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July 23, 2014
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Past Issues

LEADERSHIP SPOTLIGHT
The Executive Edge: Because Every Leader Needs an Edge

IREM® HEADLINES
Tough Clients for Property Managers: Situations Requiring Intervention
Considering an IREM Membership? The Price is Right
IREM Joins IPMS Coalition
Join IREM at this Year’s Greenbuild in New Orleans

INDUSTRY HEADLINES
Skyscrapers Reach for Greener Energy Goals
Is Multifamily Supply Overtaking Demand? A New Twist to the Debate Emerges
CBRE Pushing Office Layout to New Frontiers
How Pests Affect Tenants
Skylights for Everyone: Productivity-Boosting Optical Illusions for the Office (and Beyond)
A Tech Hub Treads in a Sea of Bureaucrats
Apartments Pile on Amenities in New Developments
NY Building Shows How Mod Design Stacks Up as Cool
Tide of E-Commerce Lifts All Industrial
Office Tenants in Grey Area When It Comes to Green Certification
Competition Soars as Investors Seek to Dominate the Skyline
Fairfax Updates Green Building Policy


 

Leadership Spotlight


The Executive Edge: Because Every Leader Needs an Edge

Plan now to attend the only industry event designed to meet the challenges and needs of both multifamily and commercial real estate managers. Greatness awaits this October 16-18 in Orlando, Florida. The Executive Edge is your chance to compile a year’s worth of learning, making new contacts, and fun into just three days.

The ultimate discovery experience for:
  • Real estate managers
  • Property managers
  • Asset managers
  • Commercial and residential management executives
  • Aspiring leaders from the site to the C-suite
Get education and networking opportunities curated specifically for real estate management professionals, designed to invigorate your leadership skills and give you the tools you need to develop new business. Featured sessions include:
  • One For the Ages: The Generational Impact on Commercial Real Estate -- Are you prepared for the massive impact shifting demographics are about to create? You will be after this featured event.
  • Medical Marijuana: It’s a Hazy Situation – Understand the laws, trends and best practices you need to deal with this growing industry.
  • Creating a Personal Brand: How You Too Can Become Kardashian – Discover strategies to enhance your image and make your reputation your best asset.
Register now!
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IREM Headlines


Tough Clients for Property Managers: Situations Requiring Intervention

In the July/August edition of the Journal of Property Management (JPM), Natalie Brecher, CPM, identifies different types of difficult clients for property managers. Natalie notes that, “Real estate management is a service business and having good client relationships is essential. But different personalities, values, communication styles and expectations affect satisfaction for both sides of the table. There is such a thing as a bad client.”
  1. The Time Thief takes up time better spent elsewhere (e.g., due to a need for inordinate information, the desire to socialize or not honoring work hours).
  2. The Payment Procrastinator is late-paying, or worse, non-paying— and may even be in financial trouble.
  3. The Miser hunts for bargains, wanting services at a reduced rate or gratis. One type regularly asks for extras, trying to take advantage of you. Another type won’t spend needed money on the property.
  4. The Bully can be demanding, rude, argumentative or disrespectful. This client deflates egos, creates stress, causes self-doubt and hurts morale. Ultimately, this can cost you employees.
  5. The Blamer uses hurtful, unproductive, criticism. For instance, when the property isn’t performing as the client desires, management is to blame. Blame tears people down.
  6. The Loser refers to the account—not the person—and is the low- or no- profit account. Loss leaders should lead only, not make up the masses.
  7. The Maven gives you the gift of advice. Actively involved is different than controlling, and this client tries to control. Eventually, you’re virtually made incompetent. If there is a problem later, who will be held responsible?
  8. The Indecisive changes direction often, with goals as moving targets. Approvals may be late or not given—an indication of client efficiency problems. This leads to yo-yo management or ineffective paralysis.
  9. The Insatiable Complainer expects and demands special treatment and impossible results. Ask yourself: Are you being reimbursed for the time this takes? Is accommodating this client causing distress that hurts performance?
  10. The most deadly of all is The Unlawful. This client holds no allegiance to landlord-tenant laws, building codes, Fair Housing laws, labor laws, contracts or the IREM Code of Ethics. It’s a major danger zone: A client may not last forever, but a reputation does.
To read the full article, and get ideas for dealing with these difficult clients, check out the July/August Edition of JPM
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Considering an IREM Membership? The Price is Right

Associate membership is now less than a dollar a day for the rest of 2014 -- only $105. Less than a daily cup of coffee. Less than a monthly dry cleaning bill. Less than a pair of movie tickets once a month. Invest wisely: join IREM today as an Associate Member for only $105 to elevate your career, build your credibility and gain access to the best minds in the industry.

