Real Estate Management News - 05/27/2015

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May 27, 2015
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IREM® HEADLINES
Recruitment & Staffing: Fitting Employees to Your Company’s Culture
Submissions Due July 1: The First-Ever REME Awards
New Addition to IREM Leadership White Paper Series
Take a Step toward Managing Risk

INDUSTRY HEADLINES
Rejecting the Cubicle for an Expanse of Space
Wide Open Spaces: Outdoor Apartment Landscape Ideas
Amenity Will Have Apartment Residents Climbing the Walls
US Commercial Real Estate Recovery Lags Behind Residential, Say Agents
Wichita Falls Apartment Pools Reopening This Year
Here’s Your Chance to Live in a Deserted Shopping Mall
Alta Energy Announces Completion of 504.7kW Solar Installation at Los Angeles Shopping Center
New Luxury Rental Projects Add to Rent Squeeze
Westfield Re-Establishing U.S. Retail Stronghold with $3 Billion Pipeline
Multifamily Investors Bid in Secondary, Tertiary Markets
Office Renters Eligible for Energy Star Ratings
Freddie Mac Finds Rising Rents Are Not Pushing Homeownership


 
 

IREM Headlines


Recruitment & Staffing: Fitting Employees to Your Company’s Culture

An excerpt from an article in the May/June edition of the Journal of Property Management (JPM), by Shannon Alter

The outcomes and results your company has—from business strategies to client development to financial performance—all of these begin with how and who you hire, and whether you can retain them. People, not products, are the face of your company. The ability to put the right people in the right place, at the right time, is crucial to the success of any exceptional company.

If you want to foster a culture of encouragement in your organization, it pays to take notice of your company’s current culture. Your job as a hiring manager is to choose employees who will fit easily into, and grow with, your company’s culture.

What should you look for?

When you’re considering which attributes will work best, consider these qualities:

LIKABILITY—will customers and employees like working with this person? Will people trust them?

LEARNABILITY—does the candidate exhibit a willingness to learn from others? Can they successfully pass their knowledge onto others on their team?

LEADERSHIP—is this person an emerging leader you can bring into the fold? What is their leadership potential?

Check out the full story in the May/June, 2015, Edition of JPM
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Submissions Due July 1: The First-Ever REME Awards

There is only a little more than a month left to distinguish yourself or your company with a prestigious industry honor – a REME award. Submissions are due July 1, and you won’t want to miss out on a chance to see your name in lights.

To be presented at the IREM Fall Leadership Conference in Salt Lake City this October, the REMEs will celebrate excellence in real estate management through recognition of real estate management companies and individual practitioners for innovative, leading-edge, business practices and initiatives.

Award categories include:

Company Awards

• Leadership
• Corporate Responsibility
• Work Place Environment
• AMO of the Year

Individual Awards

• CPM of the Year
• ARM of the Year
• Professional Achievement Award

…and more.

Showcase your excellence to colleagues and potential new business. Submit your story by July 1 to be considered for this honor. Good management translates into value, and well?managed properties improve the quality of life for people who live, work and shop in them. IREM and the REMEs are designed to give credit where it’s due, and to ensure that true excellence is rewarded.
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New Addition to IREM Leadership White Paper Series

Ready to take your career from good to great?

Sharpen your leadership skills and check out the new IREM White Paper on Leadership Development: Self Awareness. For real estate management professionals, there is a strong need to bolster your sense of awareness. Whether you’re dealing with complaints, inquires, or negotiations, there is a constant need to think on your feet and remain poised. Self awareness is key to becoming an effective leader. You must know yourself; identify who you are, and understand your strengths, weaknesses, interests and opportunities. The IREM White Paper on Leadership Development: Self Awareness will help you understand key behaviors and development tactics for building self-awareness. So you can stay focused on your leadership style and to ultimately help others succeed.

Explore the IREM Bookstore for this White Paper, along with the full Leadership White Paper Series.
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Take a Step toward Managing Risk

As a real estate manager, you’re always on the look-out for ways to minimize those unexpected expenses. Ways to ensure the safety of tenants and staff and continue to attract and retaining tenants. Maintaining a property in good condition is the first step towards managing risk associated with real estate management. Where to start? Maintenance and Risk Management for the Real Estate Manager, a new publication from IREM, is designed to help you craft a top-notch, proactive, and sustainable property maintenance and risk management program. With this valuable reference tool, you’ll learn to:
  • Establish a maintenance and risk management program that aligns with the owner’s goals and objectives
  • Develop a property maintenance and risk management policy and procedure manual
  • Strategies to minimize physical, environmental, and security risks
  • Maintain a sustainable and efficient property
  • Plan and implement an emergency and disaster program
Filled with countless tips, forms and checklists, Maintenance and Risk Management is one book that is sure to keep you coming back for more.

