Real Estate Management News - 06/14/2017

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June 14, 2017
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LEADERSHIP SPOTLIGHT
How Well Do Managers Manage?

IREM® HEADLINES
Using Your Rooftop to Generate Revenue: Live Webinar

INDUSTRY HEADLINES
Are Shopping Malls an Endangered Species?
Three Strategies for Navigating the Office Market in 2017
Energy Efficiency: A Deeper Shade Of Green
Office Renovations Pick Up in Downtown Minneapolis and St. Paul
For Property Managers, a Penny Spent Is a Penny Earned
Common Rooms Go Flexible, Functional, and Furry
Region's Older Office Space Refreshed to Woo Tenants, Talent
Who Are the Most Likely Tenants to Backfill Empty Retail Big Boxes?
St. Paul Woolworth’s Pivots From Dime Store to Hip Offices
The Home Depot Shares Three Inexpensive [Ways] to Enhance the Outdoor Living Experience
Developers Lure Buyers to Cities, Even as Prices Stall
Portland Unveils Affordable, Energy-Efficient Apartments


 

Leadership Spotlight


How Well Do Managers Manage?

As Ben Wigert and Annamarie Mann write in their article, How Managers Can Excel by Really Coaching Their Employees, “the answer to that simple question may have a profound impact on how employees are managed, now and into the foreseeable future.”

Recent Gallup research finds that only about one in four employees “strongly agree” that their manager provides meaningful feedback to them. Only about one in five employees strongly agree that their performance is managed in a way that motivates them to do outstanding work.

But the good news is that many managers know there’s bad news, and they’re doing something about it. Gallup reports that companies are putting a bigger emphasis on such remedies as more frequent and ongoing performance reviews. Annual or semi-annual reviews they realize, just aren’t cutting it.

But in that good news, we find some more bad news. Many managers reported that they either didn’t feel comfortable in providing effective feedback, or they didn’t even consider that it is part of their job. In their article, Wigert and Mann ask, “Are companies setting managers up to fail by asking them to do something they either don't know how to do or believe they shouldn't be doing at all?”

A manager often has the greatest impact on an employee’s engagement and performance. Good managers are also critical to retaining good talent. Research tells us that employees don’t leave companies, they leave bad supervisors.

The writers suggest that, “managers must take ownership of their employees' development and think of themselves in a new way: as a coach, not a boss. This approach also requires that leaders take ownership of manager development to teach them how to be effective coaches.”

Most people aren’t born great bosses, they have to be developed. But it takes great bosses to make great bosses. So what kind of manager are you?

To learn more about becoming a great boss, and how to develop others to be great bosses, check out IREM’s Leadership Handbook for Real Estate Professionals.
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IREM Headlines


Using Your Rooftop to Generate Revenue: Live Webinar

Wednesday, June 21, 2017 – 3pm ET; 2pm CT; 1pm MT; 12pm PT

Chances are you are reading this from your cell phone or over the Internet. That means you need a cell or WiFI signal. Where does your signal come from? Most likely a rooftop Wireless antenna. What's on the roof of your properties? If your answer is, "tar and the building's mechanical systems," then you are missing out on a potentially substantial revenue stream for your property. Join Mike Bickford to learn if rooftop leasing is right for your properties and to see if you have what it takes to manage rooftop leases.

Register Now!
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Industry Headlines


Are Shopping Malls an Endangered Species?
USA Today (06/07/17) McCoy, Kevin

Credit Suisse predicted recently that up to 25 percent of U.S. shopping malls could close by 2022. However, many shopping industry experts say the number of malls is holding steady and the sector is coping well. In part, recent closings of shopping mall anchors such as Sears and J.C. Penney result from increases in online shopping as traditional brick-and-mortar stores ramp up their own omnichannel strategies. Mark Cohen, a former Sears Canada CEO and now the director of retail studies at Columbia Business School, predicts that approximately 230 to 240 U.S. shopping malls "will remain fully viable" when the industry shakeout is complete. In all, the U.S. currently has 1,211 shopping malls, the same as last year and a net increase of 46 from 10 years ago, according to CoStar Group data provided by the International Council of Shopping Centers.

