Real Estate Management News - 03/25/2015

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March 25, 2015
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IREM® HEADLINES
Still Time to Register for the IREM Leadership and Legislative Summit
Asia Leads International Commercial Investment in U.S. and Canada
IREM Seeks to Commemorate Excellence in Real Estate Management
Marketing and Leasing Courses Available

INDUSTRY HEADLINES
Retailers Are Wary of Possible Mall Deal
Environmental Report Details Heat’s Costly Escape Through Elevator Shafts
Commercial, Multifamily Mortgage Debt Increased to $2.64 Trillion
Garage Ventilation System Achieves up to 95% Peak Demand Energy Savings
Five Pool Maintenance Tips to Help you Pass Inspection
Disney Vanquishes Greenhouse Gas Emissions
Bangor Eyes Mandatory Health, Safety Inspections of Nearly 6,000 Apartments
New Technology Measures IEQ
Heat Waves Expected to Increase
As Apartment Rents Rise, Landlords Turn to Software to Set Prices
State Bill Would Stop Phoenix From Requiring Energy Use Disclosures From Building Owners
Rufrano Named CEO at ARCP


 
 

IREM Headlines


Still Time to Register for the IREM Leadership and Legislative Summit

It’s not too late. Unite with hundreds of industry colleagues as IREM heads to Washington for the annual Leadership and Legislative Summit, April 11-15. Join property managers from across the country as we advance on our nation’s capitol to talk shop, learn from one-of-a kind education sessions and hear from industry leaders on the future of real estate property management.

We’ve gone all out for this year’s Summit with featured sessions that will have everybody talking, including:
  • Up in Smoke? Marijuana Use in Leased Property
  • Calm in the Storm: Managers Cope with Crises
  • The Political Climate and Federal Policy Making: What’s the Impact on the Property Management Industry
And, you won’t want to miss featured speakers Mike McKee, Chief Executive Officer, Bentall Kennedy U.S. and Joe Stettinius, Chief Executive, DTZ Americas at the “Live!” with Industry Leaders” session to discuss current trends, the state of the industry and their global perspectives.

Don’t let this event pass you by. Register today!
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Asia Leads International Commercial Investment in U.S. and Canada

International investment in commercial real estate is dominated by Asian interests in both Canada and the U.S., according to a new survey conducted by the Richard J. Rosenthal Center for Real Estate Studies at REALTOR® University in collaboration with IREM, CCIM, and the National Association of Realtors®.

The survey found that 47 percent of Canadian respondents and 41 percent of those in the U.S. indicated that their international clients were from Asian countries.

According to the survey, 45 percent of respondents who practice commercial real estate in Canada noted an increase in international clients. Similarly in the U.S., more than a third of responders, 36 percent, observed an increase in international investment.

The survey found that in the U.S., 22.5 percent of international clients came from Europe, 21 percent from Latin America and 20 percent from the Middle East. In Canada, 18 percent of international commercial real estate investment came from the Middle East, 17 percent from Europe and 5 percent from Latin America. It is important to note that the heaviest cross-border investment in commercial real estate continues to be between the U.S. and Canada.

International investors brought significant capital into North America, nearly $13 billion in the latter half of 2014. Investors from Asia invested $5.7 billion in real estate, $4.8 billion came from Europe, $1 billion came from Oceania and $390 million came from Latin American investors.

The survey also found a changing demand for office space in both the U.S, and Canada. Commercial clients are seeking more flexible office spaces, reducing the amount of personal space for workers and increasing the amount of communal space; 40 percent of Canadian respondents and 45 percent in the U.S. said their clients are looking for more open space in their offices.

The location of offices spaces is also seeing a shift. In Canada, a majority of investors is looking at property in metropolitan areas with populations of more than 1 million. In the U.S., however, investors have begun moving away from larger markets into secondary and tertiary markets; more than one-third of U.S. respondents reported investors are interested in markets with populations less than 750,000.

Highlights from the report are available at
www.realtoru.com/real-estate-studies/current-research-programs/internationa
l-commercial-real-estate-investment
.

