Real Estate Management News - 01/28/2015

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January 28, 2015
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LEADERSHIP SPOTLIGHT
IREM Leaders Meet to Discuss Industry Trends and Future Responsibilities

IREM® HEADLINES
The Power of Uniqueness
Accessing Energy Data

INDUSTRY HEADLINES
National Apartment Vacancy Dips to 4 Percent
Answers to Questions About . . . De-Icing Sidewalks and [More]
One of the Region's Largest Office Buildings Could Get a Rooftop Deck — and With It a New Tenant
A Structural Shift in the Retail Market?
New Mall Trend: Shop Till You Drop
6 Pest Prevention Tips for Your Property
Wireless HVAC Units Aim for a Smarter Temperature
Solar-Powered Window Sensors for Smarter Buildings
Eight Sources of Building Energy Waste
Wrigley Rooftop Owners Sue Chicago Cubs Over New Outfield Signs
City to Go After "Bad Landlords" Over Smoke Detectors, Heat
BMW, Volkswagen Partner on Electric Car Charging Stations


Leadership Spotlight


IREM Leaders Meet to Discuss Industry Trends and Future Responsibilities

IREM leaders declared that the current improved business environment is having a significant positive impact on real estate management, while exploring trends at IREM’s annual strategic planning retreat.

Leading minds from throughout the industry met Jan. 16-18 in Chicago, as IREM’s 20-person executive committee came together to kickstart 2015, and share observations and give input and insight into the future of the real estate industry. Over the course of three days, leaders worked to identify key trends and issues impacting commercial real estate as well as investigate the roles and responsibilities facing property managers today and the future.

Other than the positive economic outlook, anticipated industry trends include technology, shifts in demographics, talent management and business consolidation. The group also identified regulation and legislation, urbanization, globalization and capital financing as major industry concerns.

“The leadership of IREM has shown a deep passion for the direction in which our industry is heading,” said 2015 IREM President Lori Burger, CPM. “I look forward to seeing IREM and the entire real estate community thrive while adapting to an ever-changing landscape.”

For property managers, the leaders stressed a focus on financial aptitude and the ability to think like an asset manager. Other areas addressed include:
  • Understanding, responding to and mitigating risk
  • Training and developing talent
  • Technology as it relates to improved access and service
  • Developing customer service, leadership and critical thinking skills
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IREM Headlines


The Power of Uniqueness

From the IREM Blog posting January 15, by Dawn Brent.

In a recent “TED Talk” (Where Am I? The Power of Uniqueness) Ed McMahon, ULI Senior Fellow, talks about “community distinctiveness,” how “in a world where capital is footloose, if you can’t differentiate one community from another, you will have no competitive advantage.” While Mr. McMahon talks mostly about cities when he refers to communities, he also clarifies that the same is true of buildings. He goes on to explain, “The image of a community is fundamentally important to its economic well-being… People make decisions where to live based on what the community looks like.” This started me thinking about the properties that real estate managers manage. How can property managers distinguish their properties?

Determining what will distinguish a property takes market research and analysis along with creativity and ingenuity. Let’s say I manage an office building in an up-and-coming neighborhood that attracts a younger population, but all the office suites sport beige walls and cubicles. How appealing is that, especially to Gen X and Gen Y workers who will be making up 65% of the workforce by 2020? Replacing all the cubicles is costly, but painting walls to bring in color and reconfiguring some of the space from cubicles to open office collaborative space would distinguish the office space from all the other beige mazes out there.

What about if I manage an urban residential building? With rising rents in urban areas, smaller units are a draw as long as the building is in proximity to the hustle and bustle of downtown (JPM, May/June 2014). To distinguish the building even further, offering some key amenities, such as outdoor square footage, pet perks, gathering spaces, and concierge services (JPM, March/April 2014), is going to be important in distinguishing the property further.

Globe Street recently reported how commercial developers are turning to marketing methods more traditionally used by residential developers. According to the article, “times have changed in the commercial realm enough to warrant a significant change in marketing strategy.” The marketing strategies are changing because developers are building more creative spaces with unique architecture and distinguishing features similar to residential properties, including indoor/outdoor space, balconies, lofts, kitchens and places for pets.

As these examples show, there are many ways to distinguish a property. What will you do to distinguish your property?