If you’ve considered taking an IREM course, the timing couldn’t be better. If you join as an Associate Member today and take one of our advanced courses (including Marketing and Leasing, Investment Real Estate: Finance Tools and more), you'll actually save $41 versus registering for the course as a non-member. If you're interested in developing a skill and building your resume, joining IREM is a no-brainer.

Find out more.
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IREM Joins IPMS Coalition

IREM has become a member of the International Property Measurement Standards Coalition (IPMSC), an international group of professional and non-for-profit organizations working together to develop and help implement a single global property measurement standard.

Currently, the way real property assets – such as homes, office buildings and shopping centers – are measured can differ dramatically from country to country, making it extremely challenging for global investors and occupiers to accurately compare space. Indeed, a property’s floor area measurement can deviate by as much as 24 percent, depending on the method used, according to research findings by the international commercial real estate services and investment management firm JLL (Jones Lang LaSalle).

“Real estate today is playing out on the world stage,” observed IREM 2014 President Joseph Greenblatt, CPM, “underscoring the growing need for internationally uniform industry standards and practices. With members in 39 countries and on six continents, IREM enthusiastically supports the efforts of the IPMSC to establish globally consistent and recognized property measurement standards, confident that they will lead to greater marketplace transparency, stronger investor and public confidence and increased market stability.”

IREM is one of 44 organizations that comprise the IPMSC, all of which have committed to promoting the implementation of property measurement standards and encouraging world markets to accept and adopt the IMPS as the primary method of property measurement.
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Join IREM at this Year’s Greenbuild in New Orleans

IREM is proud to partner with the largest sustainable building event in the U.S. as it marches into New Orleans! We’ve been participating in Greenbuild, the annual conference of the U.S. Green Building Council, for several years. We invite all IREM Members and industry professionals to join us again this year as we work to advance the role of exceptional real estate management in sustainability and enjoy the sites, sounds, and flavors of New Orleans.

Greenbuild is the world's largest conference and expo dedicated to green building. Greenbuild brings together industry leaders, experts, and frontline professionals dedicated to sustainable building in their everyday work, sparking a unique energy of idea-sharing and collaboration.

IREM has lots to share at this year’s Greenbuild. We’ve launched IREM Sustainability, including the IREM Certified Sustainable Property Certification, and we have several educational offerings and resources in the works for late 2014 and 2015. Track us down while you’re in New Orleans to learn more. We’re always happy to talk sustainability, particularly the real estate manager’s role in keeping those green buildings performing as designed,

The 2014 event will take place Oct. 22-24 in New Orleans. Register today at www.greenbuildexpo.com.
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Industry Headlines


Skyscrapers Reach for Greener Energy Goals
Chicago Tribune (07/18/14) Wernau, Julie

Owners of some of Chicago's best-known buildings have committed to join an effort to reduce energy use, after early participants posted a 7 percent reduction in less than two years. Those that sign on to Retrofit Chicago aim to slash energy consumption by 20 percent within five years. "There are some buildings that did their entire five-year commitment in the first two years," marvels Rebecca Stanfield, the Natural Resources Defense Council's deputy director for policy for the Midwest. "One of the big barriers we see to an uptake in energy-efficiency services is that while saving money may be high on a building executive's list, this isn't always the stuff they're paying attention to."

The 14 buildings that initially signed up in the second quarter of 2012 used a combination of retrofits, including upgraded lighting, replacement windows, and/or new heating and ventilation systems. In addition, they educated their tenants on ways to reduce energy waste and added technology to automate systems that consume energy. Since then, according to a newly released report by the Defense Council, four dozen buildings spanning 37 million square feet have committed to the goal. This includes the 16 buildings that signed up in June alone. The Windy City's goal is to cut energy use in half of Chicago buildings by 30 percent by 2020.
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Is Multifamily Supply Overtaking Demand? A New Twist to the Debate Emerges
GlobeSt.com (07/15/14) Morphy, Erika

Apartment industry professionals have been concerned about a bubble forming and then bursting in their sector ever since the Great Recession. Some contend that building in this sector is reaching a saturation point in a growing number of markets. Others counter that not only is a supply bubble not forming, but the current development pipeline is actually insufficient to meet the real demand for apartments now and in the months and years to come. After the flood of foreclosures from the recession, the demand for apartments soared amid short supply. So far, demand for apartment space has remained very high and has been able to blunt the growing supply. The reasons for this have been threefold: one, stricter lending requirements has made homeownership more difficult; two, young adults are shying away from owning anyway to remain flexible in their careers; and, three, there is a growing trend towards urban living.

