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September 11, 2013
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LEADERSHIP SPOTLIGHT
Message from the IREM President

IREM HEADLINES
New iPhone and iPad Apps for Real Estate Managers
Shopping Center Income and Expenses Up, Occupancy Levels Rise Slightly in 2012, New IREM Benchmarking Study Reports
IREM Executive Edge: Come for Three Days. Learn for a Lifetime.
Sprinklers in High-Rise Buildings: What You Need to Know

INDUSTRY HEADLINES
Big Changes Are Coming to Conventional Office Buildings
Greenwich Tops Nation's Priciest CBD List
Seeking the Adult-Proof Carpet
Ex Post Evaluation of the Empire State Building Retrofit
Adaptive Reuse: Repurposing Nashville Commercial Real Estate
The Front Desk at Your Service
Top 10 Smart Building Myths—Busted
London Skyscraper Takes Heat for Its Beams (of Light)
Sherman Oaks Apartment Complex Draws Criticisms Over Health Concerns
Grocery Stores Adding Tech Features to Stay Competitive
As Some Malls Fail, Others Thrive
Brookfield Bets on Downtown L.A. Rebirth
NAAEI Opens New Path for Lapsed Students to Earn Certified Apartment Manager Designation under CAMnesty Program
Green Apartments in Evanston Open in Grand Style


Leadership Spotlight


Message from the IREM President

I hope you’re enjoying Real Estate Management News, our new publication aimed at providing our industry with insight, best practices and the latest and most important information and content.

In every issue, get updates from the real estate management world that will have a direct impact on you, your career, and your business. We want to be your primary source when you need to find out what’s going on out there, quickly and easily.

For more like this, check out the new Resources section of www.irem.org. There, you’ll find everything from books to webinars, white papers to free online tutorials. It’s our library of 80 years’ worth of industry knowledge, searchable by topic and by property type. You’re guaranteed to discover something that will help you do your job better.

Please take a moment and let me know what you think of Real Estate Management News.

Elizabeth (Beth) Machen, CPM
IREM 2013 President
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IREM Headlines


New iPhone and iPad Apps for Real Estate Managers

MAGICPLAN
No need to draw or move around furniture: MagicPlan—downloaded by more than one million people—measures your rooms and draws your floor plan by simply taking pictures of rooms, exporting them into PDF, JPG and DXF formats, so you can post images or publish interactive floor plans.

ZITE
Want to keep up with content but don’t have the time to sort through all of it? A personalized magazine that learns what you like and gets smarter with each use, Zite handles the dirty work of curating the content you want—from real estate news, housing, home improvement, finance, social media—any topic you’re curious about, and lets you share articles you like, give them thumbs up or thumbs down and choose to receive more from certain sources or block others.

ERRANDS
Errands is a task manager app that is crafted with a blend of basic and advanced features that allow you to create your own custom folders, checklists and task images. This app also provides alerts to send you reminders with customizable sounds or repeat options. With full support for iCloud Sync, this app is the perfect assistant to help you get through the day.

SCAN PAGES
Scan Pages converts your iPhone into a mobile scanner by converting captured images into PDF documents. By organizing and cleaning your mobile images using an advanced image processing technology, it allows you to combine them in a PDF file and store in GoogleDocs, Evernote, Drop-box or share via e-mail.

Additional apps can be found in every edition of IREM’s Journal of Property Management.
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Shopping Center Income and Expenses Up, Occupancy Levels Rise Slightly in 2012, New IREM Benchmarking Study Reports

Median income for open shopping centers across the country in 2012, based on average actual occupancy (AAO), increased to $16.18 per square foot from $15.31 the prior year. In contrast, open center operating costs increased to $5.20 per square foot from $4.95 in 2011.

These are among the key findings reported in the 2013 edition of the Income/Expense Analysis: Shopping Centers, a new benchmarking study published by the Institute of Real Estate Management (IREM).