Continue checking the IREM Blog for other useful information.
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Accessing Energy Data

From the IREM Blog posting by Todd Feist.

IREM recently participated in a roundtable discussion as part of its ongoing collaboration with the City of Houston on the IREM Sustainable Property Challenge + Houston Green Office Challenge. About 30 professionals from different real estate sectors and property types discussed issues and opportunities in accessing energy data.

Whole-Building Aggregate Energy Data: This issue is relevant in markets in which properties are sub-metered. When tenants pay their own bills, there are privacy concerns that prevent the utilities from providing data to third parties. Often, real estate managers must seek approval from each tenant—a laborious process. Some utilities do provide this data in aggregate form so that no one is able to identify the energy consumption of a particular tenant. A real estate manager can use this data to measure the overall effect of energy efficiency projects, demonstrate lower energy costs compared to competition, or ensure the highest level of energy performance to meet green building certification requirements. They may also need the data to comply with regulatory requirements, including local benchmarking laws.

Direct sync from utility to ENERGY STAR Portfolio Manager: The ability to import utility data directly into Portfolio Manager would have two primary benefits: (1) eliminate data entry time and (2) increase data integrity. The EPA provides the ability to set up a data sync with Portfolio Manager accounts, and some utilities have implemented this tool. However, utilities must invest resources to establish the sync, so many of them have not provided this benefit for their customers.

Access to smart meter interval data: Smart meters record energy usage in detail, often down to instantaneous or 5-, 10-, and 15-minute intervals. This is powerful data. You can identify malfunctioning equipment and operational problems. You can see energy usage patterns and work to reduce load through behavioral changes. You can participate in demand response programs and reduce peak charges.

Awareness of existing utility programs: In the roundtable, we discovered that very few participants were aware of the tools that the utility already provides. It’s worth exploring your utility company’s website to see what they offer in terms of data access tools and project incentives. You should also speak to your utility representative about what they offer.

Continue checking the IREM Blog for other useful information.
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Industry Headlines


National Apartment Vacancy Dips to 4 Percent
GlobeSt.com (01/22/15) Borland, Kelsi Maree

National apartment vacancy rates dipped to a low 4.2 percent last year, reports the 2015 National Apartment Report released by Marcus & Millichap, and ended the year at 4.7 percent. These numbers far surpassed researchers' expectations for 2014, leading them to conclude that demand for multifamily housing will not be leveling off anytime soon. During last year, approximately 238,000 new apartments came online -- the most in the past 14 years. This was driven by a national pent up demand for 270,000 apartment units, which led to a 3.8 percent rental growth for those 12 months. However, the research anticipates that 210,000 new rental units will come online this year, surpassing demand for 186,000 units -- a fairly minor oversupply issue that will likely raise the vacancy rate to 4.8 percent by the end of the fourth quarter.

San Francisco leads the national apartment index with sub-5 percent vacancies, above average employment prospects, and rental growth. The City by the Bay improved from the No. 2 spot, pushing New York down a notch. The rest of the top five included San Jose, Oakland, and Denver. Filling the bottom spots on the list were Detroit, St. Louis, and Indianapolis. The Marcus & Millichap report includes an economic update, which showed that employers added 2.7 million jobs during 2014 and retail sales improved 5.8 percent. Looking ahead to the new year, the report anticipates consumer spending will continue to increase to help drive GDP growth to 3.1 percent in 2015.
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Answers to Questions About . . . De-Icing Sidewalks and [More]
New York Times (01/25/15) P. MB2 Pollak, Michael

New York City holds building owners and, in many instances, their tenants responsible for clearing and de-icing the sidewalks in front of their properties. City officials recommend rock salt -- the same substance as ordinary table salt -- for the task. Rock salt lowers the melting point of ice. It is, in fact, the New York Sanitation Department's primary weapon against street ice. However, it can work only if the temperature is just a few degrees below freezing. It indeed loses its effectiveness below 24 degrees Fahrenheit, according to Sanitation Department officials, who add calcium chloride to increase the salt's melting ability on the streets. "If the snow or ice becomes frozen so hard that it cannot be removed, the sidewalk can be strewn with ashes, sawdust, or cat litter to create traction," adds Department spokeswoman Kathy Dawkins.

