 This is Think Tech Hawaii. In case you went on the wrong channel, I'm Jay Fidel and that's Stephen Sullivan. We're going to do a discussion today about if your purification at the Davies Pacific Center, 841 Bishop Street in Honolulu. So if you're not in Honolulu, come out here and take a look at that building, great building. I was in that building many years, many decades. And Stephen is vice president of Parallel Partners, vice president of operations, regional vice president of operations, and he's responsible for the things for this property. We're going to talk about air purification for this property, which is very important in our time of COVID. Hi Stephen, how are you? Hi, Jay, how are you doing today? Good. So, you know, as I said, I was in that building for a long time. I considered it, you know, a very aesthetic building. I liked it very much. Obviously, I wouldn't have stayed that long. We were there for like 50 years. I'm not getting that better part of my life in that building. And it was, you know, sort of an amazing barometer of the development of the state, you know, from the early 70s on, it was finished in, I think, 73. And I think the tenants there were generally speaking successful and participated in the economic development of the state. So, it's great to talk about this building. It brings tears to my eyes to talk about this building. So, we're talking today about air purification. Now, we have talked on this show about many incidents of air purification in many commercial circumstances in the state, but we haven't talked about it in office building. And I guess we missed out on that because office buildings are very important. And office buildings are part of the reopening like it or not. So, how has business been? How has the office tower business been over the past year that we would now, you know, focus on air purification? So, that's a very good question. As you know, the word for this year is pivot or for 2020 into 2021. So, a lot of building owners and operators have had to make adjustments so that, one, to enhance the cleaning measures that we do are our properties. We've looked at different systems that essentially would make cleaner indoor air quality standards. And it's just a normal situation for any building operator continuously want to transition and improve the quality of the product that they're providing. But for us, we have Davey's Pacific Center, Waterfront Plaza, as you may be aware. And actually, at Waterfront Plaza, we're doing vaccination parking for peer two. And then we have Waikiki Marketplace and one other asset. So, we're surviving. I mean, we go week by week. Obviously, as the tiers improve and vaccination, we get closer to herd mentality. It's definitely a good thing for all of us. Well, you know, ThinkTech has not really been affected in terms of its space, you know, by the COVID because we have a studio that's right size. We're 1164 efficient. We're waiting for you to acquire that. Okay, come around anytime. And, you know, we don't have people come in, except our engineers and our, you know, computer guys, but it hasn't affected our space requirement. Because we're just the right space to go, you know, into a studio model or an engineering model, all the same. So now for you, you probably have tenants, you know, I mean, the trend anyway, over the past several years, especially for the nationals to just reconsider the amount of space they use. So, you know, national firms that, you know, had 10,000 feet of space have shrunk. They use this space. And I imagine that, you know, a lot of people, a lot of tenants, including local tenants have shrunk their space during COVID. You know, they didn't come in at all. And when renewals came up, they said, thank you very much. We're not doing this. So you probably had a reduction in occupancy, am I right? It varies. So for example, one of our projects at Waterfront Plaza, we're, we've been able to maintain occupancy rates in the high 90%. So we're very, we're very fortunate. We have a lot of government medical tenants. They're not shrinking healthcare, etc. And then your normal office tenants. But what's interesting is as we went into COVID, I would say that some parts of the market was looking at, you know what, maybe we need to downsize or work from home. But then they realized that they lose that bit of collaboration and those opportunities to mentor, to work with others. And so we're kind of seeing, I'm not saying that we're back to normal yet, but we're definitely seeing some uptrends. I'm very excited, especially at the retention rates we have at our property is really high. So we definitely want you to come back when you're ready. So we can certainly find a space for you. But yeah, we've done, we're positive. We're very positive. I mean, parking has probably taken a big hit for all owners. As you have less people going to nightclubs and bars and kakaako in general, parking's taking a little bit of a hit, but that'll bounce back as well. So we're very, we're very optimistic. Yeah, sure. You know, when people make this kind of analysis and they're making it now, you know, I learned a few things about how to do business during COVID. I am now considering the moves I'm going to make, you know, in the reopening. And I like operating by remote. I like the virtual and like Zoom and all that. And that persuasion for a number of reasons is it's not just that we can talk and have a one-on-one engagement like this here today. I'm getting to know you, Stephen. But it's also because of driving, right? And