Real Estate Management News - 01/18/2017

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January 18, 2017
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LEADERSHIP SPOTLIGHT
Growth in Asia’s Property Management Frontier

IREM® HEADLINES
Second Annual IREM Commercial Summit Draws Property and Asset Managers into Meaningful Dialogue
2016 ARM of the Year – REME Award Winner

INDUSTRY HEADLINES
As Department Stores Exit, Mall Makeovers Begin
A. Scott Anderson: Is Your Building Part of the Pollution Problem? Time to Find Out
Home Depot Recommends Top Tools for Your Maintenance Team
Better Design and 'Atmosphere:' Why Canadian Malls Are Thriving While American Ones Struggle
Deloitte Predicts Major Advances in Mobile Technology in 2017
New York Secures the Most Affordable Housing Units in 27 Years
Michigan's 'Battle of the Buildings' Encourages Owners to Think Green
Free Parking at Cherry Creek Mall Ends Jan. 17
Three Signs of Hope in the U.S. for Energy Efficiency and Renewables in 2017
Access to Bank On
How North Texas' Brick-And-Mortar Shops Are Attracting Customers
The Limited Owner Almost Doubles Investment


 

Leadership Spotlight


Growth in Asia’s Property Management Frontier

In his first column for NREI Online IREM 2017 president Mike Lanning reflects on the growth of property management in Asia, where, he says, “the pursuit of optimizing building value is creating unprecedented potential.

“I had the opportunity to join an IREM delegation in a late-year visit to China,” he explains, “and three things struck me. First was the truly global nature of the Institute. Second was how differently the field of property management is conducted there. Third--and this relates to that difference--was the thirst for knowledge of how to create and maintain asset value in a methodology that replicates that of the US.”

In terms of IREM’s increasing globalization, Lanning notes that IREM has been “in Korea for a decade now and in Japan (where last year we installed 80 new CPMs), since 2002, with our first chapter opening there the following year. We launched our current program in Shanghai, China in 2011 and last year installed another 15 CPMs. This year will be a year of great Asian growth for the Institute. More on that in a bit.”

On the second point, he says the concept of proactive property management is new to Asian practitioners. In fact, “There is often no strategy for maintaining the building holistically, including common spaces and infrastructure. There are virtually no standard operating procedures to maintain those facilities.

“As a result of this lack of building-wide procedures, there’s a thirst for knowledge of how to bring value to their assets, and they look to the US for that insight,” Lanning says. “This extends as well to Asian investments in North America--and to the $25 billion Chinese investors are expected to put toward assets in the US and Canada this year. So the need is clearly there.”

And that need is being expressed by a new generation of professionals. “On our visit, my colleague and 2016 IREM president Chris Mellen spoke before a group of 5,000 professionals--most of whom were in their 20s and just launching their careers. Meanwhile, in Shanghai, I had the honor of speaking before 300 young professionals.

“IREM is tapping into that great potential, and within the first quarter of this year,” he writes, “it is our intention to lay the groundwork for a continued Asia growth strategy for the Institute.

“It is also our intention to continue to grow our footprint globally, and a key part of that strategy, clearly is Asia. The time is ripe, as we continue to see incredible growth throughout that continent.”
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IREM Headlines


Second Annual IREM Commercial Summit Draws Property and Asset Managers into Meaningful Dialogue

Representatives of third-party property management companies and asset managers from major institutional real estate owners came together in Chicago last week to hear from industry experts about emerging issues in commercial real estate for the second annual Commercial Summit hosted by the Institute of Real Estate Management (IREM).

Among those investment companies represented were Bentall Kennedy U.S., GLP, MetLife Real Estate, New York Life Real Estate Investors, PGIM, Principal Real Estate Investors, and USAA Real Estate Company. From the asset services side were CBRE, Colliers International, Cushman & Wakefield, RiverRock Real Estate Group, NAI Global, and Transwestern – all of which are AMO-accredited companies.

With asset service providers and asset managers coming together, it was not surprising that an oft-repeated refrain of the Commercial Summit was how property managers and asset managers can work together more effectively to increase the value of real estate investments. It was the general consensus that eliminating silos between property and asset management through increased communications and greater understanding of the roles played by each would lead to greater efficiencies and increased ability to achieve investment objectives.

