Real Estate Management News - 02/07/2018

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February 7, 2018
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IREM® HEADLINES
Get a Step-By-Step Guide to Participating in IREM’s Income/Expense Research
AMO Firms—It’s Not Too Late to Nominate Your Young Stars for the Next-Gen Program
Ensuring Tomorrow: The Four Stages of Successor Development

INDUSTRY HEADLINES
NMHC: Developers Already Planning the Apartments of the Future
Can Power Center Landlords Handle Toys ‘R’ Us’ Retreat?
Amazon Replaces Office Buildings With Spherical Plant-Filled Greenhouses
Bon-Ton Stores Files for Chapter 11 Bankruptcy Protection
While Some Malls Are On The Decline, Other Malls Bring In Billions In Sales
Waterbury State Office Complex Achieves LEED Platinum
Tips to Mitigate Bomb Threats in Your Facility
Vanderbilt Selects New Property Management Firms
JV Unveils Dynamic Live-Work-Play Campus in LA
Daylighting for Productivity and Savings
The Emergence of VRF as a Viable HVAC Option
Earnings for Major Mall Owner Simon Property Show Shopping Centers Still Make Money


 

IREM Headlines


Get a Step-By-Step Guide to Participating in IREM’s Income/Expense Research

Many real estate professionals rely on the data in IREM’s annual Income/Expense Analysis® Reports. These valuable resources provide up-to-date and precise information for property managers to use in determining how their properties are doing against others, and where they might want to place their focus to improve upon the buildings they’re responsible for.

The more properties that are represented by the data in the reports, the more accurate the data becomes, and the more beneficial it is to its users. And you can play an important part in helping IREM maintain the high quality of statistics in the Income/Expense Analysis® Reports by submitting operating information about your properties to us for inclusion in our analysis. IREM is accepting Income/Expense submissions through April 1, 2018, and we appreciate your participation in this program.

On Tuesday, February 13 at 2 p.m. CST, join Matt O'Hara, IREM Senior Manager, Income/Expense Analysis and Research, for a webinar that will walk you through how to prepare your property information and submit it via our 2018 online survey. And chapters, learn how to keep track of your chapter goals and encourage your members to submit their data.
Register for this informative webinar here, and share in the success of the production of these indispensable property management tools.
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AMO Firms—It’s Not Too Late to Nominate Your Young Stars for the Next-Gen Program

As an AMO Firm, you undoubtedly know the benefits of being credentialed, and the value of the CPM designation. What if you could fast-track one of your star employees to earn their CPM designation at a savings of more than 50 percent, all within a 16-18-month timeframe?

The IREM Next-Gen CPM Leaders Program is a talent management initiative developed exclusively for you, an AMO Firm, and offers you the opportunity to nurture employee’s talent through leadership training and peer networking opportunities. Smart businesses know the importance of supporting the development of their up-and-coming leaders and giving them opportunities to strengthen their skills. Our exclusive Next-Gen Program is a win-win for your Firm and your employees!

But hurry, nominations are due by February 15, 2018. Don’t miss out on this incredible opportunity– Click here for more information!
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Ensuring Tomorrow: The Four Stages of Successor Development

By Michael Beck

This an excerpt from an article published in the Jan/Feb 2018 issue of Journal of Property Management. Click here to read the full article.

The property management industry is in a state of flux—changing with the use of remote workers, new technologies and increased competition—but all things considered, the biggest challenge facing the industry is the fact that baby boomer owners are beginning to retire. Estimates are that somewhere between 54 and 63 percent of all property managers will be retiring over the next 10 years. The shifting real estate landscape coupled with the pending wave of ownership transfers spells trouble for the industry if successors are poorly prepared to take the reins of a company.

Studies show that 70 percent of successions fail. But if successors are effectively developed through all four development stages (Worker/Contributor, Manager, Leader/Executive, C-Suite/Owner), growth and profitability are maximized, employee turnover and customer loss are minimized, and owners get paid the full value of their business. Here are the characteristics of the four stages of successor development.