all the things that go with driving and parking and all the things that go with parking. You know, when I got out of law school, my first boss said to me, Jay, he said, never underestimate the power of parking. That was a long time ago. And I think of that, you know, very often about parking. So if I'm a tenant, you know, making this decision about what I'm going to do on the way back, I think about parking. And so, you know, it's the cost. It's the convenience. It's the dynamics of the parking lot and all that. It's part of attracting them back to say, we're going to make parking easy for you. You know, we're going to do what we can not to have that as an obstacle. And that's a really good point because we so we are exploring different things. So for example, at Waterfront Plaza, we're looking at some future things as it relates to parking, but we've actually installed at both Davies Pacific Center and Waterfront license plate recognition. So you can just, once you're in as a tenant, you just drive in, you drive out, you get that full VIP experience. And then we also have valets at Davies Pacific Center. So I don't know if you knew that, but you just drive to the valet on the top floor and they'll go ahead and park the car for you. So we made that a little bit better. And Jay was correct when Jay made sure that the stalls, we have some of the biggest stalls in downtown. And so you, if you have a luxury car, it's taken care of, but I personally like driving because I have a Tesla and it's just the coolest car to drive in the world. So that's just me. Oh yeah, well, we have to do a show with you about the Tesla. I need to know your driving experience from the energy point of view. And speaking of energy and building operations, let's go to the purification thing. So this is obviously part of a thing to be able to say a branding thing, a de facto thing to be able to say your tenants and visitors that this building is safer than another building. This building is, you know, your risk here is less. And so this is happening elsewhere. The hotels are doing this, the unions are demanding it, you know, the hotels. And in fact, any business, if I go to my doctor's office, you know, he has air purification, that's good. And it sends me a message that he cares, you know, that he's using technology, that he's at the cutting edge, and that I'm safer there. So any business would use it. And I've, you know, it hats off to you guys for having thought of this and having, you know, installed it. So tell me, what's the technology? How does it work? How does it make me safer? Sure. And it's a, there's a much larger picture, but we'll focus on this aspect. As a building operator, there's a lot of things that go into an HVAC system or heating ventilation air conditioning system. And so we're just focused more on the filters and how, what it filters, right? So as you, as we mentioned, buildings are a little bit older and downtown Honolulu, we were looking at an efficient means of, I would say just providing cleaner air. And so by polar ionization was one of those methods that we could do relatively easy to install, you install it in every one of your, your AC systems, locator, inch floor, just, just to dummy it down. And you essentially just need an electrical source about the same as the requirements of an iPad. And the cleaning of it is very simple, like literally go and wipe it down when you do your quarterly inspections. And the life cycle is about seven to 10 years, but they believe it might actually last 20. And what it does is it, it, it's ions. So ions are naturally occurring. As you know, before electrical storm, for example, you get a high concentration of ions, it helps clean the air. Well, this is what we're doing. When you get into a commercial building or any building, your, those concentrations of ions go quite a bit down. And I'm not a scientist. So I explained it the best that I can, but those concentrations of ions are much less. And so what this does is it's artificially creating both positive and negative ions, which attach to particles and items like, you know, I'll use COVID. COVID would be a good one. It'll attach to these things and basically neutralize them or make them ineffective. And it makes your filters work better. If that's the easiest way to put it. Okay. So and it operates across electricity. You have to plug it in in some way. It uses the electricity to create the ions. And the ions, what they, they essentially fry the virus and it drops. Am I right? Yes. That's the easiest way. Cause there's, when you start talking about the different technologies, there's UV, UV hyphen C, you know, light, for example. Well, that's, that works, but it can only work on things that can see. And then if you see it and it sees you, it can burn your retina, you know, so there's, there's, there's goods and bads with that system. But that's an option. I mean, the other one, of course, is ozone. Ozone is bad. You do not want, you do not want that in your, your indoor environment. So this was a clean, safe option that was relatively inexpensive. And we started implemented it in several property, not just in Hawaii. I believe the first installation was in one of our buildings in Arizona. And we're, we're doing it in California as well as some other locations. So we're just, we're just happy. It's the way we look at it. It's another tool in our belt. We still need to make sure the systems are maintained and ran properly. You still want to get as much fresh air as the system is designed. But