The National Association of Real Estate Investment Trusts expects this shadow demand to continue fueling this sector for years to come especially as the job sector improves and more young adults strike out on their own and form their own households. Among the pessimists, though, is Reis senior economist Ryan Severino. He recently stated that even though demand will remain high, new apartment supply will likely overwhelm it if current trends hold. Rent growth is already moderating in some markets, he notes, with the San Francisco Bay Area and Seattle on pace to see the effects of oversupply on rents in the nearer term. Severino concluded, "The markets that started to recover the soonest, at least enough of them, are the ones where we're seeing a lot of the construction activity taking place right now. We're not seeing a lot of the construction activity in some of the secondary markets, where they're kind of the laggards right now."
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CBRE Pushing Office Layout to New Frontiers
Real Estate Weekly (07/16/14) Orlando, Dan

CBRE New Jersey's senior managing director Jeff Hipschman confirms that the commercial property brokerage has brought an open floor plan to its Saddle Brook, N.J., offices after seeing favorable results from a similar implantation on the West Coast. The shift is part of the firm's Workplace 360 initiative, which seeks to offers real estate brokers and other employees "enhanced flexibility, mobility, technology, and productivity" so that increased communication can be made possible. Unlike in California, the New Jersey office features a single-floor layout. Hipschman said the company has seen a "drastic improvement" in collaboration and communication between the workers. CBRE's new layout includes eight group work areas, adjustable-height desks that allow for sitting and standing, a paperless work environment, and a treadmill desk which allows for light exercise during the completion of business-related tasks. Additionally, the new set-up has an indoor putting green and a Jersey Shore-themed entrance.
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How Pests Affect Tenants
Buildings (07/11/14)

Pests are a never-ending source of trouble in commercial buildings, according to a new survey conducted by Orkin and BOMA International, which recorded 89 percent of respondents saying their tenants reported at least one pest sighting in the past year. Researchers polled building and facility managers in a wide variety of property types to find that almost 50 percent of office tenants will notify the building management after just one pest sighting. That number shoots up to 83 percent after a second sighting. It's not uncommon to see the occasional pest that slips by the building's defenses. However, Orkin and BOMA researchers found that at least half of respondents will begin looking for a new space after multiple sightings, highlighting the importance that owners and managers need to place on staying on top of pest control. Patricia Areno, senior vice president of BOMA International, states, "Tenants are saying there's a very real possibility that they will consider moving office space if pest issues are not resolved quickly and effectively." Tenants are often purposefully not told when pest control professionals visit the building. Around 66 percent of respondents said they wanted to be part of the visit or at least know in advance when it is taking place. However, 25 percent said they were rarely -- if ever -- told that a pest control service is visiting.
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Skylights for Everyone: Productivity-Boosting Optical Illusions for the Office (and Beyond)
Core77.com (07/17/14) Rae, Erika

Skylights can be an attractive perk for those office tenants who lease space on the top floors of buildings. They can provide a welcome source of light and are often seen as an attractive design feature. Not only has it been scientifically proven that natural light boosts productivity levels, it's also good for morale and mental health. Unfortunately, most office buildings have not been designed with such features in mind. And, of course, skylights are not possible for any floor underneath the top level of buildings. Enter Iowa-based Sky Factory with their "embedded" skylights. The company's "cerulean ceiling projections" are designed to produce psychophysiological relaxation responses with their simulated natural light. Measuring 8'×8', the company's newly launched Revelation SkyCeiling features their biggest panels so far. The light is made up of four layers: a fluorescent lighting system; an acrylic tile, featuring a photographic reproduction of the sky; "elevators" that gives the system structural depth into the ceiling; and a customized ceiling grid to top it all off. In addition to clouds and a blue sky, scenes can also include sunlit trees.
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A Tech Hub Treads in a Sea of Bureaucrats
Wall Street Journal (07/16/14) Brown, Eliot

The Washington, D.C., suburb of Crystal City, Va., continues to emerge as an East Coast tech hub. Vornado Realty Trust, for instance, is embarking on a grand experiment to create a cluster of technology companies amid its more than seven million square feet of Crystal City offices. Tech clusters have popped up in a number of cities nationwide, but primarily in areas with older buildings and close proximity to hip residential neighborhoods. That isn't the Crystal City market, whose collection of two dozen or so modern buildings offer little in the way of architectural distinction or proximity to downtown amenities. Their appeal up until now is that they are three subway stops from the nation's capital, two from the Pentagon, and one from Reagan National Airport. Turning Crystal City into a successful tech hub is "going to take a lot of work," reports Sandler O'Neil + Partners analyst Alexander Goldfarb. "They're outside of the District and they're in an area that historically, most people have never even considered."

