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Since the fall of the Twin Towers on 9-11 resulting from a terrorist attack, office building security has been steadily evolving from relatively open access to much stricter environments through the use of electronic barriers, individual identification and monitoring, as well as vehicle control. The new approach to safety goes well beyond gadgetry and technological wizardry. The good news for landlords and tenants is that security costs appear to be under control. In the end, security expenses represent a drop in the bucket for both larger owners and tenants. Enhanced security has clear benefits, but owners must consider the expense and intrusion. On the plus side, quality security systems can help retain tenants, lead to a decrease in theft and reduce insurance premiums. In a risky world, perfect security is unattainable. The best hope is to address security threats with a suitable mixture of technology and human surveillance.

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When coordinated suicide bombings struck London's public transport system last July, closed circuit television (CCTV) footage enabled police to identify four suspects within days. The detailed analysis showed that four men with backpacks had met up at I King's Cross station before fanning out on separate missions.

The high-profile incident illustrates how security techniques and technology are getting smarter, and working in concert to protect both public and private spaces. Since the fall of the Twin Towers on 9-11 resulting from a terrorist attack, office building security has been steadily evolving from relatively open access to much stricter environments through the use of electronic barriers, individual identification and monitoring, as well as vehicle control.

Owners and landlords are gravitating toward a more strategic deployment of technology and personnel. "The aim is to implement new technologies for added efficiency, not just for their own sake, or because they are the greatest wonder since sliced bread," says Mike Coleman, vice president of commercial real estate at Philadelphia-based AlliedBarton, a security personnel firm.

Maximizing the available tools

The new approach to safety goes well beyond gadgetry and technological wizardry. Relatively simple procedures may also be cost-effective and beneficial. For instance, mail handling and emergency planning have taken on heightened importance. security guards can communicate through PDAs, enabling them to receive messages in the field. Good lighting is a must, especially in garages.

In general, office building managers are reducing their reliance on manpower in favor of X-ray machines, metal detectors, turnstiles and barriers. Speed lanes, for example, are automated turnstiles that permit passage as long as the user has a card. "The key is to do it smarter, by integrating personnel and systems," emphasizes Coleman of AHiedBarton. "That could mean replacing or supplementing humans with technology."

Video analytics and biometrics are at the cutting edge, according to Tony Varco, vice president of the security division at Convergint Technologies in Schaumburg, Ill. New surveillance software, using complex algorithms, allows operators of CCTV to zero in on abnormal behavior. "Layered technologies work in conjunction with each other. For instance, software complements high-quality video or digital recordings," Varco explains.

Smart video software looks for specific activities, such as a package left unattended for several minutes. In parking garages, the video is looking out for behavior called "looping" from car to car, as a thief tries to break into vehicles.

Biometrics, which verify identity through fingerprint, iris or facial recognition, have moved from James Bond to the real world. Facial recognition, for example, analyzes the 80 nodal points on the human face, like distance between eyes or nose width. "We now are beginning to see templates of fingerprints embedded in employees' smart cards," says Varco. What's more, the cost per card has dropped from $4,000 to under $1,000.

The San Antonio Technology Center, a three-story building with multiple technology tenants, added a FaceKey fingerprint recognition system in late 2004. "So far, we have hardly seen any biometric systems yet in commercial office buildings," says Annette Starkweather, chief operating officer of FaceKey Corp. in San Antonio. "We hope they will eventually be adopted widely, as it is the only technology that provides total control - unlike passwords or PIN cards."

The bottom line

The good news for landlords and tenants is that security costs appear to be under control. After an initial jump from 46 cents to 56 cents per sq. ft. between 2000 and 2002, research from the National Association of Building Owners and Managers (BOMA) shows they have now leveled off. Still, those overall numbers do not capture the trend for the high-end systems found in landmark and ClassA buildings. "Comprehensive electronic security and surveillance systems now cost between $2 and $5 per square foot. In the 1990s, they were under $1," says Varco of Convergint Technologies.

What are you paying for? Installing and maintaining a CCTV system ranges from $1,500 to $2,000 per camera. Varco estimates a card access system with a proximity reader may cost about the same per door. Metal detectors are expensive to install, requiring electrical expertise. As for security personnel, unions dictate wage levels in different cities. Chicago is the priciest at $11.50 per hour, followed by Boston and Washington at $11.25, and New York at $10.75, according to Coleman.

