so all of a sudden the suburb might be more how should we say attractive what's or what is occurring counterintuitive in the third ring as we call it cities grow metros grow 60 miles so the third ring is Santa Rosa to Fairfield to Elk Grove to Stockton Modesto going around to Gilroy single-family home sales through virtual sales are occurring in those subdivisions today so those are in those counties they're allowed to do some work and so people are actually buying and it's called the new house syndrome I'd rather have a new house because it could be certified clean or if super commuter says was low interest rates almost two to three points you can buy a house where before you were forced to rent so that's a counterintuitive no housing in the inner Bay will be lagging multifamily medical will be lagging medical a lot of cities aren't zoned to put medical into certain parts of their city and believe it or not hospitals are getting hurt so Medicare for a lot of hospitals I represent children's for instance in Oakland Medicare only reimburses sixty to seventy percent of every dollar so a lot of what hospitals are doing is not being fully reimbursed meanwhile they're postponing elective surgeries which pay for everything so some of that's going to be coming back but medical then will take time and also we have a person issue here employment issue where are the people who are now being exhausted the first responders difficult this is a downward trend this is where acceleration of previous trends is occurring because of what we're going through so restaurants California Association of restaurants estimates 30 percent of restaurants will disappear by August existing restaurants remaining restaurants that survive well because they can demonstrate coded type procedures as Brian suggested you're going to see social seating required of six to nine feet some cities can help where they have unused parking lot area maybe we temporarily fence some of the parking lot spaces in front of the restaurants to allow outdoor seating so we can get the seating because if when you do six to nine feet apart you take away half to two-thirds of the restaurant seats so even though that will help it will not be sufficient for restaurants to stay in restaurants will shrink so you're going to see more two thousand foot versus 4000 foot traditional white tablecloth the white tablecloth will be the dinosaur unless it's a tourist attraction which is an issue will disappear department stores are yesterday so you're already hearing about Neiman Marcus you're already hearing about Sears you're ready hearing about JCPenney they were doomed as they said before forever 21 no longer forever so therefore you're gonna see a lot of boxes cities will have to adjust that they're not going to be able to depend upon retail taxes their budgets so big box retail we're gonna see a lot of empty big boxes how do we zone so they'll allow medical how do we zone to allow alternative uses to create activity to help the rest of the center transit operators people I imagine will be reluctant to get on any transit system for months so this could be a long time to recover back-office function in suburban locations this will directly affect real estate again so right now if you're the back office of an insurance company Bank civil engineering we're learning to work remotely and we're learning to automate away those jobs so you're gonna see the AI revolution take over more and more functions of the back office for accounting bills and equivalent ordering and purchasing so any building that relies upon suburban suburban the suburban office buildings therefore which still have not fully recovered from 2:08 believe it or not that's why you don't see a lot of new construction whether it's in Concord San Ramon or Pleasanton your you'll see continuing softness in that market l-shaped this could take a year so as I said hospitals we're already seeing aggregation you're going to see the difference between mission and profit hospitals mission hospitals take take anybody who comes in they have a mission to help versus for some nonprofits or other hospitals without naming them you're gonna see an aggregation good or bad but they'll take time again how do they come up with kovat clean process how do they redo some of their buildings etc hotels hotels are in trouble we were actually in a record hotel expansion prior as late as February hotels now have seen activity drop 80% so again cities are going to be tough getting any T ot room taxes so hotels some of them are allowing homeless and they're getting paid by the state some of them are being Kovac type ii places to stay but hotels could take a year or two and all the ecosystem that depends upon hotels so that's the workers that's the cleaners that's the restaurants tourism it's gonna be a long time tourism now is going to be hey can I go five miles to the State Park not fly to LA or New York or Italy farming you're reading all the stories bad story sad stories were dumping milk or closing we're plowing under farms were afraid of kovat which has broken out in the meat processing plants well if you kill if you bury crops this spring and early summer that means we're not going to have some of this stuff back until next year so you're gonna see some supply chains and the food area earth breweries believe it or not once you put beer in a keg it only has a certain couple month lifetime there's a New York Times article on the weekend breweries across the country big and small and especially the craft are gonna have to dump their beer the problem is you can't just dump it into the drain or the rivers because it impacts the chemistry of the river so they're creating a chemical to raise