Read more about IREM’s International Programs
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IREM Seeks to Commemorate Excellence in Real Estate Management

No one understands better than IREM the value of innovation and that recognizing it is important. So for the first time ever, IREM will showcase real estate management companies and individual practitioners for their innovative, leading-edge business practices and initiatives. At the first annual REME Awards for Real Estate Management Excellence, real estate management companies and individuals from all across our industry will convene to shine a light on the best of the best.

As real estate professionals, your efforts to improve our community often go unnoticed. To honor the work of corporations that go above the call of duty, IREM will be presenting the Corporate Responsibility Award at this year’s REME Award ceremony. Presented at the IREM Fall Leadership Conference this October, the Corporate Responsibility Award will recognize corporate contributions to the community that enhance the reputation of the real estate management industry.

Submit your story for a chance to have your company shine.
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Marketing and Leasing Courses Available

How do your marketing efforts measure up? Marketing is the food you need to nourish your business – don’t let it fall by the wayside. Master the art of marketing and leasing with help from IREM. Through exploration into marketing strategies and techniques, this course will guide you to discover the most effective way to position your property and help you attract and retain new tenants. Dive deep into important concepts like:
  • Identifying characteristics and location factors that affect the target market of a property
  • Conducting a comparison grid analysis to establish average market rent
  • Recognizing the key elements of a marketing plan and their purpose
From Multifamily Properties, to Office Buildings or Retail Properties, IREM has a Marketing and Leasing course to suit your needs. Classroom and convenient self-paced online offerings are available. Register now!
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Industry Headlines


Retailers Are Wary of Possible Mall Deal
Wall Street Journal (03/20/15) Kapner, Suzanne

More and more retailers are expressing concern that Simon Property Group Inc. would gain too much clout over many of the country's top shopping malls if it succeeds in purchasing rival Macerich Co. Simon already ranks as America's biggest mall operator. If it acquires No. 3 player Macerich, it would control roughly 33 percent of all A-ranked shopping malls in the U.S., states Green Street Advisors. Both retail and real-estate executives contend that Simon would then have an unprecedented amount of leverage to hike rents and influence future store openings and closings.

Among those most concerned is Jim Bieri, a principal with the Stokas Bieri consulting firm. He states, "Negotiations are difficult for retailers when one landlord owns all the space. If you control all the great real estate, then you can dictate the terms." Simon spokesman Hugh Burns counters that a combined Simon and Macerich would control less than 3.1 percent of the 7.5 billion total square feet of U.S. retail shopping center space, leaving retailers a plethora of alternatives to Simon's malls. On March 20, Simon made what it described as its best and final offer of $95.50 a share for Macerich, valuing the company at $16.8 billion.
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Environmental Report Details Heat’s Costly Escape Through Elevator Shafts
New York Times (03/17/15) Foderaro, Lisa W.

During the cold winter months, heat is continuously being lost through leaks in buildings, especially out of the tops of elevator shafts. "It's hard to open doors in winter because there's a negative pressure," said Russell Unger, executive director of Urban Green Council, the New York chapter of the United States Green Building Council. The panel recently released a study about preventing heat loss in city buildings. When a door is opened, cold air rushes in and must be heated. According to the study, the amount of warm air lost in winter through elevator shafts of New York's 4,000 multifamily buildings that are at least 10 stories tall could fill the equivalent of 29,000 Empire State Buildings. The Urban Green Council said that retrofitting buildings, at a cost of $500 to $15,000 per building, would save owners across the city at least $11 million a year in energy costs and would cut carbon dioxide emissions by 30,000 metric tons. Council members further calculated that a typical 15-story building could achieve $3,000 to $6,500 a year in energy savings just by sealing the vents in elevator shafts.
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Commercial, Multifamily Mortgage Debt Increased to $2.64 Trillion
National Mortgage News (03/18/15) Passy, Jacob

