Kabir Seth, Chief Operating Officer at Presidio Bay

In this episode, we chat with Kabir Seth about how Presidio Bay is integrating technology throughout their development and operational processes to create efficiencies, better serve tenants and their own staff, and stay ahead of the competition.

Transcript

Comly Wilson 0:08

Welcome to Enertiv's fireside chats, where we sit down with owners, operators and developers of commercial real estate to talk about how the industry is changing, and how they are innovating to adapt to that change. Today, I'm pleased to introduce Kabir Seth, the Chief Operating Officer at Presidio Bay. Welcome, Kabir. So for those who might not be familiar with Presidio Bay, can you give a little background on the company and its founding and how you got to where you are today?

Kabir Seth 0:45

Sure, we're an operator based in San Francisco in the Bay Area. We were founded in 2012. And I've expanded our portfolio now we've we've done some work up and down the state, but historically focused most of our attention in San Francisco itself. And down the peninsula, East Bay. And we generally are fairly opportunistic in what we do, I'd say the one sort of consistent theme is that we're either building from the ground up, or we're doing a lot of work to existing assets, really like to roll our sleeves up. And sort of play in a variety of product types, which is sort of just been a continuation of our, you know, motivations, since the day we founded the company, which is just to be very opportunistic, do interesting deal, do interesting projects, and really try to create some value in the different arenas that we plan. So when we started, back in 2012, we were leveraging the experience for relationships, my partner, Cyrus Sanandaji, who founded the company, and came from the General Services Administration, with the federal government. So anything from the FBI to the DEA, to the Social Security, so on, and so forth, you know, we were chasing those projects all over the country, on more of a national platform. As you can imagine, the government works about as quickly as expected to so wasn't really wasn't really suitable for a company, you know, started by a couple of young guys that wanted to grow, it was impossible. So we turned our attention to, obviously, the creative office demand that was being generated by the deluge of companies that were raising capital and being vastly successful from San Francisco and, you know, a handful buildings and Soma built, ground up office buildings converted into bold, industrial PDR type assets, integrated office buildings as well. And then obviously, the next logical step was, you know, the service, the demand for housing, that came with all the the sort of tech boom, in our area. And so it started off as a handful of smaller assets, 16 to 20 units, now grown into a portfolio of just about 1000 units or so on various stages of design and construction. And most recently, you know, we've sort of combined our backgrounds and experience with really complex assets from the federal government, you know, mission critical labs, security facilities, and so on and use that to service the growing life science demand in the Bay Area as well, where we've seen a tremendous amount of growth in areas like San Carlos, obviously, Menlo Park, I think, San Francisco, while we do have assets that are in the life science space, it's still a smaller market compared to other areas in the Bay Area. And so we found ourselves most recently, working doing a lot of work outside the city, where we continue to think broader efforts for the time being.

Comly Wilson 3:53

that is incredible progress in the last nine years. As you as you head into your 10th year, what are the one of the big initiatives for 2022? How are your teams thinking about, you know, technology during development? How are you thinking about which property types to go into and which markets to expand to?

Kabir Seth 4:20

Yeah, so from a technology perspective, we're really focused, you know, both within the company and without, right, so just starting off within the company, there's a lot of software and tools are now available. One to sort of streamline our operations from an investor relations standpoint that we're investing heavily in, but also just from a pure finance and operation standpoint as well. You know, I think we're still unfortunately as as as an industry, we're still stuck in the spreadsheets right? And how we get out of it is going to be a way we're able to level up and I think just get more productivity out of the teams that we haven't placed is that natural. Particularly as a developer, you know, my partner and I talk about this all the time, there's only, there's only so many projects a team member can take on, right? That sort of forces your hand, and forces you to scale up the size and complexity of your projects, in order to get the most out of sort of revenue or dollar per employee, however you want to look at it. But that's, you know, not always feasible was possible for a lot of developers. So the only way to sort of prove that as a sort of, like, you know, work on some of these legacy processes that we have, as developers, again, try and get something out of the spreadsheets as much as possible. And, you know, figure out ways to save our team's time as much as possible. So that's one initiative on the internal side. And on the design and construction side, we're always sort of leading the charge with all of our consultants are engineers, architects, forcing them to use, you know, the latest in 3d modeling and rep coordination and BIM coordination. You know, we've, we've, we've had those experiences in our older projects, where the lack of coordination led to, you know, some issues in the field, once it came down to it. Now, the size and complexity of projects that we have, I mean, that's, that's just a non starter, right, especially in this day and age. So the cleaning from the assembly there in the design construction site, and then, you know, we got in touch with with additive is finally, in the building operation side itself, I mean, we're far more conscientious about what we want plan for include in our plans, everything from access control, to air quality, to energy, censoring, to equipment, monitoring, you know, tenant communications, so on and so forth. All that sort of requires a physical layer of infrastructure in our buildings you're very cognizant of on day one, particularly since, you know, we have the luxury of making those decisions, given the lead time or developments. But it's super important to plan for those, you know, as possible.