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In the end, security expenses represent a drop in the bucket for both larger owners and tenants. "When occupancy rates are high, the landlord can be reimbursed for most of the costs, which are spread among the tenants," says John Kirn, a research analyst at Bank of America.

From the tenant side, rents are a marginal expense for large companies and professional firms. Small increases in rental expenses, including security, barely dent the bottom line. "Total expenses, including property management, utilities, security, insurance and taxes, comprise 30% to 40% of rental revenue," Kim reports. "security expenses constitute just 6% of all that," adds Amita Juneja, BOMA's director of research.

How much is too much?

Security responses to threats vary based on the location and type of buildings. Populated coastal markets, such as New York, Boston, Washington, D.C. and San Francisco, viewed as prime targets, have ramped up accordingly. BOMA reports that from 2002 to 2004, security costs in New York rose from 79 cents to 95 cents per sq. ft., and in San Francisco from 51 cents to 89 cents. In Chicago and Boston security costs held steady, while in Washington, D.C. they fell from 96 cents to 69 cents.

Dennis Friedrich, president and chief operating officer for U.S. commercial operations at Brookfield Properties Corp., sees "dramatic differences" among tenant demands. For example, security measures at Brookfield's holdings at I Liberty Plaza and the World Financial Center in Manhattan are more rigorous than buildings in Denver and Minneapolis.

Brookfield "hardened" 300 Madison Avenue in New York City shortly after 9-11. The company reinforced structural steel columns on the outer shell to better resist car or truck bombs. Steel plates were welded over the open flanges of the Ç-shaped columns, producing stronger box columns. All windows on the wide lower section, or "podium," were fitted with tempered, double-paned, blast-resistant glass.

Landmark buildings viewed as targets, such as the Sears Tower and the Empire State building, now include optical turnstiles that only permit one person to pass at a time and prevent tailgating. Many new buildings are constructed with elevator lockouts, which only allow elevator riders to exit at a specified floor. Class-A tenants expect the most. "We haven't seen such big changes in B and C buildings, where smaller tenants may occupy less than 5,000 sq. ft.," says Friedrich.

Landlords want to attract and keep tenants, especially where vacancy rates are high. Maguire Properties, the largest owner of Class-Á office space in Los Angeles, meets with tenants on a monthly basis to monitor their security needs, says Ted Bischak, senior vice president of asset management. "We keep tweaking policies and procedures."

Once the bar is set though, it can be hard to shift. After 9-11, building managers made an effort to beef up security to unprecedented heights. The result, Coleman says, is that it may have established a level that is artificially high. "Make sure that you can live with your standards on a long-term basis," he cautions.

Lenders call for insurance

Mortgage lenders are unlikely to insist on specific upgrades. PhO Horowitz, a partner at Venable LLC, and president of the American College of Real Estate Lawyers, says that "so much capital is frantically chasing loans, it would be unusual for a lender to refuse [a deal] for security reasons." In fact, lenders are leery of becoming involved with directing building operations, which might open them up to liability. "They don't want to be sued, especially since they have deep pockets," explains Horowitz.

Lenders do demand terrorism insurance coverage for office buildings, regardless of location, trophy status or even height. That terrorism component must be included in the general hazard insurance for the full cost of building replacement, after backing out land and foundations.

Ralph Arpajian, a New York city attorney with Paul Hastings, often represents borrowers. When he negotiates with their lenders over lengthy leases, he tries to cap the component for terrorism insurance at two to three times the cost of current premiums.

"That assumes TRIA - the Terrorism Risk Insurance Act - remains in effect, to provide a backstop of government coverage for certain types of terrorist acts." TRIA has recently been extended to December 2007.

A sense of balance

Some tenants balk at visitor escorts and delays. But most, like airport passengers, are willing to put up with some inconvenience. Enhanced security has clear benefits, but owners must consider the expense and intrusion. On the plus side, quality security systems can help retain tenants, lead to a decrease in theft and reduce insurance premiums.

In a risky world, perfect security is unattainable. Unexpected terrorist threats, not to mention natural disasters, can arise without warning anywhere. (Who would have imagined four commercial airplanes would be used as missiles?)

The best hope is to address security threats with a suitable mixture of technology and human surveillance. As part of that two-pronged approach, experts emphasize, efforts should not be wasted on cosmetic changes that fail to truly enhance protection.