this is just another tool in your belt to provide your tenants with a piece of mine that they can come back to their offices and work safely. Does it require any maintenance? It's very minor. Like it's wiping down what's called neopoints, which is where the ions come out. But it's very minor. It's in-house, in-house staff. Yeah, in-house staff. You don't have to bring anybody in from the outside to do it. That's correct. And one part that you kind of have to do, and this is with any of those type of applications, is you still got to measure it, make sure it's working and operating efficiently. And so there is like an ion counter that you got to use to test. And so after we installed it, we're right now 90% where we want it to be. So we're doing some minor calibrations on a couple floors. But yeah, we're up into operation. So we're very happy. It's actually all installed, at least for babies. It's all there for the install. Yes, so where does it go? Where does it go, Steven? So you have a chiller, I assume that maybe old technology, but chillers are still, they rule the roost and air conditioning in office buildings. They have a chiller, and then the chiller cools the air and runs it through these ducts and the like all through the building. And then it returns up to be chilled again and so forth. So where do you physically attach these devices? So we're putting it right after the filters, right before the coils. And essentially it's in what's called an air handler area. So those that know building, especially building managers and operators will understand that. But it's interesting because you have your chillers, your coin towers, your air handlers, your thermostat, your VAV, all those components are still the same. And they all still have to be operated properly and efficiently. And filters still need to be cleaned. You still need to change up. So all those things occurred. So another benefit of this system would be, let's say you take an older building that only has a merv rating of eight or nine, which is low. But let's just say it has a merbrate filter that's less merbrating. What does that mean? Tell us what a merbrating is. The easiest way to explain it is it's a filter's pores, right? The more open the pores, the lower the rating. So it's more efficient at the higher the number. So for example, HEPA filters, I believe it's 17, Fresno-Holby, so I think it's 17 and up. But that would be in your medical facilities. So we have, for example, surgical centers over at Waterfront Plaza. We do have applications where there's a much higher merbrating. But in a normal office environment, it's a little bit less. Well, what the bipolar ionization system does is it effectively, it almost, it's like it's increasing that merbrating. And again, we're taking the studies and the information that's available from that company. We're not the experts in that. But we went through quite a bit of due diligence to ensure that what we were putting in is going to be a good thing for our tenants. Aside from the tasks involved in installation, is there any downside to do this? It sounds like it's all good, all upside. There's no downside that we can see at all. We looked at UBC lighting and there's some companies in town that we have great relationship with that can install those items. And I don't want to say which office building, but there's office buildings with that lighting as well. And they have it where it's safe. So they're good for them. Meaning that no one has access to look at those lights. But we really wanted to find something that was clean, efficient, and relatively easy to install. And we could get it in quickly. As you know, offices want to get their people back in the office. And they just want to know these things are in place for them. And so that was our goal. What kind of response are you having from tenants? I assume you're telling the tenants. I mean, this is already public, it's been in the newspapers, and it's here on ThinkTech. That's very important to them. They're all going to find out about it. But what kind of response are you getting? Very positive. So we partnered up, the company we work with is called ServiTech, whose it's a California company that offers janitorial and maintenance serve engineering services here locally. And he's this gentleman's a matter, I mean, he is an expert at engineering. His name is Eric Sorenson. So he actually is the president of their maintenance division. He flew in personally to oversee the installation. So we were supposed to take two weeks to install it. He made sure it got done in three days. So to be fair, we got it done faster than the press release was ready. And a lot of times that doesn't happen. But as our tenants are finding out more, we have different packets of information that we released to them, bullet points, of course, the PBN article where quotes are one of our managing partners. And so we're definitely getting that information out. But the information coming back for those tenants that have done a little bit of research to find out, they're like, this is great. Thank you. But you talked about it being one element in an arsenal of possibilities of options. Can you talk about the others? Because if I'm coming back, yes, this is actually number one for me is the air. Because we know it's all airborne, and that's the risk. But there are other things, too, that I want to feel good about. I want to feel that, for example, I want to feel the people around me, the neighbors in the building, whoever comes in, and this is my office