Comly Wilson 6:59

Yeah, that that's, that's true. You know, the, unlike many industries, commercial real estate is physical, and it requires some, some thought into how you're going to, you know, capture the necessary data. How do you guys think about evaluating technology? You know, you rattled off half a dozen or more different areas of focus. How do you, you know, a lot of owner operators feel like it's, you know, drinking from a firehose, when they're trying to evaluate vendors, or evaluate what priority should be, what are your kind of rules of thumb or heuristics there?

Kabir Seth 7:48

Yeah, no, it's a good point, especially because, you know, the jokes always that, you know, prop tech is been slow to catch up, and oh, my God, how can I use my cell phones travel the world, but I can't sort of like, you know, send an image to my property manager, or whatever it may be right. And so and we're getting there. So you have two things, you have this expectation of technology. But then when it's there, and it comes in, like most, you know, innovation and industry, you're never gonna have a single sort of panacea, or one stop solution that fits all it's good to sort of the innovation is going to happen at the margins, it's going to happen at the different pain points. And then those different pain points are going to sort of come together as people realize that okay, well, now that we've solved the problem, x and the other problem is solved problem, why would it be great if we could sort of bring them all together onto a central platform? Right, and that's sort of similar a little bit to what Enertiv does with regards to, you know, the various monitoring solutions that it provides. So I think one of the biggest pain points of the ways we try and, you know, get around this problem of drinking from a firehose is always, you know, what purpose does this sort of technology serve and cannot be wrapped up in our sort of broader technology stack in a way that in a way that's complimentary and not sort of duplicative? Right. And so sort of one of the things we try and you know, when we think about the, the tenant experience, for example, in our projects, what we want to avoid, avoid at all costs, is having a situation where a tenant has to open four or five different applications to access four or five different functionalities in the project, right, that just won't make any sense. And then you don't expect that anywhere else in life. So I would expect that in your property. So one of the things we always try and do when we evaluate new providers, okay, have you thought about where you fit into the bigger picture of building like an EV charger? application or EV charging management software, for example. That's just one tool, but presumably, they would be appreciated with the fact that they fit into a broader physical building that's got access control, it's got communication and so do they fit in really play nice, do they have API's that would allow And other application that's maybe got a more broader mandate to sort of pull that Evie charging app in and create sort of a unified experience for the tenant. And so that's, that's, that's one example at least again, this is all focused on the operation side. But I think that's where a lot of the overloads coming in, because you have certain companies focus on the finance side. So we're always focused on access control on health and wellness, payment, food and beverage, and it can get pretty overwhelming. So I think the winners are going to be the ones that sort of positioned well to synthesize all these different, you know, products and tools and applications, ultimately, for the benefit of both tenants and building ownership the same time.

Comly Wilson 10:41

Yeah, couldn't agree more. And the same goes for, you know, property managers, engineers, as it managers is this, it's crazy to expect them to have, you know, five different logins for the for the five things they have to do that day. Yeah, exactly. So how do you how do you measure success? You know, how do you kind of benchmark yourself against the market? In terms of your level of innovation? And your, you know, any, any kind of objectives or our key results internally?