Talent, technology, and trends were key themes of the Summit, and speakers addressing these themes were:
  • Dustin Read, PhD/JD, Assistant Professor of Property Management and Real Estate at Virginia Tech in Blacksburg, VA, who shared findings on just-completed research on asset management
  • David Funk, PhD, Pasquinelli Family Distinguished Chair in Real Estate at Roosevelt University, Chicago, IL, and Managing Editor, SelectLeaders Job Barometer
  • Steve Weikal, Head of Industry Relations at the MIT Center for Real Estate in Cambridge, MA
  • Robert C. Kramp, Director of Research and Analysis at CBRE, AMO, in Houston, TX
Speaking about the Commercial Summit, IREM President Michael Lanning, CPM, with Cushman & Wakefield, AMO, in Kansas City, MO, said, “Our primary goal for the Summit was to bring together those who manage real estate investments at both a property and asset level to share information and trends and facilitate a meaningful conversation about how each of us can better support the companies we work for and the owners and investors we represent. Based upon the quality of the speakers we heard from and the open dialogue that was taking place,” continued Lanning, “I am confident that we achieved that goal.”

The 2017 IREM Commercial Summit was sponsored by Cushman & Wakefield, AMO.
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2016 ARM of the Year – REME Award Winner

Nicole Helton, ARM
Alliance Residential LLC, AMO, Riverside CA


Nicole Helton, ARM, truly has a passion for the real estate management industry. While going through her ARM training and certification, Helton notes that she learned so much more about the industry than she ever thought she could. She believes that the IREM education allowed her to put herself in different roles within real estate management and to gain a better understanding of what goes on in the big picture.

Through her company, Helton is a “Certified Coach”, serving as a mentor to new associates. Through effective mentoring, her staff has been recognized on both a regional and national level. In 2013, Helton’s property was nominated for “Most Improved Property of the Year.” In 2013 her property placed #1 in the Alliance Residential’s Summer Sales Challenge – placing #2 in the 2014 challenge. Helton recently implemented a “Position Swap” challenge for a month where an office associate and a maintenance associate swapped positions for the day. As a result, her team gained a better understanding of what their teammates do, and developed greater respect and appreciation for one another.

When asked what advice she would give to newcomers in property management, Helton notes, “If you are up-and-coming in this industry, you must have a passion for helping people or it just won’t work out. What has helped me be so successful is NETWORKING! Raise your hand to help, get involved, get out of your office and meet the people and companies who can benefit you and vice versa. You will feel so empowered to know what is going on around you and also open up countless doors to your career. Not to mention, understanding the big picture will make you better at your job!” Helton states she is still surprised by being named ARM of the Year, but has big goals moving forward – she has decided to earn her CPM designation.

For more on Nicole and how she earned the 2016 REME Award for ARM of the Year read her story in the January/February edition of the Journal of Property Management.
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Industry Headlines


As Department Stores Exit, Mall Makeovers Begin
Chicago Tribune (01/12/17) Reed, Robert

As big-name department-store retailers prepare to close locations in 2017, many traditional shopping malls and the communities where they reside face a disturbing dilemma: What will they do with all that vacated space? For the nation's healthier malls, it may come down to cutting deals with new types of retail tenants. However, for more modest and marginal shopping centers, filling space will require thinking outside the box and repurposing all or some of these large spaces to meet radically changing consumer demands. In many parts of the nation, malls are being rebirthed as data processing hubs, micro loft apartments, medical centers, office parks, and even megachurches. Nationally, an estimated 300 malls -- or about one-third of the total number -- are expected to close over the next decade, industry research warns. Some say that's a conservative estimate that will likely accelerate as digital buying increases.

Some mall developers and operators are attempting to re-energize empty spaces by luring more restaurants, gyms, or cinemas and other entertainment venues. Since 2011, General Growth Properties has invested almost $1.5 billion nationwide to freshen up over 90 vacant or near-vacant department stores and mall spaces. More often than not, attracting new tenants will require communities to invest in building or improving roads and sewers connected to these massive buildings. Infrastructure investment is "very important" to any relaunch, states Ellen Dunham-Jones, architecture expert at the Georgia Institute of Technology. As traditional malls become more endangered, local community and business leaders must rethink how these retail hubs can be redeployed and put to bigger, better uses. They can point to what other states -- namely Colorado, Florida, Maryland, and Texas -- have done to reconstitute outdated malls into business or civic centers.
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A. Scott Anderson: Is Your Building Part of the Pollution Problem? Time to Find Out
Deseret News (01/12/17) Anderson, A. Scott

About 40 percent of air pollution in Utah's Salt Lake Valley during the winter comes from commercial buildings. To address the city's pollution problems, Salt Lake City leaders recently launched Project Skyline to work with building owners and improve energy efficiency. Mayor Jackie Biskupski had proposed an ordinance that would require building owners to benchmark their energy usage and report the scores annually. No penalty would be imposed if a building is not deemed energy-efficient, but the data would give owners, tenants, lenders, and buyers the data they need to make decisions about building efficiency.