OTHER STUDY HIGHLIGHTS
  • Broken out regionally, median income for open centers in 2012 ranged from $14.10 to $22.74 per square foot versus a range of from $13.90 to $20.46 per square foot in 2011. The Northeast and Mid-Atlantic regions reported the highest income per square foot at $22.74.
  • Regional results also revealed that the Southeast had the lowest median operating cost for open centers last year at $3.80 per square foot, whereas the Pacific Coast region had the highest at $6.46 per square foot.
  • In terms of expenses, insurance and taxes in 2012 accounted nationally for 44.4 percent of the typical open center’s total operating costs; contracted services accounted for 12.9 percent; and maintenance/repair and utilities accounted for 8.7 percent and 8.3 percent, respectively.
  • The national occupancy level for open shopping centers in 2012 was 92 percent, up from 91 percent from the prior year. Broken out regionally, occupancy levels this past year ranged from between 89 and 96 percent.
For more information on any of the Income/Expense Analysis: Shopping Centers’ products, check out the I/E Report products page or contact the IREM Customer Service Department at 430 N. Michigan Ave., Chicago, IL 60611-4090 or call toll-free to (800) 837-0706, ext. 4650.
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IREM Executive Edge: Come for Three Days. Learn for a Lifetime.

Register by October 1 to receive an earlybird discount!

Expectations are higher than ever for today’s real estate managers. You must be more than a property manager – you have to help owners reach their goals and successfully manage assets and navigate high finance. You must be a leader.

The Executive Edge will serve as a three-day boot camp, from which you’ll emerge a better leader than ever before. Show clients, owners and employers your commitment to your career.

Among the sessions that will ensure you learn more than enough in Scottsdale to kickstart your career or business to a new level:
  • Hiring and Retaining Young Talent Beyond salary, what is important to the young professional seeking employment today? Mark Stapp, executive director of the Master of Real Estate Development program at Arizona State University’s W.P. Carey School of Business, leads this provocative and interactive session.
  • The Aging Process: Apartment Repositioning. Hear valuable lessons learned on how to successfully reposition apartment communities, and learn strategies that can be adapted to any community or any market in the country to make your next repositioning project more successful.
  • Keynote speakers Anant Yardi and Steve Rizzo will leave you breathless with their dynamic presentations.

IREM Executive Edge
October 17-19, 2013
Scottsdale, AZ.

Come for three days. Learn for a lifetime. Register today!
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Sprinklers in High-Rise Buildings: What You Need to Know

Did you know?

According to the National Fire Protection Association (NFPA), buildings equipped with fire sprinklers lowered the risk of death by approximately 80% and reduced property damage by 71%. Between 1996 and 2001, the average cost of fire damage in buildings with a working sprinkler system was less than $400,000, while the loss incurred in buildings without sprinkler systems averaged $2.2 million. NFPA also reported that 95% of building and structure fires that have been reported the fire (flame) damage was confined just to the room of origin compared to 73% when no other automatic extinguishing equipment is available. In 85% of fires, only one sprinkler is set off rather than all sprinklers. Sprinklers have a 96% success rate in extinguishing fires.

This IREM White Paper gives you the information you need about sprinklers, including:
  • Sprinkler Maintenance and Inspection Issues
  • Impact on Real Estate Managers and Commercial Brokers
  • Reductions in Insurance Premiums
  • Reducing Liability
  • Maintenance
…and much more.
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Industry Headlines


Big Changes Are Coming to Conventional Office Buildings
Los Angeles Times (09/04/13) Vincent, Roger

