Real Estate Management News - 05/06/2015

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May 6, 2015
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LEADERSHIP SPOTLIGHT
Industry Leaders Speak Out

IREM® HEADLINES
Pool Safety – Maintenance and Risk Management
Nuisance Wildlife: When Wild Animals Arrive on Your Property
IREM Membership: A Career-Long Partnership

INDUSTRY HEADLINES
New York Plan to Save Energy May Mean a Dimmer Skyline
Making the Most of Social Media
Magnifying Vibrations in Bridges and Buildings
U.S. Office Construction Picking Up Momentum
Corporate Real Estate's Shifting Landscape
Purchasing 101: How to Standardize Procurement to Benefit the Bottom Line
Commercial Property: Should You Own or Lease?
Property Owners Oppose Proposal That Would Require Reports of Energy Consumption
CBDs: The New Low-Barrier-to-Entry Multifamily Markets
Survey Shows LEED Impacts Building ROI
New York State to Turn Off Lights to Make It Easier for Migrating Birds
Green Building Should Start With a Green Supply Chain


 

Leadership Spotlight


Industry Leaders Speak Out

Get unique insights and analysis from two industry icons, direct from the source. Michael McKee, CEO of Bentall Kennedy US, and Joe Stettinius, Chief Executive of DTZ, spoke in-depth on real estate trends, the state of the real estate industry, and their global perspectives at the IREM Leadership and Legislative Summit in Washington, DC.

Now, hear these leaders’ perspectives for yourself with a series of short videos taken directly from this landmark session.

McKee and Stettinius expound on such subjects as:

• Current economic conditions
• The risk of investment hesitation
• Millennial lifestyles
• Choosing a property management company
• The easing of standards
• Cap rate compression

…and much more.
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IREM Headlines


Pool Safety – Maintenance and Risk Management

Summer is finally coming, which brings its own set of challenges for property managers. Swimming pools can present a major liability risk exposure for property managers and owners.

Daily and weekly maintenance of a swimming pool and surrounding areas is not usually a difficult task, provided the staff clearly understands and accomplishes the routine duties of cleaning, water testing, and ensuring safety.

However, the property manager should consult with pool professionals for repairs to equipment and pools where hazards may be present. Pumps, underwater lights, and certain heaters carry live voltage, and that hazard can be fatal. Additionally, pool heaters emit potentially fatal carbon monoxide. Repairs to gas heaters can be dangerously explosive.

Most accidents involving drowning or severe injury occur to children under five years of age who are unsupervised, cannot swim, and fall into a pool or pool cover with water on top of it. The second largest number of accidents involves teenagers, primarily males. In a number of cases, alcohol is involved.

The steps for maintaining safe pools are worth reviewing with staff, including the need for onsite inspections. Most municipalities have laws that include rules requiring inspections.

Some of the more common items that can lower liability risks include:

• Maintaining permanent barriers to pool entry (check local ordinances)
• Requiring adult supervision when used by children
• Prohibiting alcohol in the pool area
• Maintaining proper rescue equipment (e.g., ring buoys, reaching poles, first aid kits)
• Removing pool covers completely before allowing use
• Keeping emergency telephone numbers near the pool
• Ensuring there is no missing signage or warning information
• Storing (and using) pool chemicals safely, and away from children and pets
• Repairing any broken rails or pool ladders
• Safety covers over pool drains

There is a critical connection between maintenance and risk management. Maintaining a property in good condition is the first step towards managing risk associated with real estate management.

To learn more, check out IREM’s new book Maintenance and Risk Management for the Real Estate Manager.
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Nuisance Wildlife: When Wild Animals Arrive on Your Property

From the April 28, 2015 IREM Blog posting by Mindy Wallis

Bats in the belfry, bees in the eaves, or geese on the lawn? If you are having a problem with nuisance wildlife on your property, be careful how you handle it - what is a nuisance to you may be a protected species to the government. Before taking any wildlife control activities, find out the applicable federal, state, and local laws. Most states have a Department of Natural Resources or other agency website which describes recommended practices for dealing with nuisance wildlife on private property. In general, assume that you are prohibited from disturbing an occupied nest or den, or directly harming an animal.