Benchmarking will be free using the Energy Star Portfolio Manager provided by Project Skyline. The benchmarking system rates buildings on a one-to-100 scale, with highly efficient buildings earning the highest scores. Results are based on building use type, square footage, occupancy, and natural gas and electricity utilization. Salt Lake City officials note that through benchmarking and voluntary follow-up actions, businesses could save $9 million in annual energy costs, reduce carbon dioxide emissions by 97,000 tons a year, and slash nitrogen oxide emissions by 30 tons per year. If building owners perform energy tune-ups every five years, estimates are they would save an additional $18 million.
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Home Depot Recommends Top Tools for Your Maintenance Team
Property Management Insider (01/10/17) Blackwell, Tim

The maintenance staff is frequently the face of an apartment community. That's why it is important for apartment owners and operators to show their appreciation for the value they bring to the overall operation of the property and their contribution to resident satisfaction. In fact, the New Year is the ideal time to say "Thanks!" with tools that will help maintenance technicians do their jobs better and easier. A number of new tools under $100 make great additions to techs' tool belts for 2017. Husky, for instance, offers the 12-inch Tool Bar Bag for around $35. It's water resistant and has plenty of compartments and pockets to keep things organized. In addition, Klein Tools has the durable 7.25-inch Tradesman Pro Organizer Backpack ($90), featuring 35 pockets. Bosch's Self Leveling Cross Line Laser (for $74.97) is a handy device that makes a cross-line projection that can be used for a broad variety of leveling and aligning tasks.

For those special maintenance techs, power tools make a larger statement of appreciation. For around $400 each, Milwaukee and DeWalt each offer new drills and drivers that perform faster and longer. Furthermore, a durable 12-volt Lithium-Ion battery can help maintenance techs stay warm during those especially chilly outdoor jobs. Milwaukee, for example, sells a cordless heated jacket that uses carbon fiber heating elements to create and distribute heat to the chest, back, and front hand pockets. Of course, if apartment property owners and managers are unsure exactly what maintenance tools will work the best for their staff, there's always another option. "A gift card is always great," states Adam Swenson, a Texas-based store manager for Home Depot.
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Better Design and 'Atmosphere:' Why Canadian Malls Are Thriving While American Ones Struggle
Financial Post (01/11/17) Shaw, Hollie

A spate of pending department store closures has many industry watchers fretting about the future of the American shopping mall. In Canada, though, the picture looks a lot brighter than it does in the United States. A new Retail Council of Canada study reveals malls north of the border are significantly more productive, on average, than U.S. -- with average sales of $744 per square foot versus US$466 per square foot down south. RCC President Diane Brisebois reasons that developers in all major Canadian cities have been quicker to refurbish their malls in recent years and add new tenants, including a number of new-to-Canada retailers and licensed restaurants. She adds, "Our malls look better, there is less empty space, and that in itself creates an atmosphere that makes people want to come to the malls." This news comes as Macy's plans to permanently shutter at least 68 U.S. stores in 2017, and Sears Holdings is angling to close 108 Kmart stores and 42 Sears locations. It also follows the closure of 154 U.S. Wal-Mart stores in 2016 and all 450 stores belonging to the bankrupt Sports Authority chain.

One big upside for shopping center developers and owners in Canada is that retail has never reached the very high per capita penetration it has in the U.S. Per capita penetration of shopping centers in Canada is 16.5 square feet per person versus 23.6 square feet per person in America. Brisebous remarks, "More per capita penetration in the U.S. means that more retailers are competing for consumers." However, an even bigger threat -- Amazon -- is also clearly taking a toll in ways that the industry has not yet seen in Canada. "We have to look at the impact of e-commerce on malls in the U.S., where it is more advanced than it is in Canada," she concludes. "Here, we are at about 6 percent [of overall retail sales], and there it is at about 10 percent or 12 percent." Consequently, U.S. retailers are studying their square footage, with many determining that they don't need as much and shrinking their footprint. The first parties that would be affected by that would be shopping malls.
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Deloitte Predicts Major Advances in Mobile Technology in 2017
ComputerWeekly.com (01/11/17) Scroxton, Alex