Vornado ranks as Crystal City's largest commercial landlord. Company officials say they are taking on the challenge because the local area's traditional tenant base is waning due to federal defense cutbacks. In total, the REIT has nearly 900,000 square feet of Crystal City space that was vacated due to the cutbacks. Vornado is now in the process of redeveloping or leasing almost 400,000 square feet of that. Meanwhile, Crystal City is vying with growing areas considered more hip, such as D.C.'s Shaw neighborhood. Adding to the difficulty is the fact that the Washington area's technology sector is considerably smaller when with cities like New York and San Francisco.
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Apartments Pile on Amenities in New Developments
Greater Wilmington Business Journal (07/18/14) Callison, Jenny

In Wilmington, N.C., local apartment residents are finding that today's multifamily housing communities are offering a lot more than just a living room, kitchen, and a place to sleep. Through both design and amenities, an array of new and existing developments are increasingly catering to individual tastes while encouraging a sense of community. As in other metro areas, more young professionals and older adults are opting to rent instead of buy a home. Tribute Properties President Robert Bishop states, "Apartment amenities have evolved over time as developers have followed the changing interests and lifestyle patterns of apartment residents. It used to be that an apartment community would offer tennis courts and a pool table for recreation. Now you’d be hard-pressed to find a pool table, and fitness centers have become more important to residents than tennis courts." Tribute Properties, which has developed more than 7,000 apartments in North and South Carolina, still owns and manages more than 5,000 of them. Amenities at its Wilmington-area communities include so-called "bark parks" for pet exercise and fashionable meet-and-greet areas where residents can convene.

In 2012, Tribute Properties introduced a different kind of apartment community to Wilmington: the gated South Front Apartments near downtown. South Front amenities were developed to create a specific lifestyle experience, ranging from a community great room with fireplace and big screen TV to a coffee bar and theater to loaner bicycles and bike storage area. There is also a community roof garden and water park. Not surprisingly, there is a waiting list for units. Tribute Properties is now working on a similar urban redevelopment apartment community in Asheville, with plans to transform an old Chrysler dealership into a boutique apartment community. Meanwhile, a quick scan of websites of apartment properties near the University of North Carolina Wilmington campus show that students have their pick of places with swimming pools, sun decks, billiard rooms, coffee bars, and sand volleyball courts, along with on-site fitness facilities and even tanning beds.
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More on Apartment Amenities

If you want to learn more about new trends in apartment amenities, you can attend the session "Amenities: If You Build It, Will They Come?" on Friday, October 17 at 3:00 pm at IREM’s Executive Edge conference in Orlando. Register now!

NY Building Shows How Mod Design Stacks Up as Cool
Washington Post (07/20/14)

Dubbed the Stack, this new, seven-floor structure in Manhattan is being touted as the city's first multi-story, modular-built apartment building. Located near the borough's northern tip, it aims to show that while stackable apartments can save developers time and money, modular doesn't necessarily have to mean monotonous. Indeed, the apartments' interiors defy their boxy components with varied floor plans and stylish fixtures. Modular construction entails assembling a building from prefabricated sections rather than building from the group up on-site. It has been around for decades, but interest has grown recently nationwide and in New York City, in particular. The world's tallest modular building, the 32-story "B2" apartment tower, is now being erected in Brooklyn and will boast 363 rental units when completed at the massive Atlantic Yards complex. Supporters say modular construction can reduce both costs and timetables as module factories do not have to worry about bad weather. Of course, the technique does presents its own set of challenges -- such as opposition from labor groups -- and not all projects have proven speedy. The Stack's 28 apartments were formed from 59 modules. The rectangular components are each 12.5 feet wide and 50 to 60 feet long, but with different interior doorways, walls, and other attributes. The modules' interior layouts interlock like jigsaw puzzle pieces to form apartments of various sizes and configurations. Construction started in the fall of 2012.
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Tide of E-Commerce Lifts All Industrial
GlobeSt.com (07/15/14) Bubny, Paul