Tactics you can use for dealing with wildlife on private property include:

Exclusion - Keeping the animal off the property is the most effective and permanent ways to control the problem. With larger animals, it may require fencing, netting, or spikes. With insects, birds or small mammals, it may be matter of determining how they are entering the property and closing gaps with caulk, hardware cloth, or other materials.

Habitat modification - Making small changes on the property may sufficiently alter an animal’s habitat to make undesirable. Such practices may include changing landscaping materials or practices, securing garbage, and even changing the slope of drainage ponds to make them less appealing to geese.

Repellents - Repellents deter wildlife habitation and feeding. Objectionable-tasting coatings or odor repellents may deter wildlife from feeding on plants. Some repellents contain toxic chemicals and may require permits and/or licenses for use.

Frightening - Frightening discourages habitation by causing the animal to leave on its own. Devices include bells, whistles, horns, clappers, recordings, scarecrows, and sonic emitters, or even other animals. Many pest control companies now rely on dogs or birds of prey to frighten geese or pigeons off a property.

Trapping - Glue traps and boards can be used to trap small mammals and snakes. Cage or box traps may be used for larger animals and allow for the safe release of the animal elsewhere, however, many species cannot be trapped without a permit and relocation is often illegal.

Of course, hiring a licensed pest professional will ensure that you are not violating any laws and that your residents, tenants, visitors and staff remain safe. And whatever the situation, take care when approaching or confronting wild animals, or dealing with toxic substances.

For more detailed information on dealing with specific wildlife issues, check out our Nuisance Wildlife SlideShare contained in the full IREM Blog posting!
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IREM Membership: A Career-Long Partnership

If you’re not an IREM Member, join today to begin a long, lucrative partnership, featuring exclusive member benefits, like:
  • A subscription to the Journal of Property Management, offering comprehensive industry coverage, features and trends
  • 20 percent discount on world-renowned IREM courses and training – a benefit that means your membership can more than pay for itself
  • Free downloads of leadership white papers to boost your skills
  • Local chapter events, so you can connect and network in your area
  • 50 percent off Income/Expense Analysis Products
  • Free access to webinars for timely, convenient learning
…and much more.

An Associate membership is now just $165 for the remainder of 2015. That’s an investment in your career and your bottom line that’s sure to pay dividends for years to come.

If you want to be linked to a community of forward thinkers who care deeply about property management, and want to leave their mark on the world, then there’s never been a better time. Join as an Associate member today. Or, consider pursuing an IREM credential to distinguish yourself in the eyes of employers, clients and the industry.
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Industry Headlines


New York Plan to Save Energy May Mean a Dimmer Skyline
New York Times (04/30/15) Flegenheimer, Matt

Last week, New York City officials discussed a bill to limit internal and external light use in commercial buildings when empty at night, which could lead to a dimmer Manhattan skyline than people are accustomed to seeing. The bill comes on the heels of a large initiative within the city to reduce New York's environmental footprint. Among the worries associated with the change are issues concerning safety at night. It would, obviously, be darker and potentially more dangerous.  Furthermore, security cameras would be rendered useless in some areas where there isn't enough light to see.  O nthe plus side, the bill exempts buildings with people still inside at night.  In addition, temporary seasonal displays would be allowed. The Empire State Building and other landmark buildings could also be exempt, but that matter has not yet been decided. The other reason city light is detrimental to the environment, besides the obvious overuse of electricity, is that it can change natural proceedings in the wilderness. For example, artificial light can deter nesting among female sea turtles and disorient butterflies.  The bill is an effort to solve all of these problems while keeping New York City's skyline as recognizable as it has been for decades.
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Making the Most of Social Media
Property Management Insider (04/28/15) Lyman, Guy