The next 12 months will include major advances in mobile networking and device technology, with mobile network operators (MNOs) beginning to incorporate elements of 5G architecture into their existing 4G networks, according to Deloitte's latest "TMT Predictions report. In particular, network strength and accuracy in indoor environments will become greater, with improvements to Wi-Fi equipment, beacon technology, and mobile base stations, all of which give users a better experience inside large or old buildings. This will result in indoor digital navigation, as the report predicts that one in 20 uses of digital navigation tools will take place indoors this year. "Billions of smartphones and tablets are expected to be capable of processing and collecting multiple types of biometric inputs, including face recognition, voice pattern and iris scan in 2017, but usage of fingerprints will lead the way," concludes Delloite's Paul Lee.
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New York Secures the Most Affordable Housing Units in 27 Years
New York Times (01/12/17) Bagli, Charles

New York City Mayor Bill de Blasio announced on Jan. 12 that the city built or preserved 21,963 units of housing in 2016 for poor and working-class residents, the most since 1989. The total includes 6,844 apartments in newly constructed buildings, according to data provided by city housing officials. These apartments are earmarked for families and individuals who meet income requirements, with about 35 percent of the units set aside for three-person households making no more than $40,800. de Blasio made affordable housing a centerpiece of his administration, pledging to build or preserve 200,000 units over the next decade. Over the past three years, the capital funding for the city’s housing agency has doubled, rising to $798 million this year, from $400 million in 2014.

Affordable housing remains a challenge, given the city’s increasing population, the demand for housing at all income levels, and a wave of luxury development that has washed over nearly every neighborhood in the city. The de Blasio administration has increasingly sought to earmark more affordable apartments for New Yorkers with what are called very low and extremely low incomes. About one-fifth of the apartments — far above the 8 percent goal set in the city’s housing plan — built or preserved in 2016 were for those earning less than $25,000.
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Michigan's 'Battle of the Buildings' Encourages Owners to Think Green
MLive.com (01/06/17) Tower, Mark

The 2017 Michigan Battle of the Buildings is a competition organized by the U.S. Green Buildings Council aiming to encourage and recognize energy-efficient practices in buildings across the state. The competition requires building owners to measure, monitor, and report monthly energy consumption using Energy Star’s Portfolio Manager. Participants also engage in building improvements, energy-saving technology workshops, and programs to encourage occupants to conserve energy. Buildings that demonstrate the greatest percentage-based reduction in energy use intensity will be recognized at the 2018 Energy Summit in Grand Rapids. The competition is open to owners and operators of commercial, industrial, institutional, nonprofit, multifamily, retail, and education buildings within Michigan. In 2016, 475 buildings competed, representing nearly 65 million square feet of real estate. Competitors have reduced more than 17,000 metric tons of equivalent carbon dioxide since the competition's inception.
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Free Parking at Cherry Creek Mall Ends Jan. 17
Denver Post (01/12/17)

It will cost a few bucks to park at Denver's Cherry Creek Shopping Center beginning Jan. 17. that's the day gates come down on all 10 entrances to the parking garage and surface lots at the regional mall. The first hour will be free, the second is $3, the third is another $1 and each hour thereafter runs another $2. Some businesses will validate, including the AMC Cherry Creek 8 theater, The Container Store, Brio Tuscan Grill, and Boulder Running Company. Other retailers have inquired about validation, reports mall general manager Nick LeMasters. Valet service will continue to operate as it does currently. Otherwise, there is a big change ahead for people who have viewed the 5,001 spots at the mall as a place to ditch their vehicle when they head to work or shop in neighboring Cherry Creek North or pick up the bus to get to their jobs in downtown Denver. "For a quarter of a century, we have been the free option," states LeMasters. "Some have taken advantage of it."

The goal is for prime parking spaces not to be filled by automobiles that do not necessarily belong to mall shoppers. With two hotels, a couple of condo buildings, and apartment buildings on the verge of opening and two major parcels slated for seven-story office buildings on the horizon, Cherry Creek needed to protect the parking that gets paying customers into its stores. Here's how the new system will work. Customers will pull a ticket at the gate to the lot. At that time, cameras will record your license plate and time of arrival and embed the information in the ticket. Monument signs near the lot's various entrances will help shoppers strategize, showing which floors in the garage have the most spots available. Shoppers should take the parking ticket into the mall with them. When done shopping, they will pay at any one of the more than two dozen kiosks located throughout the mall. Or, they can pay at the exit gate. There is even a find-your-car app that can be used for those who forgot where they parked.
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Three Signs of Hope in the U.S. for Energy Efficiency and Renewables in 2017
Forbes (01/09/17) Remley, Micah