Get your copy today.
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Industry Headlines


Rejecting the Cubicle for an Expanse of Space
New York Times (05/19/15) Hughes, C.J.

Some New York office tenants are clamoring for a very different kind of workplace: one that spans a cavernous 100,000 square feet or more.  The horizontal equivalent of the tall high-rises sprouting across Manhattan are spread out on a single story and usually have minimal walls.  They are luring ad agencies, financial firms, and magazine publishers, who say that employees are more productive when they intermingle on the same floor.  But according to property brokers, since new skyscrapers tend to be more narrow and block-length, buildings that can offer this kind of space are growing increasingly rare. As a result, the market for these "superwides" has become quite tight.  Evocative of the trading floors of investment banks, such voluminous spaces are vastly superior to the older type of workplace with cubicles and corner offices, concluded Adam Kansler, a managing director of financial data company Markit.
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Wide Open Spaces: Outdoor Apartment Landscape Ideas
Property Management Insider (05/15/15) Lee, Chris

As apartment community landscapes are being called on to accommodate a sense of gamesmanship and personal fitness, pretty flowers, shrubs, and hedges are getting a lot of competition.  Socializing is still a priority with regards to exterior amenities. Outdoor fire pits, conversation and grilling areas, and walking trails continue to emerge as popular extensions of living spaces that encourage residents to gather and relax. But recent installations of outdoor lawn chess boards, disc golf, sand volleyball, and interactive fitness trails are becoming more common as apartment owners and managers work to engage and enable today's active residents. For some operators, the key to taking outdoor living space a step farther is adding low-maintenance sporting and gaming activities that complement the existing landscape and maximize the use of green areas.

Looking at the individual options, outdoor lawn chess entails giant rooks, kings, queens, and pawns on a checkered board that can be installed over roughly 300 square feet using 2 x 2 maintenance-free squares of concrete and artificial turf. Meanwhile, disc golf is a low-maintenance game that will appease residents who don't have time to hit the links or just want to play at their leisure after work. Sand volleyball, by contrast, requires a playing area composed of fine sand that is similar in size to a volleyball court It is fairly easy to groom and maintain. But it's wise to install such courts away from areas where others will gather to socialize as the balls tend to fly erratically and with considerable force. Finally, putting greens can also be a desirable area for residents. Synthetic turf for such areas is recommended as it is fairly easy to maintain. Owners and managers are encouraged to placing three or four such greens around the property within an easy walk.
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Amenity Will Have Apartment Residents Climbing the Walls
Milwaukee Journal Sentinel (05/20/15) Daykin, Tom

Mandel Group's latest Milwaukee apartment complex will have some residents literally climbing the walls.  The community is making plans to offer an indoor climbing wall -- an on-site feature that the firm hopes will help attract tenants.  Apartments within the L-shaped RiverCrest building will wrap around an 18,000-square-foot indoor climbing gymnasium operated by Adventure Rock Indoor Climbing Gym.  "The people we're targeting are young, active, and outdoors-oriented," said Mandel Group COO Robert Monnat. The gym is on pace to open in next year's first quarter, with the apartments set to be ready for occupancy by May 2016.  The monthly rents for the one- and two-bedroom units will start around $1,300 and $2,000, respectively.
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US Commercial Real Estate Recovery Lags Behind Residential, Say Agents
Property Wire (05/20/2015)

The U.S. commercial property sector continues to face its share of challenges, but real estate professionals specializing in the sector are optimistic that marked improvement seen over the past year will continue.  National Association of Realtors chief economist Lawrence Yun states, "Commercial real estate usually recovers two years behind the economy.  However, NAR members who practice commercial real estate are seeing a three- to four-year wait.  It has been a long and slow recovery, but it is happening."  Still, challenges remain for commercial real estate in the form of stagnating wage growth, low employment rates, and a general lack of financing available for small investors.  Yun and others say improving those underlying fundamentals is key to maintaining a strong commercial property market.  While big corporations can access financing from Wall Street or international buyers, most financing for smaller investors comes from local or regional banks and credit unions that balk at giving out commercial loans.  
 
Chandan Economics founder Sam Chandan says apartments will continue to thrive because of Millennials' eagerness to rent rather than own.  As a demographic, they prefer the flexibility and proximity to amenities that come with renting.  However, Generation Y will not always be in their twenties and early thirties; and the multifamily housing sector will need to take that into consideration.  The same problem is impacting other commercial markets -- such as retail, where online commerce has changed the way people of all ages shop.
 