While most property management companies have a social media presence these days, maintaining that presence continues to pose challenges to such firms.  This is certainly proving true to those focused on operating apartment communities.  Eve Mayer, CEO of Social Media Delivered, says its important to recognize that each platform will have a different approach.  "Not only are the communication formats vastly different, but the audiences are too.  So, for example, if you're trying to attract more young people to your property, you're going to choose certain platforms over others to apply your limited resources."  She estimates that it takes approximately 32 hours per month to leverage one social media platform optimally.  She said its important to tailor messages as carefully as possible for each platform to ensure the best results.  To this end, posting the same content to several platforms at a time is a good example of the wrong way to do social media.
 
Looking at the differences, the article's author holds up Pinterest and Facebook as examples.  Pinterest is photo-based and over 80 percent female.  By contrast, Facebook is more text-based, with a gender gap not nearly as pronounced.  Pinterest has a more Millennial user base, where Facebook's base is definitely aging.  Consequently, they are two completely different environments that require different approaches and subject matter.  Unlike broadcast media, though, know that social media is a great tool for building a property's aura of community, warmth, and personal attention.  Finally, it is a highly effective medium for dialogue, conversation, and resident feedback, allowing owners and managers to demonstrate their properties' caring and professionalism.
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Magnifying Vibrations in Bridges and Buildings
MIT News (04/23/15) Chu, Jennifer

Buildings appear fixed in place, unmoved by such forces as wind and rain. In reality, such large structures do experience imperceptibly small vibrations that, depending on their frequency, may indicate instability or structural damage. Massachusetts Institute of Technology (MIT) researchers have combined high-speed video technology with computer-vision techniques to develop a method to "see" vibrations in man-made structures that would otherwise be invisible to the naked eye.  Conventional high-speed video cannot pick up subtle vibrations in buildings. But the researchers used motion magnification, a computer-vision technique that breaks down high-speed frames into specific frequencies, exaggerating tiny, subpixel motions.  The researchers say motion magnification provides a faster, less expensive, and noninvasive alternative to existing monitoring techniques.  "This could be a noncontact sensor technology that can be used for economic and speedy applications," says MIT professor Oral Buyukozturk.  

The researchers adapted the original motion magnification algorithms, which were developed in 2012, to monitor infrastructure, essentially filtering a video image into amplitude and phase signals, which can then be combined to reconstruct the video image in which the apparent motions of certain objects are magnified at certain frequencies.  "This could be a noncontact sensor technology that can be used for economic and speedy applications,"  Buyukozturk concludes, "Depending on your objective, perhaps you could use the camera on your cellphone for screening, and if you detect something, you could concentrate on it with a high-power camera."
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U.S. Office Construction Picking Up Momentum
CoStar Group (04/29/15) Drummer, Randyl

After nearly five years of steady but relatively moderate increases, deliveries of newly constructed office space exceeded quarterly office demand nationally in the first quarter as office construction levels moved closer to their long-term average across the nation.  According to CoStar office market data, approximately 15 million square feet of office space was delivered to the U.S. market during the first quarter of 2015, eclipsing total net absorption of office space for the first time in the current economic cycle.  CoStar data shows that about 108 million square feet was under construction as of March 31 -- a 17 percent increase from the same period a year ago.  With higher office rents making new development a viable alternative to buying existing buildings, the amount of office space under construction is finally approaching its quarterly historic average of 122 million square feet.  Rising office rents are driving the development boom in such metro areas as Atlanta, Los Angeles, and San Francisco.
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Corporate Real Estate's Shifting Landscape
GlobeSt.com (04/28/15) Rossenfeld, Carrie