the psi of it but breweries could be hard especially craft and then again state County Municipal who lying on certain tax receipts are going to be hard to come back they're doing furloughs now layoffs combine that with still the pension problem and they'll be hard to recover the other industry not put up here that's going to be hard to recover is auto so the various big automakers our sales are down 80% and so therefore how do they manufacture what do they do when they come back the good news on manufacturing in the United States what people have learned is not for the futures not to have all their eggs in one basket so if I'm Apple tech company manufacturing in China East Asia if I'm a pharma company manufacturing the component parts for various drugs 80 to 90 percent of that is least Asia so almost in self-defense and survival all these companies are going to bring back we asked to make 30 percent of their offshore manufacturing back to North America so the good news is North America trade agreement is back in is was signed as you know four or five months ago so for northern Mexico Canada which already have logistics supply trains to the United States and for various states in the United States to prosper because some of the offshore comes back so in general I'll close with this sentence there are going to be losers it's going to be more acceleration a difficult one one comment on medical if you heard the esoteric word ashpod which is what medical buildings do to upgrade their internal air ventilation system so viruses don't go through the air conditioning so you have a surgery center as one of your tenants you don't want what they're going to go over to the next tenant so buildings will have to upgrade medical medical has already started upgrading because of various other mandates will be interesting as Brian said to see what the Class A buildings could do downtown and tech buildings I think can afford it because rent is less of a factor suburban buildings will have more of an issue because they because rents as they said are not there expect vacancies in that like in all recession depressions or equivalents there's opportunity so for instance in my business the big five Wall Street firms without naming them have all done layoffs cut staff t.ri which has 140 people 35 staff we made it a commitment not to layoff our staff we did get a PPP loan which means you um seventy five percent of those funds do go to the payroll and we're actually hiring and when we're even planning and open up in San Jose because we want to take advantage of the companies that come back and have a complete barrier to coverage so with that I'll close and answer any questions ok great I knew there was no way both either of you were gonna stay to ten minutes and that's fine that's fine we do have lots and lots of questions so um thank you so much and a few have been sent to the whole whole group but I've been getting a lot of individual questions and actually and near the end of your talking we're using discuss the Class A buildings you know it makes some of these tweaks and I already have invested in their buildings to make them smart buildings you know and Brian talked about this but so much of the office space around Contra Costa and the Tri Valley is you know and as someone who has a lease and is paying rent on Class C space with lovely views and a great location but a bathroom from 1982 Brian asked you this what advice you have for everybody who's listening in terms of dealing with your landlord and and how do you start to have these conversations if you are in a building that you think isn't thinking about any of this what is your best advice about what to do so I think one of the things we're advising tenants to do and so one of our biggest challenge has always been that the the beneficiary of the kind of data that this provides is the tenant because just like you're paying think of it when you pay your utility bill you know you don't just blindly pay whatever the landlord says to pay right you don't just send it in but when it comes to your your comfort you're just blindly accepting whatever they say so one of the questions that came across was hey I asked my building manager what how much how much fresh air they're bringing in they said we're following title 24 standards okay so my first answer to that would be that's a cop-out answer because title 24 says that you need to have 20 CFM per person minimum outside air intake unless you have demand control ventilation demand control ventilation means I have a few can you translate what CFM CFM cubic feet per minute so it's amount of air actually fresh air being pushed into your space and so many of you may not realize that it's a requirement in California in a commercial office space to have ventilation going 100 percent of the time during occupy dollars so one of the ways that it's go ahead sorry when you're finished I want to comment on title 24 and what happens how small business owners are to have that so finish first okay yeah so the the thing that happens is you have standard thermostats residential class thermostats that are configured to allow the fan to shut off when the zone is satisfied so when you when you effectively operate a commercial office environment like a residential environment and you allow your fan to shut off you have stopped circulating any kind of air and you will notice like my the prior building that we are in our landlord would say that's how it's going to run and if you want fresh air open your windows see that's that's actually not an effect it's not one it's not a legal response but it's also not effective and so many tenants can feel like they're you know they're their hands are tied