Kabir Seth 11:17

Yeah, it's a good question. As we've been growing as a firm, I think what's interesting for a firm like ours is that we're very present development heavy, right. So a lot of our projects are several years in the making. And so I think, one sort of measure of success that we always like to, you know, pay attention to is obviously, just how much how successful we're are sort of planning efforts and preparation, all of our developments, when it comes time to the actual project when it comes time to live, because we're predicting stuff, you know, two, three years in advance, and we're gonna be we're operational, you know, needs gonna be. And those things are very, very difficult to sort of, in your, in your mind's eye, right. And I think the only thing we can point to is sort of a metric of success is just how, you know, how successful a project itself is, when whether it's a life science project or office or residential project, in terms of its reception by the tenants? Is this a place where people want to be? Do they? Is there a sort of price, or we call it price elasticity in the rents like, Are people willing to pay a little bit more just to be in a building, because there's an X factor that we've planned for, and that we've designed for, be it in, you know, just the granting of the project in terms of like, the operational considerations we've made, you know, whether it's how we, how we sort of manage air quality, how we sort of communicate the sustainability aspects of the building, how we, the sort of thoughtfulness behind the amenities, you know, the personification of our management team, you know, we aren't a very large company, there's not too many layers. And so when we're talking to tenants in the market, we're bringing people in, they're talking to the people who are ultimately owning and operating this facet for the long term that's going to house their employees. And so there's appreciation there for that. And so, you know, I think there's, that's how it says our sort of biggest metric for success. You know, we think we for our developments,

Comly Wilson 13:18

Yeah, that, that makes a lot of sense. But actually, I think that's a great segue into the spring line project. It's like a great case study on taking everything you just talked about and putting it into one, you know, mixed use asset. Can you tell the audience about the spring line project?

Kabir Seth 13:37

Yeah. It's, it's a really, I'm really grateful for the opportunity to work on a project like this. It's about a six and a half acre project in Menlo Park. It's comprised of 200,000 square foot Class A office buildings, 183 residential units, 20,000 square feet of retail all over, just under 1000. Space parking garage, and it's about you know, it's kitty corner from the Menlo Park Caltrain station. So, I mean, it's got just about everything you want. It's like a city within a city. And that's sort of when we that's sort of very obvious realization, and that, but that really sparked everything, you know, with regards to our approach to the project execution, starting with the branding, I mean, Menlo Park hasn't really seen a project of this size and significance in a long time. And so, you know, we really saw it as an opportunity to kind of redefine where people in that city would gather a word come to live, having it really be a new sort of focal point for the community, something that they've been open to something that they've communicated that they wanted, and responsibility that we've sort of taken on since taking up the project 2020 So yeah, I mean, it's, it's, it's a great opportunity, I encourage everybody to go to the websites online.com and you know what? I think you know, going back to the question metrics of success, and you know, my response from price elasticity, you know, anybody sitting here, you know, maybe a few months ago, or even six months ago, we were pretty nervous sitting on 200,000 square feet of office space, you know, in this market, but we are, you know, leasing momentum is extremely positive. We've announced a few of those tenants already, the others are still in discussions, but we feel pretty confident Well, you know, we'll be fully leased up by the middle of next year on 200,000 square feet, we're going to be launching the residences in q1 of 2022. The retails almost fully spoken for this point. And so a project that I think anybody would have been pretty nervous to take on during the pandemic, because we think a lot of the efforts we've made with regards to the placemaking, you know, hospitable thinking, in terms of like, bringing a sort of hospitality component, not just to the retail office to the open space and the public. And certainly all the operational considerations from this technology that we've put in that's really spoken with and resonated with all the tenants that we've been touring, really see this as a truly differentiated product compared to what else is out there, especially when compared to the traditional, you know, central road, you know, office space that's still renting for a fairly significant premium. And you're seeing it in the rents that, you know, we're able to come out now.

Comly Wilson 16:31

Can you can you dive in there a little bit what, what is the technology in place? What are the kind of sustainability features? What, what are you doing from a tenant engagement perspective?