Stage One: Worker/Contributor
Skills:
- Gaining knowledge of what’s involved in managing a property
- Learning how to interact with tenants and owners

Benefits from:
- Acquiring technical and industry knowledge and skills

Stage Two: Manager
Skills:
- Learning to delegate, managing multiple resources or properties
- Guiding others to drive production, productivity and quality

Benefits from:
- Project management training, general management training and hands-on experience

Stage Three: Leader/Executive
Skills:
- Influencing others to get buy-in for plans and ideas
- Fostering teamwork and collaboration to resolve conflict constructively
- Instill confidence and build trust in teams

Benefits from:
- Breaking old habits and forming new ones
- Revealing blind spots and limiting beliefs
- Gaining a deeper understanding of human nature
- Honing competencies through coaching and mentoring

Stage Four: C-Suite/Owner
Skills:
- Develop a vision for the organization
- Hone strategic thinking and move beyond simply developing tactics to cultivating directions for the company that address fundamental problems or capitalize on opportunities

Benefits from:
- Shift perspective from short- to long-term thinking; from self- to organizational-focus; from internal to external focus; and from narrow/silo thinking to big-picture thinking
- Improvement is developed over time and occurs through coaching and mentoring

The Bottom Line
In order for successors to effectively lead an organization into the future, they need to transition from contributor to manager to leader and ultimately to owner. It is essential that development does not stop at mastering the mechanics of the business.

About the Author
Michael Beck (mbeck@michaeljbeck.com) is an executive coach, business strategist and author based in Portland, Ore.

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Industry Headlines


NMHC: Developers Already Planning the Apartments of the Future
REJournals.com (02/05/18)

In its recently released 2018 Consumer Housing Insights Survey, the National Multifamily Housing Council (NMHC) addresses the impact that technology will have on apartment living. To create its survey, NMHC researchers teamed up with national architecture and design firm KTGY. Their goal was to determine what the apartment of the future will look like. First, they found that apartment spaces will become more flexible. Some units will boast movable walls that can turn living rooms into offices or bedrooms. Pop-up amenities will also increase in popularity, such as hidden dinner tables that can be popped out of a wall when needed. Such flexible spaces can make even small apartment spaces seem more spacious. According to the poll, 83 percent of surveyed apartment renters said that it is important to have a living space that evolves with different stages of life.

The survey also found that the Internet of Things will play a bigger role. According to technology research firm Gartner, approximately 26 billion devices will be connected through the cloud-based IoT by 2020. This means that apartment residents could control their lighting, appliances, home security devices, and more remotely. The survey says the biggest advancements associated with IoT technology will be on the owner side of the multifamily sector. Chiefly, smart tech will enable building engineers to monitor, control and constantly analyze all aspects of an apartment building. Finally, the research also found a certain generational divide among renters. According to the research, 58 percent of Millennials say that apartments should provide helpful services and amenities to the surrounding community. Only 38 percent of Baby Boomers agreed. The question then becomes: In the future, will developers have to include services in their apartments that could benefit the surrounding community, such as park space or public dog walks open to the community?"
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Can Power Center Landlords Handle Toys ‘R’ Us’ Retreat?
National Real Estate Investor (02/04/18) Mitchell, Donna

Few retail property analysts and professionals were surprised to hear that Toys 'R' Us will permanently shutter 180 stores in the United States, especially after the retailer reported a disappointing holiday shopping season following a bankruptcy filing this past September. Power center landlords are now left to grapple with how they will fill the closing Toys 'R' Us and Babies 'R' Us locations. Some experts say the number of targeted stores is an encouraging sign, as it is much smaller than anticipated. In addition, while store closures remain an industry-wide issue, some feel that power center landlords have several options to backfill these soon-to-be-vacant locations. It was not clear as of press time precisely which landlords have the highest exposure to Toys 'R' Us and Babies 'R' Us stores. Most, though, had anticipated the kind of disruption in the toy retailing segment that would lead to store closures. "Landlords have known this was coming for 10 years," remarks Scott Holmes, a senior vice president of the national retail group at Marcus & Millichap, adding that many landlords had already priced in a high probability of Toys 'R' Us stores going vacant.