Wood shavings sold for pet bedding have also proven to be quite effective in preventing slips on steps and walks. Such shavings come in compressed packages of several cubic feet and can be obtained at pet supply stores and via the Internet. In New York City, government rules mandate that snow and ice be removed from sidewalks within four hours after the snow has stopped falling, or by 11 a.m. if the snow stopped falling after 9 p.m. the evening before. Furthermore, snow should not be thrown into the street or cover crosswalks. Those removing snow are urged to clear a path three to four feet wide. Corner properties, meanwhile, are called on to clear a path to the crosswalk, including all pedestrian ramps. Failure to comply can result in a $100 fine.
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One of the Region's Largest Office Buildings Could Get a Rooftop Deck — and With It a New Tenant
Washington Business Journal (01/21/15) Neibauer, Michael

For most tenants, an office building roof deck is a desirable, but not required amenity. For Monday Properties -- and the Washington, D.C., suburb of Rosslyn, Va., at large -- one proposed deck may be a necessity. Arlington County officials have signed off on a site plan amendment for the construction of a 3,070-square-foot roof deck atop 1000 Wilson Blvd., one of two office towers that serve as local landmarks. Monday Properties owns both. The request entails layering a portion of a largely mechanical rooftop with wood tiling; constructing a food preparation area, restrooms, outdoor bar, and seating; and surrounding it all with a 2.5-foot tall glass railing enclosure. The project is meant to keep a valuable tenant -- Sands Capital Management -- not only in the Monday Properties building, but in the county, as well.

Mary-Claire Burick, president of the Rosslyn Business Improvement District (BID), recently expressed her organization's support for the roof deck in a letter. "Sands Capital's business has grown extraordinarily over the course of the past decade, and so too has its need for office space," she wrote. "The BID believes that this is exactly the type of commercial tenant that Rosslyn needs, and the proposed rooftop deck is a necessary, yet easy amenity to supply for preventing this vital business from relocating out of Rosslyn and ultimately, Arlington." She went on to state that the BID encourages the use of rooftops as an alternative to and enhancement of over-burdened public spaces. "On a more general level, the BID believes that rooftop decks and other enhancements to the amenities of existing office buildings helps make Rosslyn a more competitive and attractive destination in the commercial office market," she concluded. Arlington planners, meanwhile, say the space is meant only as an amenity for office tenants. Consequently, it won't generate additional parking demand.
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A Structural Shift in the Retail Market?
National Real Estate Investor (01/22/15) Doremus, Brad; Calanog, Victor

The national vacancy rate for neighborhood and community centers fell by 10 basis points in the fourth quarter to 10.2 percent, a slight improvement from the July-through-September period when vacancies remained flat. For the full-year 2014, the vacancy rate declined by just 20 basis points, while new construction remained limited with completions totaling just 1.8 million square feet. Analysts report that fundamentals are simply too weak to create much incentive for new construction. While the country is still a number of years away from characterizing the retail real estate environment as "strong," 2015 could be a year of transition to a healthier market due to better employment numbers, lower energy prices, and a projected increase in consumers' disposable income. But the continued blurring of the lines between "bricks" and "clicks" will continue to cause disruption in the retail sector, rendering some traditional neighborhood and community centers obsolete.

Retail data increasingly shows that a structural shift is occurring in the property type. A proliferation of relatively new retail sub-types has occurred over the past two decades. The rise of lifestyle centers, town centers, power centers, and outlet centers is undoubtedly siphoning demand away from neighborhood and community centers and even some weaker malls. For instance, the vacancy rate for neighborhood and community shopping centers has barely budged over the past few years as consumer spending has rebounded. At the same time, the vacancy rates for Class A shopping malls are at historically low levels, while vacancy for power centers is nearing pre-recession levels. The downturn has likely exacerbated the trend away from neighborhood and community centers.
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New Mall Trend: Shop Till You Drop
Victoria Advocate (Texas) (01/21/15) Rodrigo, Jessica

Some shopping malls are taking an extra step in ensuring shoppers spend more time in stores and less time sitting around by removing benches throughout their centers. Removing seating from malls is a trend especially for larger malls, reports Burt Flickinger, managing director with Strategic Retail Group. He said the tactic is intended to create a nonstop stream of shoppers. However, he also noted that aging populations need sufficient seating to rest whether they are mall walking or shopping. Younger individuals, meanwhile, often want to sit down to check social media. In this regard, Flickinger cautions that the trend of removing benches could have the opposite effect of causing significant numbers of shoppers to cut their mall visits shorter rather than staying longer and spending more.