Corporate America is moving away from conventional office layouts where an employee's status is measured by the amount of space he occupies. Instead, more compact and even playful designs are becoming more common. Because people can do their jobs almost anywhere with their cellphones and laptops, the office is being re-made into a place where people are stimulated by close interaction at their workstations and chance meetings in inviting public spaces such as coffee bars and employee lounges. This gradual shift in workplace culture will pack more employees into less space. On the downside, it has been a blow to conventional office buildings in the various financial centers. Acres of space currently sit vacant even though the economy is on the upswing and many employers are adding to their payrolls. Making underused office buildings desirable again may require radical modifications both inside and out. While landlords have been slow to act, more and more architects and urban planners are scheming about how such transformations might be accomplished. Remodeling solutions range from cutting out chunks of an office building's interior to create an atrium or theater to adding loft-like mezzanines on floors with high ceilings. Furthermore, such changes could make it possible for office complexes to accommodate multiple uses.

Greenwich Tops Nation's Priciest CBD List
Stamford Advocate (CT) (09/04/13)

According to data released by Jones Lang LaSalle (JLL), Greenwich, Conn.'s central business district (CBD) has the highest overall asking rent for office space of any CBD submarket in the country at $82.28 per square foot. In second place is the Plaza District of Manhattan, at $77.51 per sq. ft. Stamford, Conn.'s CBD is a not-so-distant sixth at $46.12, according to Jones Lang LaSalle, trailing San Francisco's Mission Bay district, at $61.79; the Capitol Hill district of the nation's capital, $60.07; and Boston's Back Bay district, $51.35. Erin Patterson, research manager at JLL, states that the presence of hedge funds is what has driven prices in Greenwich. She explains, "Their lucrative position allows them to pay top dollar for wherever they want to be. We saw a pullback in rents in the Greenwich CBD during the financial crisis because hedge funds were pulling back. They're still the biggest driver of demand for rental space." Still, some say Greenwich's top ranking is a bit misleading considering the small size of the town's district. Indeed, Greenwich's CBD has around 1.5 million square feet of Class A office space -- or about the size of one office skyscraper in Manhattan. Furthermore, the amount of Class A space is not about to increase anytime soon there due to parking and zoning requirements.

Seeking the Adult-Proof Carpet
Wall Street Journal (08/29/13) Abkowitz, Alyssa

Apartment owners and managers take note. Approximately 58 percent of the carpet manufactured in the United States is nylon, which is more durable than polyester. However, it's not as stain resistant. Consequently, carpet makers are scrambling to develop new stain-proofing treatments, technologies, and fibers. Earlier this year, Beaulieu of America introduced Indulgence, a new line of carpet made of solution-dyed nylon. According to CEO Ralph Boe, wine spilled on a carpet dyed with the treatment will stay on top of the fiber instead of penetrating deep into the carpet. Shaw Industries, meanwhile, uses the R2X stain and soil treatment that injects a chemical into the fiber from its top to its base rather than treating it topically. For its part, Milliken & Co. uses a clear dye known as StainMaster that has a negative charge against the nylon, preventing a stain such as fruit juice from seeping in. Finally, Mohawk Industries' SmartStrand carpet uses a material known as Triexta, a plant-based polymer that has built-in stain protection. Developed by DuPont and exclusively marketed by Mohawk, the fiber is approaching $1 billion in sales. SmartStrand has proven very effective in fighting blueberry and soil stains when treated with water and a mild detergent. However, mustard and wine stains tend to linger in sample tests.
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Ex Post Evaluation of the Empire State Building Retrofit
The Energy Collective (09/08/13) Davis, Lucas

New York's the Empire State Building is both the tallest and most well-known building in the United States to have received LEED certification, part of a major retrofit undertaken between 2009 and 2011. Engineering models predicted that the retrofit would cut the building’s energy use by as much as 38 percent, saving $4.4 million a year. Johnson Controls is now making data available for ex post evaluation. Most of the firm's report describes simulated energy consumption generated utilizing an engineering model of building performance. In addition, the study includes data describing the landmark skyscraper's actual energy consumption. Researchers were also able to make comparisons across warm and cold months. According to the research, electricity consumption has decreased 29 percent during winter months, with even larger decreases measured during summer months. Most tenants in the tower are individually metered for electricity. Consequently, these savings are accruing primarily to tenants themselves and to the building's owners via higher rents. The report further states that total energy expenditures for the Empire State Building top $10 million annually for electricity and $2 million a year for steam. As more years of data become available, analysts stress the importance of continuing to refine these estimates.