Credit Suisse's report, based in part on sales projections for the apparel industry, a traditional mainstay for U.S. shopping malls, forecasts e-commerce apparel sales as likely to soar from roughly 17 percent of overall transactions now to approximately 35.7 percent within 15 years. However, the mall industry remains confident the sector will continue to thrive despite financial challenges and changing consumer shopping habits. "We found the opinion report amusing and inaccurate," says Les Morris, a spokesman for Simon Property Group. "We continue to see strong demand for our space," says company Chairman and CEO David Simon, adding that "leasing activity remains solid."
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Three Strategies for Navigating the Office Market in 2017
National Real Estate Investor (06/06/17) Lee, Tim

A new CoStar report says strong tenant demand has fueled a construction boom across the U.S., which experts say could mark a record in new office deliveries. This influx in new supply has raised concerns of a potential slowdown and softening in rent growth in the office sector. At issue is how office owners and investors can stay competitive in spite of these new deliveries. Strategies that owners and investors can take to source attractive investment opportunities include targeting emerging gateway markets surrounding urban cores. This will allow investors to capitalize on spillover growth and also benefit from the long-term stability that these regions afford.

Investors also should target value-add opportunities and reposition their office assets in order to provide tenants with the best value-oriented alternative to new construction. For instance, many office owners have been repositioning their buildings into creative, collaborative work environments in order to cater to tenants seeking to attract the next generation of talent. In doing so, office building owners can provide tenants with the high-quality workspaces that Millennials are demanding at a discount to new construction. Finally, investors need to focus on long-term demand drivers based on evaluating demographic trends and focus on areas where there is enough infrastructure in place to support future growth.
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Energy Efficiency: A Deeper Shade Of Green
Facility Executive (06/05/17) Kaplan, Shannon

Designers and builders have made great progress in developing green buildings in recent years. However, considering the effort and skill put toward making energy efficient buildings, the question remains as to why these facilities have not saved as much energy as was initially forecast. Those in the field say the issue is the way occupants behave. Too often the carefully designed strategies of green builders fail to take into account factors other than those they themselves conceived. Building owners and design teams will need to look beyond structure and systems design to other factors that influence where energy use will actually fall. Modeling software makes some limited basic assumptions about how we will behave in a building, but this doesn't completely capture reality.

The best strategy for capturing the impact of occupants' energy-related choices is to engage with them, get to know them, and ask good questions about their decision-making. Key areas that should be discussed with occupants include work and occupancy schedules, preferred building temperature, lighting, and equipment. However, it is still not enough just to understand the choices occupants make and incorporate those into an energy prediction model. The aim is to improve their actions and guide them toward energy-saving choices. Designers need to test methods in advance. Do not assume occupants know the goals of the project or are familiar with the language of building design and energy efficiency. Finally, make sure to follow up and show where occupants' input influenced the design and resulted in changes.
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Office Renovations Pick Up in Downtown Minneapolis and St. Paul
Minneapolis Star Tribune (06/10/17) Norfleet, Nicole

The office property market in Minneapolis-St. Paul has changed dramatically in recent years. Today's business tenants are more concerned about amenities and resources in a building than how tall the structure is, observes said Reed Christianson, a partner at Transwestern. "It's really about inside-out on a building and not outside-in," he remarked. :It has to be about what you have in your building." According to a quarterly report released in May by Colliers International, the vacancy rate in the Twin Cities office market is 15.3 percent -- up from 14.5 percent in the fourth quarter of 2016. The direct vacancy rate in Minneapolis' downtown core is 19.7 percent. On the positive side, Class A buildings have a 12.9 percent vacancy rate.

To this end, many buildings are now undergoing renovations to add Class A level amenities in a bid to both retain and attract tenants and hike rental rates. A prime example is the 20-story RSM Plaza. Golub & Co. and Oaktree Capital Management purchased the building in 2015 for $78.3 million and immediately announced plans to spend upwards of $10 million to renovate it. Plans call for the creation of a new two-story lobby and a new restaurant to replace a closed Barnes & Noble bookstore. The store's second level will be divided for several retailers. RSM has already completed other improvements in a previous phase of the renovation, most notably the conversion of some fourth-floor space into a fitness facility.
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For Property Managers, a Penny Spent Is a Penny Earned
Area Development Online (06/07/17) Lanfear, Matt

Matt Lanfear, CEO of Great Eastern Energy, says apartment property managers should implement the best energy management strategies to enhance long-term savings. He recommends investing in new appliances, noting that while it can be a necessary expense for property managers, but it’s not always an easy decision. However, in the long run, inexpensive products can end up costing more because of their energy inefficiency. This is an instance where higher spending pays off. Lanfear says that for property managers, predicting future energy output is arguably the biggest budgetary challenge. From changes in the market to uncertain weather patterns, having the right tool with the most relevant information available is well worth the investment.