Hull Property Group, owner of the Victoria Mall in Canada, is one of the latest operators to remove several benches throughout its mall. "Every decision is made with the best of intentions," remarks Coles Doyle, marketing director for Hull Property Group. "Everything that we do -- whether it is replacing the carpet, upgrading the lighting, or entrances -- is all with the best of intentions to improve the experience for the shoppers." Victoria Mall now offers just six total benches. But there are three larger seating areas: near the food court, near a Great American Cookie Co. location, and close to Popcorn Plus. "We do manage multiple malls and have taken this approach," Doyle noted. "We feel that a shopping venue that has an open corridor with bright lighting and fresh paint encourages people to come back to the mall and shop."
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6 Pest Prevention Tips for Your Property
Property Management Insider (01/22/15) Blackwell, Tim

For apartment owners and managers, it's really never too early to be thinking about pest prevention methods. Ants, roaches, and other pests are not only a pain for multifamily housing communities, some can even be transmitters for disease. According to the Center for Disease Control, rodents, bed bugs, and mosquitoes are among the major pests that can appear during the warmer months of the year and terrorize apartment residents. Waiting until the last minute to take proper precautions could leave owners and operators with a pest nightmare.

Owners and operators can safeguard against pest infestations by following six basic tips. First, remove any and all unnecessary food and water sources. Second, clear the property's gutters and make sure to dump all standing water. Third, be sure to seal cracks around doors and windows. A fourth tip is to install windows and doors where possible. Fifth, keep indoor and outdoor trash cans sealed. Finally, enlist professional landscapers to keep the property's tree branches trimmed. Any owner who does develop a pest problem should immediately contact a qualified pest control professional who can offer the best solution for the property.
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Wireless HVAC Units Aim for a Smarter Temperature
Multifamily Executive (01/17/15) McNulty, Laura

A partnership between Energy Technology Savings (ETS), Lowe's, and Electrolux could have major implications for multifamily housing energy usage. The firms are launching a pilot program that calls for the installation of wireless packaged terminal air controller (PTAC) units at high-rise apartment buildings in New Jersey. By connecting the PTAC units to wireless networks, users will be able to control the devices from anywhere, reports ETS Chief Executive Jeff Hendler. The solution integrates apartments into the Lowe's Iris Smart Home system, which enables wireless control and links all of the PTACs located in one area to a central thermostat base. Sensors are also placed throughout the building to calibrate a room's "real feel" and verify how well the HVAC units are working. Through the pilot program, ETS is delivering the new units to five buildings. After the program runs for six to eight months to collect and evaluate data on heating and air conditioning usage, the team will conduct interviews with apartment managers and their tenants to obtain feedback that will lead to full-scale system production.
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Solar-Powered Window Sensors for Smarter Buildings
EcoGeek.org (01/22/15) Proefrock, Philip

Sensors are the next step on the road to developing smarter buildings. A new, very-low power device has been developed by the Fraunhofer Institute to allow information about windows to be transmitted to a control system for a building without the need for extra building wiring or power supply. The solar-powered sensors are small enough to fit inside the gap between the two panes of a typical double-pane window. They are designed to detect when a window is opened or closed and can transmit that information wirelessly to a building management system controlling the interior and exterior. Used with motorized operators for the windows, this allows windows to be opened when conditions permit and closed otherwise.
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Eight Sources of Building Energy Waste
Buildings (01/21/15)

While it is clear that occupants' actions have a significant effect on building energy bills, it is less clear what factors can lead to building energy waste. Buildings magazine outlines eight sources of building waste, including everything from blocked vents to HVAC controls. Blocked vents and computer servers, in particular, offer big opportunities to cut down on power consumption. Meanwhile, turning off the lights in areas that are rarely used and installing advanced controls for HVAC systems can also cut down on costs. According to Buildings, equipment that is not functioning appropriately can also be a large drain on a building's energy consumption, as well as computers that are working around the clock. Turning off vending machine refrigeration at night and on weekends can be good ideas as long as the compressor continues to cycle. Finally, the publication advises that windows and skylights be kept as clean as possible to keep occupants from turning on the lights to compensate for dirty glass.
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Wrigley Rooftop Owners Sue Chicago Cubs Over New Outfield Signs
Wall Street Journal (01/21/15) Kesling, Ryan