Kabir Seth 16:42

Yeah, so, you know, we were working with sort of what I found earlier, which is, yes, there's, there's a lot of, there's a lot of companies trying to solve different pieces of, you know, the sort of tenant experience and operational challenges that come with owning and operating real estate. And my goal on day one is this needs to be stitched together some way somehow, and kind of something that I knew would be sort of challenging tasks on up for because the companies that are innovating themselves are fairly young, and so sort of making business decisions for themselves as to what you know, what is what makes most sense for them from a product roadmap standpoint. So nevertheless, you know, we're working, starting with sort of rise buildings, which sort of form the foundation of our tenant experience, access control operations, you know, so they'll sort of, particularly in today's environment, allow our tenants to access all parts of the building without having to pull out a single key fob. Elevator controls, now communications with our tenants, work orders, communications with each other. So that's just a starting point, right? Now, we got to consider things like the sort of energy and sustainability side of things, which is, the big sort of focus of ours is really where sort of energy comes in. So wherever possible, we've sort of submitted up all of our tenant spaces, we'd have a massive solar installation, we obviously have worked with the initial team to sort of install all manners of sensors from particulate matter IQ, PMI, humidity, temperature, so on and so forth, in this sort of a very rich data set now needs to be communicated back to the tenants in a way that's easily digestible. And in a way that's more importantly, actionable. So as an example, in the residential buildings, each one of the units is submitted. And he was able to sort of gather that data. So what we want to do is sort of slice and dice the information, we're able to gather and be able to relay that back to the tenants through the rise app, so that if you live in a one bedroom, you'll be able to benchmark yourself against the average one bedrooms, water consumption, and hopefully, in that way, will sort of encourage folks to make better decisions about their actions in the building. Within the units themselves, not just folks in the residential side, you know, fully turnkey, Smart Home Solutions, smart blinds, leak detection, locks, lighting, temperature, sort of everything managed within, again, not through REITs directly, but through a company called Iotas. But that will be integrated within rice that again, tenant have to leave their sort of, you know, leave might use multiple apps to access all these functionalities. It's not just a, you know, sort of small piece of the technology piece we're putting in then you obviously have, you know, Evie chargers, how that gets managed. The retail side is super interesting, because, you know, we're gonna have 200,000 square feet of office and 20,000 square feet of retail, you know, it's multiple operators, you know, pie and fast, casual, you know, whatever it may be. What we wanted to do was bring a sort of more managed hospital hospitality sort of oriented experience where if you imagine what Like when you go to some of the higher end, you know, full at all fully inclusive resorts, you know, you're not sort of ordering from one and ordering from other restaurant and being sort of two separate bills, sort of one sort of unified experience. And so working with some interesting food and beverage technology companies to essentially consolidate the payment point of sale systems for all of our retailers, so that no matter you know, if you and I want to grab lunch, we want to grab a burger, I want to grab a, you know, hot dog, and they're from two different restaurants, you and I can sort of place our order within the app, we'll go straight to each of those restaurants, and I'll consolidate an order within sort of a physical meeting point. And so that, you know, we'll never have to deal with sort of multiple bills, and so on. So we think that, things like that, and that's being implemented in Hudson Yards in New York, right now. And we think that's sort of the the future of sort of large, you know, mixed use developments, sort of, you just, you just want that layer of convenience of efficiency, you know, that you expect everywhere else in the world.

Comly Wilson 21:01

Yeah, you're making me want to live in spring alone. I'm sort of halfway convinced my wife, so. Yeah. Oh, and, and, and talk to me about what role the the air quality monitoring piece plays, and especially in terms of making tenants feel safe, you know, what are you hearing directly from tenants on that front?

Kabir Seth 21:29

Yeah, I mean, I think that, especially with climate change, with the sort of increasing severity of the fires meetings now, you know, I've been here for an area now since 2006, in San Francisco since 2010. I mean, this was just never a consideration, right? Like you heard about them, but it never really impacted your quality of life. If you lived in Berkeley, or San Francisco Park now, I remember feeling anxious in June, July, man, oh, man, like, when's the smoke gonna start? And what do I do to prepare for that, you know, and the last thing you want to do is, as humans consistently expose ourselves to poor air quality. And so that was sort of, you know, the fortunate thing is, that's a fairly easy issue to identify, you know, and use technology and leverage technology tools that we have to communicate to our tenants, you know, okay, you know, what, a couple of things, right? One, what is it like, generally outside, let's make better decisions about, you know, whether you want to step outside today, or use technology to stand, you know, stand side and order food, to do whatever you have to do without leaving the comfort of your home. So, you know, you want to have faith as an employer, that, you know, you have created a safe space for your employees. And we've done that through the combination of the physical, right, which is the very sort of measures, we've put in 20 fisi systems to ensure sort of clean safe air, both from a particular standpoint and a anti microbial standpoint, but then also be able to communicate that improve that to your sort of employees and tenants. So I think it's, you know, it's hugely important, particularly as, as players like ourselves included, grapple with how do we comfortably safely bring our our employees back to the office?