Adaptive Reuse: Repurposing Nashville Commercial Real Estate
Nashville Business Journal (09/04/13) Burton, Walt

Adaptive reuse -- the reuse of an older site or building for a different purpose than the one for which it was built or designed -- has been increasing in popularity over the last few years in Nashville and other cities. Adaptive reuse has gained steam as the movement to preserve historical buildings, neighborhoods, and structures has become more prevalent. Of course, it's no secret that older buildings often do not provide the return on capital and predictability that newer, more efficient structures may provide. However, the historical and aesthetic value of an older building often cannot be quantified. When faced with this dilemma, an owner of such a property must consider the structure of the building and its ability to adapt to modern needs, most notably the ability to be wired for modern technology. Market analysis then becomes critical. If research shows that potential tenants, buyers, or customers would value a restored older building over a modern complex, then a decision about how to proceed becomes much clearer.

The Front Desk at Your Service
Financial Times (09/02/13) Alen, Kate

In London, occupants of high-end office complexes are increasingly organizing their social lives through their building's receptionists, whose traditional role of a landlord's representative is being redefined as developers vie to attract tenants. In nearly 300 buildings citywide, receptionists have basically evolved into full-scale concierges. "In central London buildings, particularly the big offices and towers, it's becoming much more the norm now," confirms Sarah Crockford, a partner at CBRE. "A concierge is a differentiator [for potential occupiers], not just on new buildings but on older ones as well, and it’s definitely likely to become a wider trend in future." Tenants can now expect their front-desk concierge to do everything from booking travel to scoring concert and other event tickets. The new Heron Tower in London, for instance, has made its "six-star" concierge service a major selling point to prospective occupants. Specialist firms that provide building owners and managers with in-house concierges -- most notably Office Concierge and Portico -- have long offered such services to banks and hedge funds on an external basis. Increasingly, their concierges have taken on a permanent presence at ground-floor front desks and are even fulfilling the growing demand for technical assistance. A common request in this regard might be: "Could you set up my iPhone for me?" The leading services are now eyeing a move into existing clients' regional offices throughout Britain and across certain companies' Europe-wide operations. Office Concierge, for instance, has been asked by some of its clientele to expand its offering to Paris and New York City.
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Top 10 Smart Building Myths—Busted
AutomatedBuildings.com (09/01/13) O’Loughlin, Leo

Leo O'Loughlin, senior vice president of Energy and Sustainability Services at Jones Lang LaSalle, attempts to debunk some of the top misconceptions property owners and investors have with regards to smart buildings. One of the most common myths, he writes, is that smart building technologies are expensive. In fact, such technology investments typically pay for themselves within one to two years "by delivering energy savings and other operational efficiencies." Another myth is that smart buildings are only about energy. In reality, a smart building management system can often detect when a piece of equipment is close to failure and alert facilities managers to fix the problem. "More dramatically," O'Laughlin states, "smart building management systems can prevent full-scale building system failures." Another myth debunked is that smart buildings and green buildings are the same thing. Smart buildings maximize energy efficiency from building systems and ensure air quality. By comparison, a complete "green" sustainability program includes strategies beyond building automation systems. One other myth that O'Louglin debunks is that smart buildings are complicated to operate. He concludes, "Combined with a smart building management system, a smart building is often easier to operate and maintain than a building that lacks automated systems. A smart building management system can integrate work-order management applications; pull equipment repair and maintenance data into performance analytics; and pinpoint equipment issues to a degree not humanly possible."