Energy efficiency, renewables, and sustainability are poised to gain traction in 2017 because energy prices are predicted to be higher in 2017. Even in the event that federal support declines for renewable energy subsidies, state programs and regional initiatives will continue to provide financial support for renewables. New York and San Francisco already have aggressive energy efficiency mandates, and Denver has moved ahead with strict mandates on energy use and greenhouse gas emissions in commercial buildings. Meanwhile, investors are continuing to push for more sustainability data from businesses, and research shows a strong link between energy and sustainability performance and overall financial value.
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Access to Bank On
Security Management (01/17) Stowell, Holly Gilbert

To protect customers and assets in brick and mortar buildings and online, financial institutions have increased their information technology spending by 67 percent since 2013, according to PricewaterhouseCoopers. Zions Bancorporation's Nevada State Bank branches recently upgraded their access control system to enhance security, replacing the old system of physical keys and locks with access cards. Key cards can be disabled and reprogrammed quickly, no longer requiring an expensive and timely rekeying process if a fob goes missing. Zions chose Sielox Pinnacle to serve as the access control platform for the overall system and installed Sielox Network Controllers to support card readers at door locations.

Schlage wireless locks were chosen and integrated with the Pinnacle software, costing roughly one-third the price of a hard-wired lock system. An employee at each branch is responsible for going through the card access database every day to ensure it reflects employees who have been terminated from the bank, are on temporary leave, or have returned from leave. All actions are recorded and reported for every card, so security personnel can track activity and identify any abnormalities. The greatest concern with wireless access control readers is battery life. Administrators can use the Pinnacle application to monitor how long until the batteries on individual door readers are spent.
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How North Texas' Brick-And-Mortar Shops Are Attracting Customers
D Magazine (01/01/17) Kaskovich, Steve

In North Texas and elsewhere, shopping centers are pouring money into atmosphere and amenities, knowing that it takes more than a department store anchor tenant to attract people. And while the emergence of Amazon and other e-commerce retail has brought about a massive disruption to the shopping landscape, it doesn't necessarily mean the end of traditional stores. Instead, it has spurred a ground war of sorts, prompting retailers and developers to be more creative in luring shoppers and winning over their wallets. A new way of thinking is on display in southwest Fort Worth at the Waterside development, which opened last fall. Developed by Trademark Property, the open-air shopping center is anchored not only by a Whole Foods supermarket and REI, but by a cozy community space between the stores dubbed The Grove. There, shoppers can sit on Adirondack chairs beneath century-old oak trees, get coffee, stroll trails on the Trinity River, and more. "Compelling public spaces are one of the new anchors in retail development," declares Trademark CEO Terry Montesi. "We want people's subconscious telling them that they feel loved and cared for and served when they go to Waterside. As another attraction, Waterside has cut a deal with a museum to exhibit photographs from its collection.

While new shopping centers like Waterside are compelling, there aren't nearly as many being built as in the past and almost no traditional malls. Dallas-Fort Worth was expected to add approximately 2 million square feet of retail space last year, which is near all-time lows, reports The Weitzman Group. And that's despite continued strong job and population growth. While a few new centers continue to be erected in hot growth areas, more developers are focused on renovating older retail spaces and attracting unconventional tenants. WinCo Foods, the deep-discount grocer that entered the region two years ago, has sprouted in a number of abandoned retail sites including a former Sports Authority in Arlington. Meanwhile, in West Fort Worth, Ridgmar Mall is undergoing a reinvention. It will be an open-air center, not an enclosed mall, and there will be nightlife options such as a high-end bowling center with bocce ball -- stuff you can't do on the Internet.
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The Limited Owner Almost Doubles Investment
Fortune (01/07/17)

Sun Capital Partners Inc., the private equity owner of Limited Stores LLC, recently disclosed that it has nearly doubled its investment in the troubled U.S. women's apparel retailer even as it announced that it will shut all approximately 250 The Limited stores amid losses. Sun Capital Partners informed investors that it has made 1.8 times its $50 million investment in Limited Stores due to prior distributions and dividends. Sun Capital further disclosed that it is writing down the remaining equity value of Limited Stores to zero. The disclosure is further evidence how private equity firms can boast a profit from companies whose equity value has been wiped out.
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