The amount of commercial and multifamily mortgage debt outstanding grew during the last three months of 2014 at the highest rate since 2007, figures released by the Mortgage Bankers Association (MBA) show. MBA researchers show that total commercial/multifamily debt outstanding increased by $48.9 billion from the previous quarter, or 1.9 percent, to $2.64 trillion. Of that total, multifamily mortgage debt outstanding made up $964 billion, a $23.7 billion increase from the July-through-September period. Rising property values and low interest rates contributed to the growth seen, according to MBA vice president of commercial real estate research Jamie Woodwell. Meanwhile, banks, government-sponsored enterprises, and life insurance firms increased their books of business by more than 2 percent on a quarter-over-quarter basis. As in the three-month period ended Sept. 30, commercial banks possessed the biggest share of commercial/multifamily mortgages, holding 37 percent of the total. The MBA notes that commercial mortgage-backed securities, collateralized debt obligations, and other asset-backed securities again followed, with their share falling slightly to 20 percent of the total.
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Garage Ventilation System Achieves up to 95% Peak Demand Energy Savings
Energy Manager Today (03/18/15) Hardesty, Linda

Nagle Energy Solutions reports that its digital demand-control ventilation control system for commercial garages is now available for building automation controls resellers, controls contractors, mechanical contractors, energy management system consultants, and electrical contractors throughout North America. Nagle Energy's system can achieve energy savings north of 95 percent off peak kWh demand for enclosed, commercial garages while leaving the garage fans running. The system integrates a web server that enables building managers to conduct system status checks and adjust operational parameters from their desktop or laptop computers. The controllers are bundled with Danfoss variable frequency drives, Nagle Energy gas sensors, and alarm components, all of which are synced to a proprietary, smart-control logic that detects and measures vehicle fumes and modulates fan speeds to prevent CO levels from exceeding predetermined set points for extended periods of time.
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Five Pool Maintenance Tips to Help you Pass Inspection
Property Management Insider (03/16/15) Blackwell, Tim

At least once every year, apartment communities should have all swimming pools inspected to ensure compliance with the appropriate federal, state, and local requirements. According to the latest Centers for Disease Control data, about 12 percent of pools nationwide that were inspected in 2010 were shut down because of serious violations. Most of these failed inspections resulted from inferior disinfectant levels due to sub-standard chemistry levels that can cause recreational water illnesses. Johnny Kammerer, account manager at Accent Pools, said apartment owners and managers can help themselves by designating a maintenance team member as a Certified Pool/Spa Operator, as set forth by the National Swimming Pool Foundation.

Such operators should check for five things when determining if a pool or spa is fit for use. The first is proper water chemistry. This includes testing chlorine, alkalinity, calcium, P.H., cyanuric and phosphorous levels, as well as detecting visible algae and determining water clarity. Second, pool and spa equipment conditions should be adequately assessed. The filter, flow meters, valves, and vacuum and pressure gauges are among hardware that needs to be checked. Third, pool and spa safety. Pools and spas have certain safety features in common, ranging from adequate handrails to working drains to properly functioning returns. Furthermore, all drain covers should be in place, and none should be in disrepair or missing parts. It is also good to have an emergency phone or call device located nearby. Fourth, general safety around the pool should be maintained. Appropriate safety equipment ranges from ring buoys to reaching poles to depth markers for swimmers. Finally, there should be proper signage that includes lifeguard status, pool and spa bather capacities, rules, shutoff locations, phone location, and whether or not diving is permitted.
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Disney Vanquishes Greenhouse Gas Emissions
Triple Pundit (03/23/15) Cheeseman, Gina-Marie

The Walt Disney Co. continues to make strides in reducing its greenhouse gas emissions. The media and entertainment giant's 2014 Citizenship Performance Summary shows that it has reduced its net emissions by 31 percent from 2012 levels. Its primary objective is to reduce net emissions by 50 percent by 2020, and the company is more than on pace to meet that target. One of the ways Disney continues to reduce its GHG emissions is implementing energy efficiency projects. Some of the key projects the company launched last year in this regard include technology improvements and operational process improvements, including the use of fuel cells. For instance, Disney is in the process of installing a fuel cell at its Burbank Studio Lot campus in Southern California.