In Chicago, the owners of two of Wrigley Field's famous rooftop clubs -- private businesses where fans watch Cubs games from across the street -- last week sued the Major League ball club and its owners in federal court, claiming plans to erect new signs in the outfield would harm their businesses. According to the suit, the building owners and managers are seeking an injunction against the team and its owner -- a family group led by Thomas Ricketts -- to prevent sign construction. The Cubs have long battled owners and operators of several buildings across from the historic park's outfield who, for decades, have permitted fans to sit on their roofs to view games. Built in 1914 and nestled in the middle of a neighborhood near Lake Michigan, the ballpark has always been surrounded by buildings tall enough to look onto whatever is happening inside the park. Fans have long taken to the rooftops to watch games for free or for a modest charge from building owners.

In recent years, though, some of the "rooftops" have been charging upwards of $100 a more to allow fans to sit on custom bleachers or mingle on swanky, renovated rooftops sipping cocktails and eating upscale bar food while games are played on the field. A decade ago, the rooftops reached a collective deal to give the Cubs 17 percent of their revenues if the team agreed not to block the rooftops' views. The Ricketts family purchased the Cubs for $845 million in 2009. Four years later, the Ricketts proposed a $300 million stadium renovation that would include erecting new billboards in the outfield. More recently, the Ricketts family bought some of the buildings with rooftop seating. This past week's lawsuit charges the Ricketts with attempting to practice a monopoly and violating the Sherman Antitrust Act. "The Cubs will vigorously contest this lawsuit and move forward confidently with the Wrigley Field Expansion construction project, which is well under way," stated Andrew Kassof, the Cubs' lawyer. “Wrigley Field's expansion and renovation is in the best interest of the team, its fans, Major League Baseball, and the City of Chicago."
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City to Go After "Bad Landlords" Over Smoke Detectors, Heat
Chicago Tribune (01/20/15) Dardick, Hal

This past week, a Chicago City Council panel endorsed a measure to make doing business harder for apartment building owners who do not maintain smoke detectors, provide adequate heat, or comply with other safety requirements in their buildings. The Budget and Zoning committees recommended approval of the ordinance, proposed by Mayor Rahm Emanual, as his administration prepares to publish a list of "bad landlords" who continue to fail to provide basic services and have been found liable for two or more violations within a two-year period. City Building Commissioner Felicia Davis said the new ordinance is partly a response to the deaths of four children back in September during a fire in a Far South Side apartment building that did not have working smoke and carbon monoxide detectors in key locations.

Any building at least 25 percent owned by someone labeled as a "building code scofflaw," and the owner would not be permitted to acquire city land, obtain zoning changes, get business licenses or secure any building permits not related to addressing the problems for which they were cited. They would also not be allowed to receive any city financial assistance. Davis said that the worst cases could be taken to court for forfeiture, and some landlords could actually lose their properties to third parties. In 2014, Chicago officials issued 3,362 citations for lack of working smoke and carbon monoxide detectors and another 1,021 for insufficient heat. Other common violations were for dangerous and hazardous porches, rodent and insect infestations, and lack of hot water.
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BMW, Volkswagen Partner on Electric Car Charging Stations
PCMag.com (01/22/15) Moscaritolo, Angela

BMW and Volkswagen is teaming up with ChargePoint to build nearly 100 electric vehicle charging stations along some of the most heavily traveled roads of the East and West Coasts. The companies are planning to build the stations at such convenient locations as shopping centers and restaurants. They will be located along Interstate 95 on the East Coast from Boston to Washington, D.C., and on the West Coast in Portland, San Francisco, Los Angeles, and San Diego, spaced no more than 50 miles apart. The first 100 charging stations are expected to be available by the end of December. ChargePoint ranks as North America's largest electric vehicle charging network, with over 20,000 charging spots.
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