In fact, one aspect of the changing retail real estate business might work in favor of building owners faced with empty storefronts. Developers have been slow to erect new power centers after the last recession. This, in turn, has created demand from tenants looking to expand into high-quality locations. According to Holmes. grocery chain Aldi, off-price department store operator TJX Cos., beauty chain Ulta, and Hobby Lobby are just four of the retailers looking to expand. Toys 'R' Us stores typically average around 35,000 square feet, with double-or triple-net leases with 10-year durations. Finally, landlords are perhaps most likely to repurpose vacant Toys 'R' Us locations to include non-retail uses such as medical offices and WeWork units, concludes Steve Goldberg, president of The Grayson Co. retail consulting firm.
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Amazon Replaces Office Buildings With Spherical Plant-Filled Greenhouses
My Modern Met (01/31/18) Richman-Abdou, Kelly

More and more desk-bound workers are expressing an interest in "bringing the outdoors in." As one of the world's largest companies in the world, it is no surprise that Amazon has taken this indoor/outdoor idea to a whole new level with "The Spheres." This trio of greenhouse workspaces is located outside of its Seattle headquarters. Designed by American architecture firm NBBJ, each dome greenhouse seeks to transform the concept of the office. Three steel and glass buildings compose the clustered complex, which can accommodate as many as 800 workers. Inside, more than 40,000 plants from over 300 species and 50 countries fill the space.

This abundant biodiversity is only the beginning. A four-story living wall has taken the place of boring beige paint, and a river replaces run-of-the-mill carpeting. Treehouses serve as actual meeting rooms. In addition, the globe-shaped structures provide a green space to the public that doubles as a living, breathing learning experience. "These unique buildings are so much more than a beautiful, creative space for Amazon employees," Washington Gov. Jay Inslee recently commented. "They will help conserve a number of rare plant species from around the world and provide countless educational opportunities for local students – and that's something Washington can take pride in."
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Bon-Ton Stores Files for Chapter 11 Bankruptcy Protection
NBC News (02/05/18)

Saddled with debt and struggling with weak sales, Bon-Ton Stores has filed for Chapter 11 bankruptcy protection and is exploring a sale of all or part of the company. The chain operates 260 department stores in two dozen states, primarily in the Northeast and Midwest. Bon-Ton operates stores under its own name, as well as the Boston Store, Carson's, Younkers, Herberger's, and Elder-Beerman. It had announced back in November that it would close dozens of stores in 2018. This past week, it specified 42 locations around the nation, most of them in four states -- Wisconsin, Pennsylvania, Illinois and Indiana.
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While Some Malls Are On The Decline, Other Malls Bring In Billions In Sales
Pymnts.com (01/31/18)

For years, occupancy rates at the country's shopping malls have been on the decline, as has foot traffic. Yet some malls are still bringing in billions of dollars of sales, such as the Ala Moana Center in Hawaii, Sawgrass Mills in Florida and Oakbrook Center in Illinois. The article's author explores some of these success stories. Honolulu's Ala Moana Center is currently worth $5.74 billion and has sales per square foot of $1,450. The mall's wide mix of tenants -- from discount retailers to upscale department stores -- has drawn customers from the local area in addition to island tourists. Meanwhile, in the Sunshine State, Simon's Sawgrass Mills boasts 2.5 million square feet and contains 500 shops and kiosks. Today, the mall's stores generate a whopping $1,149 in sales per square foot according to CNBC estimates. Like Ala Moana, Sawgrass benefits from tourist traffic, especially customers from South American countries. A mall spokesperson recently stated that the fastest growing Latin American markets for the mall are Argentina, Ecuador, and Mexico. Most buy for the experience of shopping at Sawgrass.

Beyond Sawgrass, Simon is turning to technology to help make its malls more accessible to the public. For instance, the company is in the process of rolling out chatbots that can answer customer questions. The bot can help shoppers find an ATM, locate the closest restroom, browse the mall's restaurants, or answer specific questions by routing queries to mall representatives. To attract start-ups, the mall operator is offering a "scalable retail platform" dubbed The Edit, through which eCommerce start-ups can test-drive physical commerce in front of a live customer audience. Looking ahead to future development, General Growth Properties (GGP) says it is building its last mall for a while in Norwalk, Conn. GGP Chief Executive Sandeep Mathrani recently told the Wall Street Journal, "This could be it for a long period of time." As of press time, GGP had pre-leased about 60 percent of the mall's available space.
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Waterbury State Office Complex Achieves LEED Platinum
VermontBiz.com (02/01/18)