Building to achieve LEED certification is another way the company is managing to uses less energy. The new, 194,000-square-foot Digital Center on the ESPN campus, for example, achieved LEED certification for energy reductions and operational efficiencies. It uses high efficiency condensing boilers and high thermal property glazing to keep it warmer in the winter and cooler in the summer. Other examples of how Disney properties reduce waste include: Walt Disney World Resort in Florida has become the first business customer of a local business, Harvest Power Orlando, which converts organic waste into biogas and natural fertilizers; Hong Kong Disneyland collaborates with Foodlink Foundation in a food donation program that turns extra ingredients into meals for people in need; and there is the food waste collection in the restaurants and employee cafeteria of Disneyland Paris. The waste is collected and turned into energy or organic soil amendments via bio-methanization.
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Bangor Eyes Mandatory Health, Safety Inspections of Nearly 6,000 Apartments
Bangor Daily News (Maine) (03/13/15) Belanger, Evan

Routine health and safety inspections could be in store for nearly 6,000 apartment units in Bangor, Maine, that are currently only inspected in response to complaints from residents or building owners. City employees recently said they will recommend during the City Council's Government Operations Committee that the city create a new program to regularly inspect apartments for health and safety code violations. Work on the proposal predates a deadly apartment fire that killed six people in Portland, Maine, last November. According to Community and Economic Development Director Tanya Emery, a combined team of firefighters, code enforcement officers, and fire inspectors would conduct the inspections, checking for things like working smoke detectors, adequate means of escape in the event of a fire, suitable plumbing and heat, and safe electrical systems. As proposed, the inspections would only apply to apartment buildings with three or more units. Due to the limited scale of the program, city officials estimate that it would take approximately three years to inspect all eligible apartments. The inspection program would continue from there on a rotation.
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New Technology Measures IEQ
CCNews (03/18/15)

A new technology developed by the University of Sydney will soon be available to facility owners and operators to help them more accurately measure Indoor Environment Quality (IEQ) in buildings for the purposes of achieving healthier and more productive workplaces. The technology known as SAMBA monitors such factors as thermal comfort, indoor air quality, humidity, air speed, light levels, acoustics, and carbon dioxide concentrations through a suite of small sensors placed throughout buildings. "SAMBA technology will provide comprehensive IEQ analysis to building and facility managers enabling them to better understand the building environment and make changes to create healthier, more comfortable workplaces, ultimately leading to happier, more productive tenants," said Professor Richard de Dear, SAMBA creator and comfort expert.

The University of Sydney team will also work with building and facility managers, training them to interpret the IEQ Analytics dashboard, which gets its real-time data wirelessly from the various sensors. With testing to date indicating the accuracy and reliability of the sensors that meets or exceeds industry standards, the new IEQ measurement technology is set to enable more accurate IEQ ratings and benchmarking within the property industry. Ashak Nathwani, who will be demonstrating SAMBA at this week's Total Facilities event in Australia, notes that previous methods of assessing IEQ either provided a very small snapshot of indoor environmental conditions or were cost-prohibitive. "Even the more expensive, scientific models are conducted at a single point in time and at only a couple of specific locations, providing limited data to the building managers," he noted. "SAMBA changes this by placing the devices at various points throughout a building (as close as possible to occupants) and continuously monitoring, allowing for real-time and in-depth reporting for building owners and facility managers."
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Heat Waves Expected to Increase
Buildings (03/20/15)

The latest research shows that the decline in summer storm activity over the past few years could have a major impact on weather patterns in the United States, specifically leading to an increase in heat waves. Building owner and operators need to be prepared, as a result. The researchers from the Potsdam Institute for Climate Impact Research (PIK) recently found a 10 percent reduction in average storm activity and the amount of turbulences known as synoptic eddies in the air since 1979. In the years to come, researchers expect heat events to increase due to the reduction in summer air circulation with the intensity of winds from the jet stream and other weather systems having lessened.