London Skyscraper Takes Heat for Its Beams (of Light)
Wall Street Journal (09/04/13) Evans, Peter

London's newest skyscraper at 20 Fenchurch Street is drawing complaints for its glare effect. One facade of the glass tower slants downward toward the street below. For about two hours a day in recent weeks, it has been reflecting an intense beam of sunlight onto pedestrians, nearby workers, and city traffic. The US$311 million project's developers, Land Securities PLC and Canary Wharf PLC, are working to fix the problem, including plans to add a chemical agent to the building's facade to reduce reflection. Another possible fix is the use of nonreflecting foil to cover the offending panes of glass. In the meantime, the developers have agreed to erect a temporary screen at street level for the next two weeks to prevent some of the problems. The 37-story office building -- dubbed the Walkie Talkie building for its slight resemblance to a hand-held radio -- is expected to be finished in 2014. This, of course, isn't the first building to run into problems from the sun's beams. The Walt Disney Concert Hall in Los Angeles had to be modified after local residents complained the reflection from its stainless steel arches was overheating their homes and adding to their air conditioning bills.
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Sherman Oaks Apartment Complex Draws Criticisms Over Health Concerns
Los Angeles Daily News (08/27/13) Smith, Dakota

Developer M. David Paul's plans to build a 325-unit apartment community in Sherman Oaks, Calif., is drawing criticism over possible health risks. Paul is looking to provide sorely needed housing for locals who work in the area. But critics cite studies linking autism to living adjacent to bustling public highways to support their claims that building next to the 101 and 405 freeways is not safe. The project would be located just 35 feet from the freeway, much closer than the 300- to 500-foot buffer recommended by California's air quality board. The developer argues that the health risks have been addressed. Apartment windows facing the freeway will not open, and an extensive filtering system is planned. The City Council plans to vote on the matter soon.

Grocery Stores Adding Tech Features to Stay Competitive
Los Angeles Times (09/08/13) Andrea Chang; Hsu, Tiffany

Grocery stores are adding high-tech systems in an effort to cut lines, ease paying at the register, lead customers to the products they are seeking, and generally remain competitive against the likes of Wal-Mart, Target, and other big-box stores. Technologies that have recently made their way into supermarkets include digital signs that update prices and offer promotions by time of day, such as coffee and granola bar specials for morning shoppers. The Ralphs chain recently adopted the QueVision system, which uses infrared cameras to determine how many customers are in a store so managers can redeploy staff to the check-out registers. According to research firm IBISWorld, grocery industry revenue shrank an average of 0.4 percent in each of the past five years. British grocery giant Tesco is widely regarded as a pioneer of supermarket innovation. Indeed, it employs over 5,000 "technologists" in its Bangalore, India, development center who are dedicated to working on new ideas to improve the company's stores. Tesco CEO Philip Clarke recently remarked, "Digital is now intrinsic to retail. That's why, in 2013, we will invest three-quarters of a billion U.S. dollars in technology, up threefold in three years." Not to be outdone, the rival ASDA chain recently took the wraps off a checkout scanner tunnel. Consumers place their groceries on a conveyor belt that whisks them through a 360-degree laser scanner. The tunnel reads the bar codes, which ASDA said is "so fast it can increase the speed of scanning your shopping by up to 300 percent." Ralphs parent company Kroger is now testing similar technology.

As Some Malls Fail, Others Thrive
Chicago Tribune (08/30/13) Shropshire, Corilyn; Yerak, Becky