Some of Vermont’s oldest and biggest office buildings are now also among the state’s greenest. In last year's fourth quarter, for instance, the United States Green Building Council awarded the State Office Complex in Waterbury its highest honor: LEED Platinum. The rating applies to approximately 201,000 square feet of new and renovated offices on the Waterbury Campus, including 13 connected historic structures that date back to the 1890s. The 100-acre complex was heavily damaged by Tropical Storm Irene in the summer of 2011. After a period of clean-up and study, the State of Vermont opted to rebuild the complex with an emphasis on sustainability and resiliency. All occupied spaces throughout the complex are now built above the 500-year flood mark, and multiple site improvements drastically reduce stormwater runoff. Meanwhile, sustainable features at the new complex focus on energy efficiency and occupant comfort. Key features range from a 110-kWp rooftop solar array, to sensors that automatically adjust lighting based on available sunlight, to super-efficient wall and window systems that keep buildings cool in the summer and warm in the winter.
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Tips to Mitigate Bomb Threats in Your Facility
Buildings (01/30/18) Feit, Justin

The 2016 and 2017 bombings in New York City serve as somber reminders that occupants need to be on the lookout for possible bomb threats in their facilities. Preparing for a possible threat is an unfortunate but ultimately important task that building owners and operators need to do. The Department of Homeland Security's Office for Bombing Prevention (or OBP) has provided a series of tips with regards to bomb threats. First of all, keep emergency plans updated. Staying well informed about bombing prevention will enable property management to have ongoing and open dialogue with building occupants. Larger facilities need extra attention to ensure they have the right plans in place.

Tip number two is distribute important resources. Bomb scares cause immediate chaos in buildings, so it is important to be prepared even though occupants might be panicking. "Bombing Prevention Lanyard Cards from the OBP help building occupants stay on task during a high-stress scenario," the article's author writes. Such cards typically include easy-to-access information and reminders of key actions to take in the event of such an incident. A good rule of thumb is to attach them to badges or ID holders and display them in all breakrooms and kiosks. The third and final tip is to take advantage of free resources. For instance, at www.dhs.gov/counter-ied-awareness-products, you can download such bomb threat guidance products as checklists and posters.
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Vanderbilt Selects New Property Management Firms
Vanderbilt News Service (02/01/18) Owens, Ann Marie Deer

After an extensive selection process, Vanderbilt University has awarded new property management contracts to CBRE and Lincoln Property Company. The former has been picked for management of commercial properties in the Vanderbilt University Real Estate portfolio, while the latter will manage the portfolio's apartment properties. Vanderbilt initiated the bidding process last August as the terms of the existing contracts were nearing completion. The new contracts went into effect Feb. 1. "The decision to award the management contracts to CBRE and Lincoln was based upon Vanderbilt’s continued interest in high levels of attention and service to our tenants, the companies' understanding of our mission and goals, and their demonstrated awareness and application of innovative practices in the property management industry," reports Margaret Liddon Emley, interim director of Vanderbilt University Real Estate.

The two companies will be responsible for all aspects of property management within the portfolio, including administrative duties, building maintenance, and leasing. Effective Feb. 1, maintenance requests in CBRE-managed buildings are being submitted by phone or e-mail. In the not-too-distant future, though, CBRE will launch an online tenant portal for maintenance requests. Lincoln, meanwhile, will correspond directly with tenants in the buildings it manages regarding changes in procedure for maintenance requests and rent payments.
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JV Unveils Dynamic Live-Work-Play Campus in LA
Commercial Property Executive (02/05/18) Loria, Keith

Steaven Jones Development Co. (SJDC) has formed a joint venture with Creative Office Properties to develop INclave, a three-building, live-work-play campus in the Marina Arts District of Marina del Rey, Calif. INclave will consist of 49 luxury residential units, along with 65,000 square feet of tech savvy, amenity-rich creative office space and a 2,160-square-foot cafe. "INclave is unique because we are not creating just a building, but an experience," states Lawry Meister, SJDC's president and Creative Office Properties' founder. "The property has the amenities and the services that you would normally have just with a luxury apartment building, shared with the office tenants." The office component should prove especially attractive to tenants, featuring 22-foot high ceilings, abundant natural light, concrete floors, skylights, open kitchen areas, and private restrooms. It will be delivered ready for tenants' wiring and furniture, allowing for easy move-in.