GlobeSt.com recently spoke with Chris Zlocki, executive managing director of strategy and innovation at Colliers International, about the shifting corporate landscape and how his team solves problems creatively for corporate clients.  According to Zlocki, in recent years, there has been a shifting mindset for corporate clients when hiring an advisory firm from a transactional way of thinking to a more transformational approach.  Clients are being asked to solve more complex business questions surrounding such topics as enterprise growth, labor availability, location strategy, and cost reduction.  Zlocki also said that corporate outsourcing is a trend that is here to stay, which causes firms to look for answers to questions about organization, place, scale, and size.  "Our strategic vision is to align what corporate real estate executives need from their service providers with best-in-class talent to help them consider the future of their business and the impact on their real estate requirements," Zlocki said.
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Purchasing 101: How to Standardize Procurement to Benefit the Bottom Line
Multifamily Executive (04/29/15) Pajarito, Edward

The process of procuring products for an apartment community can significantly affect the owner's bottom line, making it imperative that landlords and their property management teams develop an effective and efficient product procurement system that allows them to identify quality products and services while still reducing costs.  One way owners and property managers can reduce costs related to product procurement is by negotiating based on the total volume at the portfolio level, rather than by individual property.  Another strategy is to ensure that all quotes are completed through the purchasing department instead of at the property level.  With this method, the purchasing department alone identifies and determines the best products for the best value, then makes them available to individual apartment managers.
 
In addition, product standardization helps ensure that a property management firm is saving costs while still providing the best quality service possible.  Finally, developing an efficient warranty-tracking system is an integral component in reducing property management costs.  If properly implemented, these and other strategies can help reduce costs throughout a multifamily housing portfolio, enabling both ownership and property management to not only contain expenses, but create long-term value for their properties and residents, as well. 
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Commercial Property: Should You Own or Lease?
Orange County Register (CA) (05/04/15) Bucahan, Allen

Analysts and brokers agree that some classes of commercial real estate lend themselves more toward leasing. Few if any regional mall occupants own their space, for instance, because the spaces are difficult to divide into smaller ownership interests. To own commercial real estate, the property must have a separate, definable, transferable parcel. The general rule of thumb is, if the space has its own tax bill, it can generally be owned by the occupant. Owners of commercial property generally have one or more of these characteristics in common. One, they are closely held entities. They can be a small C corporation, S corporation, or LLC, which can benefit from the depreciation on the real property. Two, their space needs are stable. Indeed, if a potential buyer's space requirements fluctuate over time, it's more difficult to disengage from an ownership situation. Three, they have very specific facility needs.

On the other hand, occupants who lease their commercial space might be publicly traded companies. After all, ownership and depreciation of commercial real estate lowers earnings. Consequently, many companies whose stock is publicly listed would prefer to lease their locations. They might also be companies with widely fluctuating space needs. Or, they may just be businesses requiring a type of space that is in abundant supply. Logistics providers, for example, have a broad array of buildings that suit their needs.
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Property Owners Oppose Proposal That Would Require Reports of Energy Consumption
Fox4KC (04/29/15) Pepitone, John

Building owners and managers in Kansas City, Mo., are upset over a proposal to require the largest buildings locally to publicly report their energy consumption.  Scott Taylor, 6th District Councilman who proposed the ordinance, wants the city's biggest buildings to report an energy star rating so that tenants can better compare the costs of operating in one place versus another.  "The community at large will benefit from reduced energy demand, which translates into more capacity for growth with less environmental impact," said Carol Adams, a member of the environmental management commission.

However, those who own big buildings throughout the metro area are not happy, claiming that the energy reports will drive up their costs and prompt tenants to move across the state line where there are no energy ratings.  "In this instance, we have a city mandate that is designed through public mandate of disclosure of proprietary operating data to shame owners and create a negative market perception of low scoring properties," said Sam Alpert of the Building Owners and Managers Association of Kansas City.  Researchers estimate that the proposal would affect 3 percent of the city's building stock.
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CBDs: The New Low-Barrier-to-Entry Multifamily Markets
National Real Estate Investor (04/28/15) Anderson, Bendix