While once-vibrant shopping centers fall into disrepair and neglect in various parts of the country, others are benefitting from deep-pocketed investors and local leadership getting proactive. Adam Cody, vice president of Jones Lang LaSalle Retail, points to the Chicago metro area where there are currently more thriving malls than those in decline. He remarks, "Landlords have gotten creative and have their money behind them keeping them relevant." Some malls have managed comebacks by "de-mailling." Randhurst Shopping Center in Mount Prospect, Ill., relaunched itself in 2011 as Randhurst Village, a roughly $200 million, open-air "lifestyle center" featuring shops, eateries, and a movie theater. Through the years, the mall had withered into a "teenage hangout and place where senior citizens went walking," laments Mount Prospect Mayor Arlene Juracek. That's what prompted local elected officials to get involved. "Village management understood that [the mall] was a huge source of sales tax revenue," Juracek explained. "It was our showpiece . . . and to have it vacant would've been a very bad thing." To spur redevelopment, Mount Prospect leaders created a business improvement district and agreed to provide up to $25 million in incentives funded by various new taxes, including a 25-cent movie tax.

Brookfield Bets on Downtown L.A. Rebirth
Wall Street Journal (08/28/13) Brown, Eliot

Brookfield Office Properties Inc. is poised to become the biggest office landlord in downtown Los Angeles, which is on the verge of a rebirth from thousands of new apartments, a burgeoning restaurant scene, and hotel construction. Unfortunately, the local office sector is mired in a slump. Brookfield is becoming a big player in the L.A. market via its $2.1 billion acquisition of MPG Office Trust Inc. The purchase amounts to a wager that L.A.'s struggling downtown office market will turn around thanks to the larger evolution of the area. Brookfield CEO Dennis Friedrich remarks, "We think downtown L.A. will follow where the rest of the U.S. is going, [with] people living close to where they work." Currently, top employers are spread across the area, from Hollywood to West Los Angeles. For now, vacant offices loom in a downtown sector built up during the 1980s for law firms and banks that have since shrunk or moved elsewhere. The office vacancy rate in the downtown market topped 17.9 percent as of June 30 -- an increase from 14.7 percent three years ago, notes Jones Lang LaSalle. Stifel, Nicolaus & Co. analyst John Guinee states that because Brookfield already owns three towers in the area that have performed well, the company would benefit from its "somewhat monopolistic position" that should enable it to hike rents. Brookfield will also look to give each of the properties more pizzazz by replacing staid plazas and ground floors with such things as trendy eateries and outdoor seating.
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NAAEI Opens New Path for Lapsed Students to Earn Certified Apartment Manager Designation under CAMnesty Program
Multi-Housing News (09/13)

The National Apartment Association Education Institute (NAAEI) is now offering individuals who did not complete their Certified Apartment Manager (CAM) designation in the past seven years a second chance. The organization recently launched its CAMnesty program, which is expected to run through March 2014. Under the program, those who have previously completed all the requirements for the CAM except the community analysis or course exam can now pay a fee, complete a new course module, and take the exam to earn the designation. The fee ranges from $250 to $350 depending on how long it has been since the individual started the CAM course. This is NAAEI's latest attempt at updating its CAM program to meet the needs of today's adult learners.

Green Apartments in Evanston Open in Grand Style
Evanston Review (08/21/13)

AMLI Evanston, a new residential green technology apartment community in Illinois, celebrated its grand opening last month. Containing 214 rental units, AMLI Evanston was constructed with Leadership in Energy & Environmental Design Silver certification standards that involved a rigorous program that incorporates green building practices. Stephen Ross, AMLI Residential's executive vice president for development, states, "The project is five years in the making. We had a recession that slowed us down and set us back a little bit. . . . The idea behind this project was a renewal of this part of Evanston, which was tired and fairly run down." AMLI Evanston offers a wide array of apartments, ranging from studios to three-bedroom units. AMLI takes part in its own "Breatheasy" program, which prohibits smoking by residents and their guests inside their apartments and in all common areas. Other green features range from energy-efficient appliances to low-flow plumbing to compact fluorescent light fixtures. So far, the marketing outreach has been effective, and occupancy is building. Travis Smith and Kara Sherman moved into AMLI Evanston six weeks ago. The two dog lovers are especially thrilled with the community's dog grooming room. Sherman remarks, "It really is a beautiful building. The service is amazing."



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