so one of the things you can do today is actually start asking them to see the data so if you're gonna tell me that you're bringing in enough air to satisfy title 24 then actually show me the data so I can see it because I need to be able to present to my employees that they're in a safe work environment because I can do the social distancing I can do those things but I'm not one who actually can tell you how much is being brought in which is when you can do monitoring technologies like put your own systems in you can monitor your space you can actually have systems like ours and others tell you how much fresh air you're getting tell you how many air changes you're getting etc so that you you can actually go to your manager building manager with with some data because a lot of times that's what it will take I can tell you right now and Ed has mentioned it that all of the non class-a buildings and and there's still a lot of class-a buildings in our farm but all of the ones that aren't smart that don't have a lot of technology built in the owners and property managers are terrified of what's going to happen next it's not just the fact that they're leasable square footage means it's you know a one-person office or a ten person office is now a three-person office and I used to be selling it based on people and now I'm really screwed because I just rented a 10-person office that can seat three and does that mean now my my tenants all gonna come renegotiate or they're just going to bail on their lease they don't care and then the other side of the thing is you're gonna start getting much more educated about your air quality because you're you're now being forced to be educated about it you're gonna start asking really hard questions and the answers that say I follow title 24 okay well title 24 is a California standard ASHRAE at the national level just trumped title 24 by saying we recommend that you go 100% outside air and commercial office building we recommend that you're adding Merv thirteen filters and we're recommending that you add ultraviolet into your duct to kill pathogens and that sort of thing none of that is title 24 that's brand new requirement so meeting title 24 does not cover that's not an effective answer today not in not in this pandemic so echoing Brian let's just first of all what's forever changed what's forever changed is the tenant and building population is now educated on air quality internal air clogged so the bigger buildings and the bigger asset managers and developers will take advantage of this to the extent they can and say my building has a comparative advantage over the other building because we can not only do we meet national and local title 24 we actually can give you sensory data so then certain companies and I'll say unfortunately fortune 5,000 companies will then relocate some of their premises this was the pattern that followed after a DEA implementation so banks financial institutions and other big companies had to move or had to get upgraded a DEA access and internal access 80% of the buildings however in the Greater East Bay or B or C that's what we economic Renaissance that occurred in the 80s and 90s unfortunately I was there or benefited from them some old but when most of the suburban buildings were built they were wood for smaller than fifty thousand feet and a lot of them have not been upgraded real rents today in Walnut Creek downtown for instance are less after inflation adjustment in 1983 believe it or not so therefore a lot of buildings have not upgraded title 24 and I don't know the answer our own national you implement when you do a building permit upgrade or greater than 10 percent of your suite so we're buildings are gradually over time because the cost adds almost two to three dollars a foot to your to your rent now if you're a landlord mom-and-pop that's 80 percent of the East Bay you're first of all been giving rent deferment to your tenants the banks might not have been as nice and if they do defer or forgive they're tacking it on to the back end so now you have tenants I might just leave so how do you then spend more money and get less rent so as Brian said a lot of the small owners are scared to death if you're a small business owner who owns your building how do you upgrade your restaurant building when you can barely stay alive or your retail building so all these things will have to be factored in as to the survival I think over five and ten years if you're not in a smart building that will be rare I think it's going to take five to ten years for the B buildings and the C buildings to adjust and how they get through this crisis will be interesting therefore there's going to be what I call a lowering of values to the next six months for the suburban office buildings specifically because the ones that are not upgraded for AI smart systems the ones are not upgraded for equivalent time in 24 will be that the hospital is not closed with this the hospital's up as they've been taken over by the national hospitals have been mandating the doctors to move into modern MOV buildings which do have this the proper building systems in them for just basic health reasons and so we're definitely had way more questions than we can get you so I'm gonna do kind of a lightning round so - Brian got a question about so kind of it I'm gonna combine two questions so you know we've seen some protective shields go up Merilee to protect restaurant workers grocery workers do you so quick answer do you see that becoming what are we going to wear the changes we expect in the long term and then about cubicles I was reading this morning that there's actually a complete like backlog three-month backlog to order Plexiglas and