 
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Wichita Falls Apartment Pools Reopening This Year
KFDX NewsCenter 3 (05/18/15) Bruno, Jessica

Last spring, the city of Wichita Falls moved into Stage 5 Drought Catastrophe, forcing many local apartment owners and managers to close their pools or find an alternative water source. This year is a different story. Many operators are able to open them up once again. "Our pool was not allowed to be open last year. We didn't have the resources to get everything lined up in time for it to be open," Tealwood Place Apartments manager Tia Meeker states. Meeker recalls having to do extensive research to find city-approved water haulers to bring in well water, then get that approved by their corporate office. She adds, "It was really hard because a lot of people did want it open last year, but not everyone understood because they thought it was just easier to bring in water from somewhere else. But it's really not." Tealwood Place and other apartment properties have been very busy with the inspections, and a majority of the apartments are going to be opening at least one of their pools. In 2014, only about 60 percent of them opened.
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Here’s Your Chance to Live in a Deserted Shopping Mall
Voice of America News (05/20/15) Mekouar, Dora

Nationwide, there are approximately 1,200 enclosed malls and nearly 33 percent of them are either dead or dying, reports Georgia Tech University Professor Ellen Dunham-Jones. Such factors as competition from other malls, a diminishing middle class, and basic retail fatigue have contributed to the demise of certain malls, leaving behind sprawling abandoned properties. Fortunately, developers and investors are out there eager to transform some of these properties into entirely new developments. One example is Arcade Providence, which was the country's oldest indoor shopping mall located in Rhode Island. It was recently transformed into micro apartments on the top floor and shops on the bottom floor. Another example is the Vanderbilt University Medical Center in Tennessee, which is located in what was once the One Hundred Oaks Mall.

Even more vividly, Highland Mall in Austin, Texas, was retrofitted to become an academic facility for Austin Community College. Cinderella City ranked as the largest shopping mall west of the Mississippi River when it opened in 1968 in Englewood, Colo. The retrofitted space is now a walkable urban center dubbed Englewood City that features everything from residences to a civic center to retail space. Looking ahead, the White Flint Mall in suburban Montgomery County, Md., now sits largely empty. Mall owners intend to redevelop the space into an open-air town center. Dunham-Jones concludes, "When I see a dead mall, I see it as a tremendous opportunity to now we get a chance for a do-over. We get a chance to rebuild it in a much more sustainable manner."
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Alta Energy Announces Completion of 504.7kW Solar Installation at Los Angeles Shopping Center
Business Wire (05/21/15)

Alta Energy recently announced the completion of its 504.7-kilowatt solar generation system project at Westfield Century City shopping center in Los Angeles.  The project represents the sixth solar photovoltaic system deployed at a Westfield Corp. property, continuing the company's goal of reducing energy consumption and sustainability.  The Westfield Century City project is a part of the Los Angeles Department of Water & Power's Solar Photovoltaic Incentive Program.  The system is expected to generate more than 730,000 kilowatt-hours of power every year, which represents a significant portion of the shopping mall's energy consumption.  Additionally, the project will remove 568 tons of carbon dioxide, and it will save the emissions from 193 tons of waste that are sent to the landfill instead of being recycled.
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New Luxury Rental Projects Add to Rent Squeeze
Wall Street Journal (05/20/15) Kusisto, Laura

Of 370,000 multifamily rental units completed between 2012 and 2014 in 54 U.S. metropolitan areas, 82 percent were in the luxury category, according to CoStar Group. In such markets as Denver, Tampa, Baltimore, and Phoenix, virtually all new apartment construction has been targeted at high-end renters.  Additionally, rents in new apartment buildings are commanding a far bigger premium over older buildings than during past construction booms.  According to MPF Research, apartments completed a decade ago on average commanded rents that were 9 percent higher than older buildings.  But new apartments delivered since 2010 have fetched a 21 percent premium over existing rental stock.  