The residential units will be situated on the third, fourth and fifth floor of the campus, offering a mix of studio apartments and one- and two-bedroom units with open floor plans, wood-style floors, and stainless steel appliances. Approximately 50 percent of the units will have gas fireplaces, and every unit has a private balcony. Meanwhile, INclave's large cafe will serve breakfast, lunch and a light dinner fare. "Our tenants are looking for a balanced lifestyle experience, and emphasize health and wellness while seeking increased productivity and creativity," concludes Meister. "We have designed INclave to provide space in a bustling area where people can live and work in harmony, and be part of an exciting, forward-thinking community." The project is on pace for a first-quarter 2019 completion.
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Daylighting for Productivity and Savings
Building Design + Construction (01/24/18)

Daylighting, or using sunlight for interior lighting purposes, carries clear savings and productivity benefits when mastered, with studies demonstrating that it reduces a building's electrical illumination costs and benefits occupants with a unique mix of light and color. However, areas near windows that receive direct sunshine are far too brilliant, while locations away from the windows are dark and shadowy by comparison. Toning down the intensity of direct sunlight while still bringing diffused sunlight evenly into the interior space is the essence of daylighting. Windows, skylights, translucent panels, reflective surfaces, and light pipes can all be harnessed to deliver effective daylighting.

The first step is for an architect to consider window placement, particularly the direction the window faces, and direct sunlight needs to be blocked, reduced, or diffused to be useful. Combining windows with strategically placed interior reflective surfaces can bring daylight deeper within the interior of a space, and clerestory windows can beam light further in without producing as much glare at eye level. A clear skylight can admit lots of glare and heat, while a translucent skylight reduces the intensity and diffuses the light. Light pipes are well-suited for multi-floor buildings, since they can admit light into lower floors that skylights cannot illuminate.
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The Emergence of VRF as a Viable HVAC Option
Buildings (02/05/18) Feit, Justin

Variable refrigerant flow (VRF) has been emerging as a top HVAC choice in U.S. buildings in recent years. "It really started as a niche product where we looked at buildings that didn’t have space or a lot of ductwork, but now we’re seeing that this can be applied to basically any building," states Scott Gilchrist, Regional Sales Manager – Pacific Region of LG Electronics. With its improved flexibility making it viable for most types and sizes of facilities, VRF systems have outpaced the growth of other types of HVAC technologies over the past decade. Its use in commercial facilities is expected to continue growing, forecasts Kevin Miskewicz, Director of Commercial Marketing at Mitsubishi Electric Cooling & Heating.

"The change is coming from the owners who gravitate to higher efficiency, easier zoning, better flexibility, attractive aesthetics and space saving that VRF systems offer," observes Vic Perez, Sales Director of Samsung HVAC's Eastern Region. "VRF offers building owners greater flexibility, easier building integration, simpler localized control and less costly maintenance due to fewer components to service." The primary benefit of a VRF system is energy efficiency because air no longer needs to move through ductwork. Instead, the system simply moves conditioned refrigerant to the locations where it's needed. One area where VRF has developed significantly over the past few years is in its controls for more precise oversight of heating and cooling.
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Earnings for Major Mall Owner Simon Property Show Shopping Centers Still Make Money
USA Today (01/31/18) Jones, Charisse

Simon Property Group posted strong results for the last quarter and 2017, defying the belief by some that shopping malls are failing. The nation's largest owner of shopping malls said net income climbed to $571.1 million in the fourth quarter, an increase from $394.4 million in the same three-month period the year before. For all of 2017, net income increased to $1.94 billion versus $1.83 billion in 2016. Simon Property Chairman and CEO David Simon issued a statement that read: "In 2017, we opened five new centers, delivered six significant property transformations and expansions, and completed several major financing transactions that further enhanced our strong balance sheet." Nevertheless, the shopping mall sector has struggled as such traditional anchor tenants as Macy's and Sears have shuttered hundreds of locations. But higher end shopping centers, and those reinventing themselves with new attractions and experiences, are continuing to thrive. Simon is one such player, and its occupancy rate was 95.6 percent as of the end of last year.
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