Google Says Human Health Protection Next Frontier for Commercial Property
Submitted February 17, 2011,12:26 AM
Green-building standards embodied in the LEED-rating system may seem punishing to some commercial property owners and developers, but they are well below the expectations of Google Inc., its director of real estate and workplace services said Feb. 16.
George Salah arrived at the 12th annual commercial real estate forecast by Colliers International in Silicon Valley armed with a $6,000, hand-held meter that calibrates volatile organic compounds in the air. VOCs can be emitted by many products including carpeting, paints, solvents and cleaning solutions. They also can cause cancer.
“This device scares a lot of people,” he said, “because they know it means that we mean business.”
Dressed in a black, grey and white argyle sweater and faded jeans, Salah said before such equipment became affordable, he relied on his nose to help decide if a building were suitable for his company. Space that smells musty, moldy or carries the scent of chemicals is immediately off the list, he said, as are building materials such as carpeting that emits strong odors.
Salah oversees Google real estate and facilities worldwide. He joined the company in 1999 when it had 35 employees in 4,000 square feet in Palo Alto. It now has more than 20,000 employees and occupies 11 million square feet in 60 cities worldwide.
The MIT- and Stanford University-educated engineers that make up the Google work force are demanding and particular, he said. They are trained to identify problems, which they do regularly with regard to the company’s workplace buildings.
Google’s main campus, the former headquarters of Silicon Graphics Inc. in the Shoreline district of Mountain View, while beautiful and relatively new, is not as functional as it should be, Salah said. Workers who sit near windows are hot in the summer and cold in the winter. “There is no happy employee who sits at the perimeter,” he said. “This is the kind of product that is out there today, and we can’t keep doing this.”
“It is hard to constantly hear someone telling you that their space is crappy,” he said.
His biggest hurdle today in dealing with his company’s real estate needs is transparency. The manufacturers of many of today’s building products don’t know themselves the full chemical makeup of what they are selling. If a company is unwilling or unable to disclose exactly what chemicals are in their products, Google will not buy, he said.
He cited the Pharos Project as one laudable effort on which his company relies. Pharos helps building-material buyers evaluate products through the prism of their human health, environmental and social impacts. It looks not only at products during use, but also during manufacture. It is working now on an evaluation of product effects at the end of their useful life.
During a question-and-answer session after Salah’s comments, Larry Wallerstein, a real estate attorney, developer and commercial broker, asked Salah how much of a rent premium Google would pay for a building certified at the most-stringent levels under the Leadership in Energy and Environmental Design program. Wallerstein himself built such a structure in Cupertino.
“A lot,” Salah replied, though he made clear that LEED is still “not enough.” As they discover what he has found, companies such as Facebook Inc. and Twitter Inc. will come to the same conclusions, he predicted.
That said, Google is not ashamed to leverage the power of its brand to cajole building-material suppliers into matching the prices of less sustainable and healthy products even when the superior products cost more to produce. “We can demand that,” he said, and as others follow in Google’s path, the prices will come down for all.
Notwithstanding his doubts about the quality and healthfulness of building products used in the past, Salah said it is true that re-using existing buildings remains the most sustainable approach. But in places such as India, where there is limited or no supply of properties that can be made to match the company’s needs, it will build, he said. He also made clear that at some point, Google would be building in Mountain View.
Salah seconded observations made by Jeff Fredericks, Colliers’ managing partner in its Silicon Valley office. Occupancy data comparing user demand for offices and research and development properties in Silicon Valley show more strongly than ever the inexorable decline in tenant preference for R&D space in favor of offices. Fredericks predicted that in the next five years office leasing in the valley would exceed that for R&D.
Silicon Valley has more than 158 million square feet of R&D space and 61.6 million square feet of offices, according to Colliers research. “I hate to use ‘o’ the word, but ‘obsolete’ is being bandied about a lot more these days,” Fredericks said.
The brokerage predicts a better year for leasing in the office sector in 2011, though it is cautious in its optimism. While tenant activity is clearly on the rise and brokers and landlords report exceptionally robust demand in Palo Alto, Mountain View and Sunnyvale, the availability of office space for lease rose slightly in 2010 compared to 2009, hitting not quite 25 percent. Net absorption, or the change in occupied space from one period to the next, was also negative for the year, a reminder that employment growth remains slow.