At one time, it was difficult to build apartments in downtown areas because there was limited land for new construction projects.  But in recent years, developers have been highly motivated to overcome these barriers and build more urban apartment projects.  The idea is for these new multifamily housing communities to be within walking distance of jobs, shopping, and public transportation.  Competition between new apartment communities for renters has already cut into the rates of rent growth in certain downtown districts.  In fact, MPF Research shows that rents for units in such locales grew at an average rate of more than 6 percent a year in late 2011.  But apartment rents downtown now grow more slowly, MPF officials note, at an average rate of between 2 percent and 4 percent.  "There has been a mindset that going downtown involves higher barriers to entry," remarked Jay Parsons, director of analytics and forecasts for MPF Research at RealPage, "though a lot of cities are heavily incentivizing downtown development."
 
Looking at the individual markets, more than 11,000 apartments are now under construction in New York City's various central business districts, most notably Downtown and Midtown Manhattan.  The concentration is even higher in the Chicago metropolitan area, where developers now have 9,240 rental units in various stages of development.  Of those, more than two-thirds are in the Windy City's central business district, reports CoStar Group.  Downtown apartment construction is not just for the gateway cities either.  St. Louis has been losing population since the 1960s, even as its metro area has continued to grow. That trend may be starting to change, as multifamily developers now have more than 900 apartments under construction in the metro area -- 75 percent of which are being built in the central business district.
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Survey Shows LEED Impacts Building ROI
Buildings (04/28/15)

A recent survey of 48 executives in charge of building operations or corporate sustainability efforts for Fortune 200 firms shows that the LEED green building certification system plays a key role in an overwhelming majority of sustainability efforts. In fact, 96 percent reported the use of the program in their organizations.  The poll further found that 60 percent of respondents believe that participating in the LEED program positively affects their company's return on investment, or ROI.  Conducted by the U.S. Green Building Council and Keybridge, the survey shows that 93 percent of respondents believe that a commitment to the environment motivates their firm to use LEED. Finally, 82 percent of those polled said they are likely to continue using the program over the next three years for new construction or retrofit projects.
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New York State to Turn Off Lights to Make It Easier for Migrating Birds
Tech Times (04/29/15) Macadangdang, Rex

As part of a plan to help migrating birds get to their destination without any injury, the state of New York has agreed to start turning off nonessential outdoor lights on state-managed buildings at night.  New York is along the Atlantic Flyway, one of the four major migration paths birds take to travel from Canada to the Gulf of Mexico. The birds depend on constellations at night to guide them in navigation along the summer breeding grounds.  At night, especially in foggy or rainy weather, birds fly at lower altitudes.  The combination of light and glass can become fatal to these creatures on their way south.  The phenomenon, known as fatal light attraction, leads to the deaths of approximately 500 million to 1 billion birds each year, according to the U.S. Department of Agriculture.  The state will be adopting guidelines of the Audubon Society's Lights Out program, joining a number of New York City's landmark building owners, by turning out the lights from 11 p.m. to dawn from April 15 until May 31 and again from Aug. 15 through Nov. 15.
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Green Building Should Start With a Green Supply Chain
Triple Pundit (04/24/15) Sprigg, Graham

The global green building market is expected to grow at a compound annual rate of 13 percent between 2015 and 2020, according to the Global Green Building Market Outlook 2020.  To achieve this growth rate, "greening the building supply chain is a necessary precondition for up-scaling delivery of green buildings and realizing the associated sustainability opportunities on a commercially-viable and widespread basis," states the United Nations Environment Program's Sustainable Buildings and Climate Initiative (UNEP-SBCI) report.  The report helps stakeholders understand resource use in buildings and the construction supply chain by focusing on two key dimensions.  The first focus is building delivery and management from concept definition and design to the construction, in-use, and end-of-life stages.  The second focus is 10 priority material supply chains, with a "heat map" to examine the relative environmental impacts and potential for reducing impacts.
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