would have you, is in a controlled setting. I don't want COVID. I know how dangerous it is. So, querie, what else are you doing? So when we got, when we started the pandemic, most, and I say this across the board, most of your Class A office is already going to have good cleaning methods, good SOPs, good standards that they follow. This just made it where we needed to increase that level. And so we did some interesting things. For example, we brought in what we felt we called them parking concierge to help because, you know, there's sometimes you may have to touch something to hit a ticket and things like that. So we brought in parking concierge. Luckily, we always, we already put in the license plate recognition for tenants can just drive in, visitors can just drive out. We brought in janitorial concierge, and we use the word term concierge is that person can help in our common areas where people would sit down to have your lunch and things like that. So we, we added enhanced cleaning measures. We brought in those concierge to assist with communicating and telling those, hey, just want to remind you, you may have forgot your mask if you could please wear that. We have them pre-packaged in different areas because we have a very large quantity of masks standing by. And we just increased our signage, social distancing requirements, looked at the elevators, looked at your common areas, I mean across the board. And then it's after you get through all your free, you know, when you have to get into a reactionary standards as well. The reactionary standard says if there's a reported case, how you handle, okay, where did that person eat? Where did they park their car? Who did they visit? Which restroom? All those things have to be looked at. And I feel very confident in our teams that we have really been on the tip of the spear as it comes to hitting those problems and communicating with our tenants. So we've been very fortunate, but we have had a couple, I mean, throughout Honolulu downtown, there's been a couple of reported cases. You'll see maybe the PBN or Star Advertiser. I'm sure there's been more than that. But in most of those cases, if not all, it's just really good cleaning methods coming in and spraying that area and making sure that it was clean and working to fix that. So what's my experience like these days? If I come in from Bishop Street and walk through the main door, I do want to talk about your redevelopment of the lobby area. But right now today, what's it like? I mean, I see signs. As a concierge there, he says he really should wear a mask. Here's a mask. And he's going to be a little concerned if I'm in a group of people that's all together. How does that work? So we still have, on both of our sites, we'll still have those on-site persons. At Davies specifically, we're going to have a parking person that will be working their way around the garage. We will have a janitor concierge working their way through the common areas, that person's second floor. And then you're going to see the security guard walking around and doing the same. And our on-site management, we have a really good on-site management team that will go out and also assist with that. And it's just a matter of, I want to say, Honolulu has been great. If you've traveled in other cities, it's not the same here. We do definitely have the aloha. I mean, I would run into one possible problem per every week. I mean, it's very minimal. And we handle that appropriately when that issue comes up. But most of the time, people want to do the right thing. We don't feel like they don't. So we're very fortunate. You know, with these vaccines, I worry, I'm happy for the vaccines. We all are. And soon enough, thanks to Joe Biden and the federal system, and of course, the aloha in our state healthcare workers, it's really just wonderful. But there are people who are going to be complacent. And maybe they don't have the vaccine yet. For some reason, they figure, I'm safe. Or they have the vaccine. And they figure, I'm safe. So I don't care. I'm different than the rest of you guys. I don't care. And I wonder how that affects this whole system you're talking about. Because A, you have people who don't care and should care. And B, you have people who really shouldn't care because they have the vaccine and the numbers are going down. How does that affect what you do? In a few months' time, this risk, I think, will be less and will be out of it. And there's a pathway to getting out of it. And maybe all the steps you're taking will be retrospective. Maybe not so necessary in, say, six months or a year. What's your answer to that? I think some things will be dialed back just slightly. But it's a matter of, I don't think anyone's going to make any changes now. We're going to continue providing the best cleaning we can and enhanced cleaning where we're able to. And that's all your high-touch surfaces. Like the escalator at Davies, for example, will have someone over there quite a bit wiping down the rails, things of that nature. But I don't think it's going to go away. I think, if anything, buildings will now start to include more of the hand washing, sanitizing stations. They'll just keep pushing to the mask, I think, might be a little bit of a concern in the next few months where people start getting complacent. But I'm hopeful, I think, why is it a little different from other locations? We're going to take care of each other and make sure that we're all doing the right thing. So part of the news about the Davies Pacific Center 841 