Comly Wilson 23:15

Yeah, all great points, what what are your What are your thoughts on on the delta variant? And, you know, how do you think about remaining flexible in this kind of uncertain period?

Kabir Seth 23:26

Yeah, I mean, look, not to wait too, too deep, too deep of political waters. But, you know, listen to the science. It's all I can really say, I mean, I think the Delta variant, you know, as, as we've seen is, vaccines are proving to be the most effective tool and super close that after that is wearing masks and you know, densely populated public places, particularly areas where you don't know if everybody's vaccinated. So I think, as time will go on, I think this is why it's funny, because this is what they predicted early on. And the pandemic, they said, would be just, you know, a binary sort of, you know, success against a virus, you sort of have this little bump you write down as they're as pumped up as regional areas will happen. So, this is it. I mean, this is sort of what the what the experts told us, you know, last year, and it seems to be playing out, obviously, unfortunately, slowing down in some areas due to sort of resistance against vaccines and masking, but, you know, the health sector has to slow down the demand, necessarily, I mean, obviously, maybe things might have been different in the absence of COVID. But certainly the activity we're seeing in spring line would indicate that the general market is fairly confident in the prospects, you know, in the coming years. And so, yeah,

Comly Wilson 24:47

I agree with that. So, you mentioned, you know, that we're we're starting to see the effects of climate change already. You know, the wildfires are the wildfire season. longer, the wildfires themselves are more intense. In commercial real estate ESG is kind of having a moment. But from talking with a lot of, you know, owners, operators, developers, it seems like a lot of portfolios, you know, want to do something, but they don't know what to do or what they're supposed to be doing. Yeah. How do you think about it? And and where the focus should be for those trying to wrap their head around sustainability? reporting, and and kind of moving the needle on that front?

Kabir Seth 25:35

Yeah, I mean, look, look at ESG is three pretty big umbrella is good environmental, social, and governance. So for a lot of a lot of real estate operators and owners, I would say the last one, governance is kind of not really, as applicable and relevant, because the firms don't have companies aren't as big, right, you don't really have the issues of, you know, representation, and so on and so forth, that it's not something that you as a small operator can necessarily make a dent in. Right, you know, so believe that that g part of it to the larger developers and yeah, right. And then, and then obviously, I think, you know, everyone's sort of overweight, the environmental aspect of it to again, I think, yes, as, as owners and operators, we can make conscious decisions about the materials that we use, where they're sourced from, yes, we want to sort of push the envelope in terms of sustainability. And you know, where, you know, from a sort of development standpoint, we sort of look around us in California be like, why aren't we building more buildings out of mass timber, obviously, a formal sustainable way to do things. And, you know, there's just, it takes that sort of like, change takes time, particularly in a heavily regulated state, like California. So we sort of, you know, there's little things we can do right now, I think the way I would think about it is, I think that that's sort of confusion is is very understandable, because when you look at all the tools are truly available to you to make an impact and whether it's ESG can be challenging to do at a smaller scale. And so, you know, what I will say is focus on what is what is at your disposal. And the first is, I would say, the social part of it is actually something we've been spending a lot of time on, you know, being a responsible developer. And what that means is being very active in our community in various ways, whether it's supporting local community groups, or just working directly with our neighbors understanding what it is they want to see, and also do our part to go beyond that with some various initiatives, the scholarship program that we're actually implementing, that's the S side of it, then on the environmental side, you know, what we can do is, you know, what's interesting is that things like carbon offsets, haven't really become as mainstream or accessible for the general retail sort of investor person, I predict that that's going to be something that people are going to be more and more interested in participating in particularly realizing look, as a single person or a smaller entity, or a small developer firm, putting a couple of solar panels on a roof would may help but one probably even more as if you're able to offset the price of other carbon that you form or community generates. And that sort of just becomes part of your cost of operations. Right. And I think the more that that takes place, you know, that's certainly one one step towards achieving this concept of ESG.