cubicles what can we you know what do you say about cubicle safety and long-term physical changes you expect yeah so I think that I think the the protections are there at the grocery stores because you're not six feet away so I don't I think if if you're going to try to keep people in their cubes and and under six feet from each other I think you're going to have to have plastic or plexi or you know cubicle windows that are six feet tall so that when they're sitting there spray or whatever is contained however if you've got low cubicles then you can just separate them by six feet and and still meet the intent of the guidelines so I think there's a there's solution there so I have some of my employees on the on this call so I'm gonna be heavily influenced by what Brian is saying so we have a typical cube farm exterior offices so wouldn't I have to work in shifts so I'm gonna tell some of my employees get to work at six Coahoma two and then the second shift comes into three and works later because there's how you we were built for four four thousand and four per thousand doesn't work in a six feet of separation so there will be that so this is all brave new world so how do we adjust how do we work will still have remote working therefore for his latest another nine months I think in some cases in order to accommodate our workflows next question we may have lost I feel as moderator here I think that one other question that come up was about whether we should expect to see a lot of barriers in public spaces or that will continue to be something that you guys anticipate if so if there's enough of that material I know one thing we've heard is that it can be hard to get your hands on that yeah I think I think the innovative the innovative property owners with with money and already some some expenses for intelligent buildings they're gonna be very smart about this they're gonna be posting signs that will actually say with 50 people in the in the lobby right and we currently have 44 right so they're gonna they're gonna start doing things to give everyone visibility quickly the other the other thing from a restaurant perspective I'm working with another colleague who actually makes tablets and so that the kiosks and the touch things and all of the restaurants those are those are gonna be a thing of the past right nobody's gonna have those anymore the amount of infection that would be transmitted is just too great so now you're going to be moving to more apps so your own device is accessing well if the restaurants are also able to then feed other data like hey you're on my app our temperature is this or humidity is this our VOCs are this our co2 level is this our amount of fresh air is this then you're gonna start finding that you're going to have more tenants more customers going to your restaurant when you're able to give them more information about spacer yeah and so I think you'll see more of that versus trying to set up physical barriers everywhere I mean if you're going to go to a restaurant I guess we could all end up in our own private Plexiglas bubble but I think that is less likely than actually putting sensors in and just more information to the public the better that's what's going to make us all comfortable is actually understanding and knowing what the what the environmental characteristics of the space grant agree with Brian I think that's gonna rule a lot of new arrangements so think about you had this image of tech working at long tables with 20 people next to each other how is that going to be changed think of manufacturing processes where you have people 2 feet apart working on an auto or some other product so therefore automation will be coming in certain cases to distance that that's going to be an interesting how that develops and what's the impact on real estate with our economy so we just interesting to watch all that by the way the other thing that's new about this recession recovery versus any other is the internet and next door so I don't have my password to next door but I just read the headlines and it's almost like a mob rule did you know this supermarket doesn't do this doesn't do this so you're gonna see people reacting to who doesn't do it who doesn't have proper procedures in place so I think there's going to be some self regulating just because of that so we we are at 11 o'clock I disappeared for a minute because my computer died but I'm glad that we continued thank you Brian and Edie for handling that we had a lot of great questions and in particular it's Cindy darling highlighted you know what what can we do to help cities deal with closing department stores that's something that we can definitely lean in on and work with and you know we've got the Mary wall Creek here and you know we left we want to work with with our city city partners to deal with this this has both been incredibly enlightening somewhat depressing because there's a lot of you know I did like how one of the things that Brian said to me really struck this is gonna be really hard and there is a lot of work to do and so I'm really really just so proud to be a part of an organization that's working on these solutions really look forward to continuing to work together Brian shared his information a lot of you know how to get ahold of Edie we're happy to share his contact information too and I just think it's there's never been a more important time for us to continue to work together and stay together so we'll follow up on some of those questions please reach out if we can be helpful want to thank Lindy and and Brian and again and we'll you our next meeting Thank You Amalia and Elaine for your leadership and have a great day good luck thank you thanks everyone