Bishop is that you're renovating some of the common spaces, the lobby area, and so forth. Can you talk about that? Can you talk about the motivations? Is this part of the branding? Are you renovating in such a way as to have further protections against epidemics like this? Can you talk about what you're doing? Sure. So we are looking at when Peril became the operators of the property in April 2019. I think I got that right. Sorry, June 2019. We essentially already put the plan together to modernize Davies. Now, as you know, there's some beautiful pieces of art throughout the project that we want to maintain and keep that. I do know, and that was an important point in the building. It was really beautiful. It had a local quality to it. It added an aesthetic that no other building downtown had, in my opinion. And for example, the elevators. We're looking at, we've already modernized the internal components of the elevators. We're working on the aesthetics of the outside component. And that has original coal wood and the coal wood logo. So we're looking at ways to incorporate that into our modernization. But there will be things like electronic directories that will be placed, a new entryway as you walk in below the escalator, new carpets, lighting, LED lighting to make it more efficient. The parking experience will be slightly different. And in a better way, just the old parking experience. And when I say old, it's just that the existing parking experience is just a little bit dated, but we're updating that as well. So we're really, we're excited. And right now, if you wanted to come over, I'd be happy to show you, like on the seventh floor, we did a spec floor where it's all written, well, we upgraded the lobbies. Love to show you that. Hopefully you'll lease out Sweet 701, which is one of our nice respects. But we have, we're looking at this from a larger perspective, hitting these sweets, getting them ready for tenants and the communication throughout the market has been very positive for us. We're very strategic in how we do these things. So for example, we still offer symmetric fiber. We have fiber coming into the building to the tenant space. So when you go into your space, lift up a switch, you can jump to one gig of service. Of course, you can for that additional service, but it's that easy. The phone call registration, it's already wired for you. So we've been very strategic in how we're picking what we're doing to improve the project and making sure those are things that our tenants want. And I've been with the project for over 11 years. And you know, Denise, who's our manager at Davies Pacific Center, they're really good teams, very care of what we're doing. And we love our tenants. So we take good care of them. That's great. You know, you mentioned, Stephen, you mentioned broadband. And, you know, obviously, think take us into broadband. We have to have broadband that carries our signal and carries your signal to us. And, you know, it's become clear to me in the time of COVID that broadband is really important, you know, for any business, more perhaps than it was before, because of virtual connections like Zoom, but because of everything else that we do these days in the business community. So if a building, you know, tells me that it has wired, pre-wired, pre-organized, fast broadband, I'm really impressed with that. That's a fundamental requirement for most business, most tenants these days. So I think that's a really good idea. And what I get out of this, by the way, is that what you're doing there in renovating the lobby and the parking and the broadband is you're setting up a new frontier or you're pushing a new frontier, you're creating a new model. I mean, I don't know if you see it that way. I always saw, you know, Davies as a kind of flagship building. It was at the front end of things. And this is consistent with that. And I feel that what you're doing is actually a statement about the new generation, if you will, of office buildings in Honolulu and maybe around the country. Your thoughts? I agree 100%. We love what we do. We want to stay ahead of the game. And when we did this symmetrical internet service, every tenant, we flipped the switch initially 20 megs, which is slow. And that was years ago. Now we have it 50 meg symmetrical up and down. And then we offered in our common areas for like water from plus, we flew 100, a 100 meg Wi-Fi signal throughout all our open areas. So we find that to be very important. And tenants, we get great feedback from that. And a license plate recognition, modernizing the elevators, all those things play into that. Very important. So I see this as a statement of how it will be. And I also see, and maybe you could cover this, that the improvements you're making in the lobby and so forth, all those things, a lot of those things are visual things where you don't have to touch anything. Those things help in branding the building as a bullet of COVID safe building. Yes. Am I right? I mean, you said you set this up in 2019 and so forth. A lot of things have happened since 2019. Have you modified this or considered this as a point of the renovation now with the experience of COVID? Absolutely. And there's a lot of infrastructure improvements that we've done prior to coming into COVID that were already accomplished. Like at Waterfront, we spent quite a bit to upgrade our entire chiller system. Davies, we've upgraded chiller elevators, you can imagine. So a lot of those things, tenants don't necessarily see because it's behind the scenes, but