"The Weakening Summer Circulation in the Northern Hemisphere Mid-Latitudes," published in Science magazine, points to rapid warming in the Arctic with the burning of fossil fuels being the major driver of decreased circulation. As the polar region's ice begins to melt, less sunlight is reflected from the sea surface than was reflected by the ice. This produces warmer waters in the ocean. This change results in a smaller temperature differential between the Northern hemisphere and the cold polar region, reducing storm activity and decreasing air motion.
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As Apartment Rents Rise, Landlords Turn to Software to Set Prices
Orange County Register (CA) (03/15/15) Collins, Jeff

Green Street Advisors recently issued a report showing the 2015 outlook to be extremely rose for Orange County, Calif., apartment owners, with rental income projected to rise 5.7 percent over last year. With the county's vacancy rate hovering around 5 percent, apartment communities throughout are at or nearing 100 percent occupancy. While developers are doing their best to increase the number of apartments, construction is not keeping up with demand. This, in turn, is leading to rising rents throughout the county. Surveys by apartment tracker RealFacts show the average asking rent for vacant, big-complex apartments has risen steadily for four straight years, climbing 21 percent or $305 a month. Local apartment owners and operators note that the rent hikes are far less arbitrary and far more complex than people realize.

More and more are turning to the same type of software that hotels and airlines use to set prices. As with the price of a hotel room or an airline ticket, lease rates for a single unit can change daily depending on such factors as vacancies, the number of rental units coming on the market, and residents' planned move-in and move-out dates. "It takes the emotion out of setting rents," remarks Scott Morrison, a senior vice president for Legacy Partners Residential Inc. "We're getting 3 percent more because of [our] product." RealPage Inc. and The Rainmaker Group are among the firms offering "revenue management" or "dynamic pricing," as the software is called, for just over a decade now. Their clientele tends to be large apartment owners, REITs, and other institutional investors. Now, smaller owners are beginning to use these products. Keith Dunkin of RealPage estimates that about 35 percent of landlords with 50 or more units are using revenue management software. Nevertheless, some apartment owners prefer to save money on software subscription fees and monitor markets on their own. "For us, each building is personal," concluded Tim Gorman of apartment manager WR Gorman and Associates. "We have to be able to look our people in the eye and say, 'This is why you’re getting a rent increase.'"
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State Bill Would Stop Phoenix From Requiring Energy Use Disclosures From Building Owners
Phoenix Business Journal (03/17/15) Sunnucks, Mike

A bill making it way through the Arizona Legislature would block Phoenix and other cities from requiring building owners to disclose their energy use. Senate Bill 1241, which was previously related to the state's Medicaid system, has been changed to specifically prohibit cities from requiring energy use disclosures from commercial and apartment landlords. Phoenix is contemplating an energy disclosure ordinance modeled after several other large cities around the country. The rules would require approximately 1,500 commercial buildings with more than 50,000 square feet to disclose. State Rep. Warren Peterson (R-Gilbert) introduced the proposed law to block the mandate.
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Rufrano Named CEO at ARCP
CoStar Group (03/12/15) Drummer, Randyl

American Realty Capital Properties (ARCP) has appointed ex-Cushman & Wakefield Chief Executive Glenn J. Rufrano to serve as its new CEO, effective April 1. The 30-year commercial real estate industry veteran succeeds William Stanley, who has served as the REIT's interim CEO since December. In addition to his time at Cushman & Wakefield, Rufrano has helmed the former New Plan Excel Realty Trust and Centro Global Property Group. He was most recently chairman and CEO of O'Connor Capital Partners, a property investment firm specializing in retail and multifamily buildings. ARCP pursued a very aggressive growth strategy under former Executive Chairman Nicholas Schorsch before his resignation amid accounting irregularities. The firm owns 4,400 mostly single-tenant, net lease freestanding commercial properties, totaling more than 99 million square feet of space. Rufrano remarks, "I look forward to meeting the management team, thoroughly analyzing the assets, and reviewing the details of the balance sheet. . . . Once complete, we will organize a strategic plan."
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