In addition to various tax incentives and rebates, companies that offer LED-retrofitting will often roll the installation fees into the monthly electricity costs, providing a flexible financial option. Finally, apartment buildings need assessments to ensure they are operating at peak efficiency. This process is called retro-commissioning, and it can include a review of anything from HVAC and electrical systems to insulation and structural integrity. Optimizing a building’s framework can reduce long-term operation and energy costs by at least 15 percent, but may also prevent any unexpected issues in the future. Though the investment may vary depending on the extent and type of updates recommended, the long-term benefits are certain to outweigh the costs.
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Common Rooms Go Flexible, Functional, and Furry
Multifamily Executive (06/01/17)

More and more apartment communities are looking to woo new residents with multi-use common areas and helpful amenities. As the standard apartment size shrinks, residents' expectations for common areas are growing. Some of the hottest amenities in this regard include well-outfitted laundry rooms and pet-friendly accommodations. Renters today want common space in which they can work and play. This has made flexible design an absolute must. Furniture should be lightweight and easy to move so residents can reconfigure the space at will to easily meet in-the-moment needs, like having a drink with friends or finding a nook so they can get work done. In addition, top-of-the-line, 24-hour fitness centers with dual-purpose rooms for classes such as Pilates or yoga are quite popular nowadays as apartment owners and operators try to further the appeal of their common spaces.

While laundry rooms' proximity to high-traffic areas remains a top priority, it is not the only one. Such rooms must also be well lighted and well maintained. Additionally, there must be plenty of energy-efficient washers and dryers, so residents do not have to wait to get their laundry done. Flexible payment options, including vended and card-operated machines and loyalty programs that earn free cycles, are among the latest trends. Wi-Fi access and flat-screen TVs, meanwhile, are moving up the priority list from nice-to-have laundry-room accessories to standard features. With regards to pet amenities, the trend toward hardwood flooring in common areas is not only aesthetically pleasing but also practical in apartment communities that allow dogs, in particular. Finally, pet-friendly properties are providing easy access to dog parks, while some even offer in-house pet spas equipped with grooming stations and washers and dryers designated for animal laundry.
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Region's Older Office Space Refreshed to Woo Tenants, Talent
Hartford Business Journal (06/05/17) Seay, Gregory

Aging downtown skyscrapers in the Hartford, Conn., market, including Goodwin Square and CityPlace I, are undergoing makeovers of their entry lobbies, common areas, and/or office suites. One goal is to install such amenities as seating or standup tables accessible to mobile phone-charging stations and free Wi-Fi. The owner of 500 Enterprise Drive recently replaced most of the 29-year-old office-building's dark, sedate wood in its lobby/atrium with lighter colors and a geometric wall hanging. A new outdoor patio will expand seating options for the building's cafeteria, and a proposed indoor arcade/lounge area will appeal to tenants' Millennial-age employees.

Building owners/managers, space designers, and lease brokers say efforts to modernize spaces in their decades-old buildings come at a time when tenants are eager to attract and retain younger workers. "We're seeing a big push toward more amenities," says architect Tony Amenta, a principal in downtown Hartford's Amenta Emma Architects, which redesigned the lobby of One Financial Plaza, aka the Gold Building. "From what we're seeing, landlords want to position older buildings in keeping with amenities newer buildings have," he says. The cost to revamp 500 Enterprise Drive alone runs about $1.5 million, which includes an estimated $700,000 budgeted for the patio, game room/lounge, conference room, and fitness center.
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Who Are the Most Likely Tenants to Backfill Empty Retail Big Boxes?
National Real Estate Investor (06/06/17) Bell, Diana

A recent JLL Research report suggests that up to 37 million square feet of retail space could be returned to the market by next year, based on store closure announcements. The next occupiers of the vacated space run the gamut, sources say, from specialty retailers to service providers to entertainment concepts to industrial and office space. "Retail real estate is undergoing an entrepreneurial moment like never before. It's a blank slate and there’s no cookie cutter," says Jedd Nero, executive managing director of retail services at Avison Young. Retail big boxes could work as multifamily housing, says Rick Chichester, president and CEO of real estate investment advisory firm Faris Lee Investments. Call centers can also work, especially since building owners would have to put less money into repurposing the property. "We are seeing some retail being converted to seniors care," Chichester adds.