that shows our commitment and ensuring that our buildings are going to be the top of line for years to come. So we talked earlier about the space requirements and so forth. And a lot of companies are thinking now really about how much space they really need and what the new office model is, how much it's going to be virtual, how much, as you said, you need personal engagement, you need to be in a conference room, you have to see the sweat on his brow to make the deal, whatever it is. And they're considering those things, both the nationals and the locals. And query, is architecture, is building out the building out process in a building like Davies, changing or will it change because of tenant preferences in terms of space and design in the new post COVID, or at least hopefully post COVID world? It's pretty similar, but the difference is, I think tenants looking at in the market, they're not sure if they should do the open concept or do that, go back to the private offices. And again, you go back to the collaboration and you want to add those things that you're trying to compete against another company. And so I think it'll be a little bit of a mix. And like Zoom for me is just one tool in our belt. We don't use this exclusively. We still like those face-to-face meetings if done safely and socially distant, but we use it when we can to just be more efficient with our tenants. So I think it's a mix. It's a mix. I would say we're still building out spaces, we're still doing the carpet and paint as you can imagine years past. You still add those private offices and none of that has changed. And we already wired for the fiber, so that's a positive. But I think tenants are, they're cautiously optimistic. I'm ecstatic. I think in six months, a lot of this will be behind us. And we will see tenants coming back into the workforce. I'm not as much worried as the next person. Yeah, well, it's the perfect time to do it really. This is the inflection point right now, you know, this month, even this week. And Query, whether other buildings are doing this at their own motion or whether they're following you, do we have a trend going on? Where do you fit on the trend line? Trend line in terms of when new tenants are looking? No, other buildings doing these kinds of things. I mean, I think all the buildings are competing for that same, you know, those same 10,000 square foot tenants. I think it really comes down that if we're all competing on a level plan field, that it's going to be the people that are operating those buildings and how that relationship is. And I think it's important. So we put a lot towards our, instead of just customer service, customer loyalty, when we get that tenant, I want you to stay at the building for 40 years. And so it's my job to make that an experience that you'll remember. So I want to say it's moving towards a little bit on the hospitality side and just running an office building. But I welcome it. I mean, I've been at Waterfront for 11 years. And again, we rarely lose the tenant. And it's normally because they moved to the mainland or something that nature. And we were just been very fortunate with the tenants that we've got. Yeah. And you know what? It's not only office buildings. I mean, this kind of technology, your approach to it, I think, you know, lots of other kinds of, you know, high rise type buildings would benefit from this. I mean, I remember in the early days of COVID, everybody was including, especially including the hospitals and healthcare buildings were using ultraviolet light. And it became clear that you couldn't be in the same room as the device. Otherwise, you'd hurt yourself with the light and your eyes and so forth. So they would benefit to know what you're doing. And I think after a while, it'll all settle down where these things will become, what do you want to call it, building standards. So you're achieving a new building standard here. And I think that's probably going to ripple right through the community, not only for office buildings, but for all multi-story buildings. I agree. When we did the parking license plate recognition, we were one of the first office properties to do it. I would say other buildings shortly thereafter followed suit. They saw the effectiveness of that. So, yes, we spent the time doing the due diligence and they benefit it, but at the end of the day, Honolulu benefits. So we've all, you know, all have increased that level of service. So, and that's kind of how it's going to be across the board. One building will do something that's great, and others will follow suit. And yeah, that's normal. But we just have a phenomenal team. I mean, I worked for Scheider Group for 10 years, and then we moved over to one of their partners, Paro Capital Partners. And it's been a great company. I mean, they're just, they're cutting edge, they're top of line. We do deals quickly, and that's important when you're in the leasing negotiations. We've just got a really good team. And then, yeah, we've just been very fortunate. So that's great. Great to see you and talk to you, Stephen. I feel like I don't walk down, down Bishop Street and visit the building, say hello to Denise, all that. Yes. And see what it looks like. I would welcome you to stop by. This is just another, you know, example of how COVID has changed us, made us more aware of things, made our lives actually in the end, made our lives better. Well, thank you so much. Stephen Sullivan, Paro Love Partners and the Davies Building 841 Bishop, thank you so much. Thank you, sir.