E-commerce is expected to continue driving the industrial property sector in many parts of the country. E-commerce retailers have greater logistics space requirements compared to traditional merchants. Such forecasters anticipate that online sales will continue rising at double-digit rates for at least the foreseeable future. According to a new Prologis report, titled "Inside the Global Supply Chain: E-commerce and a New Demand for Logistics Real Estate," both McKinsey and Forrester Research have estimated that the online share of the retail sector "will rise to the mid-teens during the coming decade, up from less than 10 percent today We see several themes emerging that will shape e-commerce and logistics real estate for the foreseeable future." Among these themes is organization. Analysts also expect to see a wave of industry growth and cannibalization. The report adds: "High top-line industry growth is a positive, but we also observe that e-commerce customers use the space differently and more intensively. They need more space as traditional retail activities are consolidated into logistics facilities."

CBRE Group, meanwhile, states that demand from both traditional and online retailers is putting a strain on the supply of available class A logistics product. Developers have ambitiously lined up build-to-suit deals and have broken ground on approximately 45.7 million square feet of speculative development. However, given the 30 million square feet of active e-commerce requirements, CBRE does not expect supply to catch up with demand anytime soon.
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Office Tenants in Grey Area When It Comes to Green Certification
Real Estate Weekly (07/17/14)

Even as more and more New York office buildings are constructed and renovated to environmentally sustainable standards, tenants and potential tenants do not really care all that much, a poll of New York City real estate executives shows. According to the spring 2014 Gotham Commercial Real Estate Monitor survey by accounting firm Marks Paneth, 83 percent of executives said tenants regard green certification as either "not too important" (33 percent), only "somewhat important" (45 percent), or "not at all important" (5 percent). Only 15 percent of respondents said they believe tenants see a building's environmental sustainability as "very important." William H. Jennings, partner-in-charge of the Real Estate Group at Marks Paneth, remarks, "It is safe to say that business concerns trump environmental concerns in the minds and calculations of those responsible for renting office space in New York City."

Nevertheless, property professionals think green certification will grow in importance to tenants. Three-fifths of executives surveyed said sustainability is a design element or amenity that office tenants will be looking for in the next three to five years. However, even more professionals (64 percent) said such things as moveable walls and open office plans will be sought-after elements in the near future. Finally, 48 percent said office tenants will be looking for outdoor spaces and 39 percent say they will want bicycle racks.
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Competition Soars as Investors Seek to Dominate the Skyline
MarketWatch (07/16/14)

It's "game on" in the intense competition for the various U.S. skylines as both local and international investors try to lock down the trophy skyscrapers that tower over American cities. "Investors across the spectrum continue to narrow their focus to the skylines of markets -- bidding for the top-tier trophy assets," said Steve Collins, international director at Jones Lang LaSalle (JLL). While demand is high for these top-line office buildings, the surge in interest from capital-rich investors is propelling rents even more than rising demand among tenants, according to JLL's U.S. Skyline Review. "Landlords are advising tenants, especially large users, to lock in leases now rather than waiting for the tides to change," said Gregory Green, international director at JLL and head of the firm's Agency Leasing. Overall, rents for skyline properties broke the $40 per square foot mark last year for the first time, up $6 per square foot from 2010, JLL reported. The firm tracked skyline investment in 43 city centers across the nation. Foreign investment reached $5.2 billion last year, making up slightly more than half of all buying activity in the primary markets. Additionally, last year's sales activity in those cities was up 43 percent over 2012 while investment activity in secondary markets was up 20 percent.
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Fairfax Updates Green Building Policy
Connection Newspapers (VA) (07/10/14) Germanos, Janelle

Fairfax County, Va., has made its green building codes more rigorous for all construction projects seeking rezoning approval. In a recent vote, the Board of Supervisors updated the 2007 green building policy to include changes made in LEED certification or equivalent programs, which will be extended to include industrial areas and proposals in high-density areas. Since 2007, over 100 developers have committed to design and construct green buildings in Fairfax. Since 2008, the Fairfax County government has built 16 green-certified buildings. The updated plan requires that higher density areas meet higher performance levels. It also urges data collection of water and energy use in certified buildings, supports green standards for renovation of existing buildings, and includes infrastructure for electric car charging stations. Some members motioned to postpone the decision on the new updates to consider cost impacts of the plan, but that motion failed.
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