While some developers worry that the current construction boom could eventually result in overbuilding at the high end -- which could put downward pressure on rents for all types of apartments -- there is also considerable angst among city officials and housing advocates worried that the middle class is getting squeezed.  Some cities are working to require that new multifamily housing development in some areas include more rental units for middle- and low-income families. Even in Atlanta, long known for its low housing costs, city officials are now considering a mandatory requirement that developers of new housing help create units deemed affordable. "Individuals who are considered to be middle class -- school teachers, city employees, and bank tellers -- need housing subsidy, as well," reports Terri Lee, deputy commissioner at the city's Department of Planning and Community Development. Looking ahead, more cities will likely look at loosening many of the zoning and other regulatory restrictions that make construction so costly and lengthy and have kept rates of new rental development low in many places. Permitting developers to erect smaller, micro-units can also help keep rents more affordable to young professionals.
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Westfield Re-Establishing U.S. Retail Stronghold with $3 Billion Pipeline
CoStar Group (05/20/15) Heschmeyer, Mark

After emerging last year from a two-year restructuring effort which saw it sell many of its U.S. holdings, Westfield Group is on track this year to open several new shopping malls. The firm currently boasts an $11.4 billion development pipeline.  More than $3 billion of that new development is targeted in two states -- New York and California. Westfield is definitely hoping to increase its profits later this year, when it plans to begin the staged opening of the redeveloped retail complex on the site of the World Trade Center in Lower Manhattan. According to Westfield Group Chairman Frank Lowy, the new 365,000-square-foot shopping and dining destination will serve as a model for its future retail projects.  "In many ways, it will provide a window on the future in terms of the kind of centers we will create and manage in the world's leading cities in the years ahead," Lowy stated. The company is also starting construction on an $800 million redevelopment at Century City in Los Angeles and has already begun the $120 million first-stage expansion at Valley Fair in Silicon Valley.
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Multifamily Investors Bid in Secondary, Tertiary Markets
National Real Estate Investor (05/19/15) Anderson, Bendix

Investors are purchasing multifamily housing properties in large numbers in smaller cities and towns.  According to Real Capital Analytics, investors bought $16.2 billion worth of apartments in secondary and tertiary markets across the nation in the first quarter of 2015 -- an increase from the $12.3 billion seen in the six major metropolitan areas over the same period.  "Across the five major property types we analyze, only in the apartment sector is it the case that secondary markets posted more activity than in the six major metros," the report states. At the same time, property prices are rising quickly in secondary and tertiary markets.  The average price per apartment in tertiary apartment markets rose 23 percent to an average price of $75,344 per unit during the year that ended March 31.  Average capitalization rates for apartment properties in tertiary markets dropped 33 basis points to reach 6.9 percent over the same period.

Detroit ranked as the top city on the index, with a five-year average cap rate of well over 9 percent. “Rental housing demand in the metro remains strong, pushing the vacancy rate to a multi-year low in 2014, and only a slight increase is projected this year while the local economy continues to display renewed vigor,” according to the study. The list of high-yielding cities also includes Cleveland, Pittsburgh, and Indianapolis. To be sure, investing in secondary markets does come with some additional risk. Such markets can be influenced by single, large properties opening or any single, large company that has layoffs So far, though, the new construction of apartments coming to most secondary markets is modest compared to the existing supply and the demand for new apartments. "In most secondary and tertiary markets, not as much new construction is taking place,” confirms John Sebree, director of Marcus & Millichap's National Multi Housing Group.
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Office Renters Eligible for Energy Star Ratings
News Times (05/20/15) Soule, Alexander

In an attempt to re-energize its longtime Energy Star label, the federal government recently authorized an extension of the voluntary program to renters within multi-tenant office buildings.  Introduced two years ago by U.S. Rep. David McKinley (R-W.Va.) and Rep. Peter Welch (D-Vt.), the Better Buildings Act of 2014 required the Environmental Protection Agency to create the Tenant Star program as one means to help building owners lower energy use in commercial buildings.  The bill also ordered a study by the U.S. Department of Energy on best practices to consider when landlords fit out new spaces for commercial tenants.  Rather than the whole-building approach under the Energy Star program for commercial structures, the new law encourages building owners and tenants to implement high-performance energy efficiency measures in separate spaces.
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Freddie Mac Finds Rising Rents Are Not Pushing Homeownership
The M Report (05/18/15) West, Xhevrije

Freddie Mac research reveals that most U.S. renters are not motivated to enter the home-buying market, even as rents escalate. Furthermore, positive perceptions about renting are on the rise. Harris Poll conducted the March survey of more than 2,000 adults. David Brickman, executive vice president of Freddie Mac Multifamily, says the findings contradict "what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. We believe rising rents are primarily a sign of increased demand rather than a signal that home purchases will be increasing." Census data, meanwhile, shows that more than 33 percent of American households are renting homes; and renters comprise all net household growth over the past several years. This year, rents are on pace to climb 3.4 percent above inflation -- a slight decrease from 2014's gain of 3.6 percent. Additionally, only 6 percent of renters who have lived in their units for more than two years have experienced a drop in rent. By contrast, 38 percent experienced an increase in the last two years. Of those who experienced a rent hike, seven out of 10 noted that they want to become homeowners but cannot afford it at the present time.
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