Comly Wilson 28:38

Yeah, definitely. So, you know, Presidio Bay is, you know, you guys are young, you guys are technologically sophisticated. You're in the fortunate position to kind of develop a lot of your properties and have the chance to think through bringing on, you know, a few platforms that do many things and can be stitched together relatively easily. What advice might you give for, let's say, an operator in, in the opposite shoes where they have, they don't kind of have this technology in their organization's DNA, they have a lot of legacy systems and some older buildings. What What advice might you give to them to kind of you know, step by step get to where a Presidio Bay is now.

Kabir Seth 29:44

It’s an interesting question. You know, I think you start, start small, right? I mean, like, start with the, you have to do your homework, you have to kind of look around and you have to sort of understand, you know, who your tenant is and what to look for. Because look, if, if, if you're in a market and your tenants don't need this stuff, I mean, good for you. I mean, You can sort of keep going, keep getting with what you're doing. But if you're looking around and seeing that everybody's got a smartphone, you know, everybody's sort of paying digitally. Everybody's sort of like no concerned about know what's going on with regards to things like our quality and safety. And what measures are you taking as a as a building to ensure their their own sort of personal well being, then you've got to, you know, start with those areas, and a lot of those, quote, unquote, technologies are fairly easy to implement. Now, especially with things like access control, right, a lot of companies like open path, and so on, I've made it very easy to sort of retrofit a building, so to speak. And just start start from there. You know, don't obviously try and reinvent the wheel across the organization and want to go on, we're still tinkering, I like to use the analogy that I divide my time between being out in the field, and then sort of being under the hood. And right now, like our firm, I'm under the hood right now for the next few months, as we sort of revamp some of our finance software and communication software internally, like, you know, sort of trying to run our company more like an agile software development firm, because look, we are we are project managers, you know, we got design and construction, folks, I've got acquisitions development, folks, you've got portfolio management, team members, I've got myself, my partner, how do we all feel organized? You know, and how do we provide the same level of service and output to our, our investors? It takes a different level of thinking, you know, you can't just keep operating on word Docs and Spreadsheets, wherever. It's not not a sustainable way of doing things. So, you know, I'm looking for that right now. How can teams like ours, as diverse as we are in our industry backgrounds, and expertise, and so on, really communicate effectively, on our products, without sort of reams of email and spreadsheets, meeting minutes, and so on and so forth? It's definitely a real challenge. Yeah.

Comly Wilson 32:00

Yeah, that that all makes a lot of sense. Okay, I think we're about wrapping up. Do you have any last thoughts? For the audience? Any things you want to tell them about Presidio Bay? Or about yourself? Or about under tough?

Kabir Seth 32:20

Yeah, I mean, first of all, yes, thank you and the Enertiv team, you guys, you guys are great. I'm excited to see what we can do at Spring line, I think it will be at least your maybe one of your biggest mixed use projects in the West Coast. So it'd be nice to showcase the capabilities there. I think, you know, that's just an interesting point, which is, you know, you asked the question, what should How should operators decide or evaluate companies are working with, I mean, the biggest challenge we have right now is, is implementation. So make sure that, you know, your team management team has been great from the engineering side, make sure that other companies are working with, pay attention to that. Because, you know, if you're left in the dark, trying to mess around with technologies that you don't really understand, your team doesn't understand. And you're trying to put it into a building and you've got a deadline of, you know, building a an occupancy and tenant starting. It can be a tough situation. So make sure your partners are aware of that. And attitude is one other way otherwise, you know, if they're exciting companies in the space, and you guys are solving interesting problems that you think, as a developer might be interested in, or even, you know, outside of direct, you know, direct development, we're always interested in investing as well and advising companies as they break into the space, please reach out to me. Always happy to chat with, you know, founders and exciting innovators in the prop tech space. Great.

Comly Wilson 33:48

Well, thank you so much for your time, Kabir. We really appreciate it. And I'm sure our audience will appreciate all the insights from you and your team are awesome. Thank you to have a great week and we'll speak soon.