The approach can work well because active seniors need convenient access to shopping and services that are present at retail centers. Medical office space is another contender in the non-retail tenant category. "Some non-retail tenants we are seeing enter anchor space are data decenters, housing, distribution centers and offices," says James Cook, director of retail research for JLL. When shopping malls repopulate empty anchor or big-box spaces with other retailers, the tenants will most likely fall into the categories of food, fast fashion, and entertainment, concludes Cook.
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St. Paul Woolworth’s Pivots From Dime Store to Hip Offices
Finance & Commerce (06/07/17) Johnson, Matt

A former St. Paul Woolworth's store built in the 1950s is on its way to becoming the latest conversion of retail space to modern offices in downtown St. Paul, Minn. The approximately $17 million renovation is a few weeks into interior demolition of a building that had sat empty since the early 1990s. Commercial Real Estate Services, the development arm of building owner HFS Properties, has rolled out a refined version of a design it proposed last summer to make certain the stark, brick-faced concrete and steel building could be expanded and opened to daylight.

The 428 – the new name — is bigger now, with a 12,000-square-foot fourth floor to be added. The 428 also will feature more than 6,000 square feet of glassed-in co-working space on a planned fifth floor that includes a rooftop patio. The 428 is also the first spec office space to come to the downtown market in five years, says Pat Wolf, owner of Commercial Real Estate Services. The 65,000-square-foot project has yet to sign its first tenant. The revamped structure is slated to open in summer 2018. Wolf says the "modern industrial" style of the building will draw tenants seeking a classic downtown building updated to include wide-open floor plans, natural light, and features designed to promote worker wellness.
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The Home Depot Shares Three Inexpensive [Ways] to Enhance the Outdoor Living Experience
Property Management Insider (06/08/17) Blackwell, Tim

Jeff Watson, Regional Pro Sales Manager at The Home Depot, offers three fairly easy ways that apartment property managers can improve the outdoor living areas of their communities without investing big dollars. Number one, relax your residents with swinging, swaying hammocks. New technology has created lighter-weight, stronger hammocks that can be stored in something as small as a plastic baggie. Apartment our residents can relax in a cotton rope hammock that costs management about $60. String a few of them attached by decorative, weather-resistant cedar posts, and any outdoor apartment area quickly transforms into an interesting social gathering spot and a relaxing experience for residents.

Two, updating patio furniture can make a big difference and adding some throw pillows, which cost around $13 each, to those outdoor chairs or a rug under a canopy creates a relaxing experience for residents. In addition, stringing party lights or other outdoor lighting will adds a festive touch. Outdoor incandescent lighting comes in a variety of shapes and sizes, from lanterns to Edison-type bulbs that range in price from $20 to $30 per string. And, three, Watson suggests, "create semi-private areas out on the grounds." After all, the outdoor experience shouldn't be limited to just patio and pool areas. A small and intimate gathering spot farther out on the grounds can offer families privacy and the feel of relaxing in a park or other recreational area.
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Developers Lure Buyers to Cities, Even as Prices Stall
New York Times (06/07/17) Hurdle, Jon

Empty-nesters in their 50s and 60s, as well as young professionals, are helping fuel a boom in multifamily housing in large U.S. cities. Some leading economists have even started warning about overdevelopment, worried that flattening prices could leave builders struggling to pay their debts. The Federal Reserve in February expressed "growing concern" about commercial property, including large apartment buildings, in cities like New York, Boston, and San Francisco. In a sign that the supply of housing will continue to swell in coming months, the number of building permits, a forward-looking indicator, rose 5.7 percent in April compared with a year earlier, the Census Bureau said. "It's exploding," says Ron Caplan, the president of PMC Property Group, a Philadelphia-based developer of rental properties in markets including Pittsburgh and Baltimore, referring to the growth in demand for urban residential rentals. Caplan attributes the surging demand to the increasing livability of downtown areas that have become more appealing with the influx of new residents who are educated, professional, and often wealthy.
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Portland Unveils Affordable, Energy-Efficient Apartments
Portland Press Herald (Maine) (06/06/17)

The Portland Housing Authority and Avesta Housing have partnered to build an energy-efficient, 45-unit affordable apartment community in Portland, Maine. The four-story building includes nine market-rate units and 36 affordable units, which are rented to families earning between $23,000 and $49,000 a year. The ground floor will house a Head Start preschool program, Portland community policing, and Portland Housing Authority offices. The building, which has solar panels on the flat rooftop, is the first multifamily building in the city to be certified as a Passive House by the Passive House Institute U.S. As an energy-efficient Passive House, the building does not have a centralized heating system because it is highly insulated, airtight, and well-ventilated. The rooftop supports 167 solar electric panels, which supply energy to the first floor of the building. The $7.8 million project is the housing authority’s first new development in 45 years. It was partially funded by low-income tax housing tax credits from Boston Capital.
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