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September 18, 2013
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LEADERSHIP SPOTLIGHT
Can Green Buildings Make Us More Productive?

IREM HEADLINES
Property Management Licensing Requirements by States
September is Ethics Awareness Month
Creating Conflict Can Be Good For Business

INDUSTRY HEADLINES
It's Midnight on Sept. 13 – Do You Know Where Your Leases Are?
Retrofit Chicago Initiative Makes Progress
University of Baltimore and Institute of Real Estate Management Collaborate to Advance Real Estate Profession
BASF Assesses Sustainability in Own Office Buildings Worldwide
Ground Zero Tower Not Yet Nation's Tallest
Call Center Debate: Better to Outsource or Host In-House?
It Could Have Been Worse: Operating Expenses 2012
Fire Standard for S.F. High-Rises Ignites Debate
P&G Slices Energy Bill With Smart Building Project
Real Estate Survey Shows Broad Support for Biking and Walking Commutes
A 13th-Floor Condo? No Such Luck
Domino's Sets World Record for LED Lighting Efficiency
Gaining Efficiency in Real Estate Property Management by Offering Generation-Appropriate Payment Channels
10 Green Building Processes Being Adopted in 2013


Leadership Spotlight


Can Green Buildings Make Us More Productive?

PayScale (09/12/2013) Luckwaldt, Jen Hubley

A recent Michigan State University (MSU) study determined that employees in LEED-certified buildings were more productive and less prone to absenteeism. MSU researchers conducted a couple of case studies among office workers in East Lansing, Mich. In the first, a total of 56 workers moved from a conventional office building to a platinum LEED-certified building. In the second, 207 workers moved from a standard building to a silver LEED-certified building. Both studies determined that, after moving to the LEED-certified properties, workers reported "reductions in perceived absenteeism and work hours affected by asthma, respiratory allergies, depression, and stress and to self-reported improvements in productivity." A building must undergo review by the U.S. Green Building Council (USGBC) to obtain LEED certification. The USGBC assigns LEED ratings by measuring the property against such categories as water efficiency, sustainable building materials, and indoor environmental quality. The MSU team indicates that their findings "indicate that green buildings may positively affect public health," but conceded that the results were based on self-reporting and perception. Consequently, it is possible that workers experienced gains because they expected to feel better in a LEED-certified office.

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IREM Headlines


Property Management Licensing Requirements by States

The Institute of Real Estate Management (IREM) has completed a state-by-state research project on property management licensing requirements. In addition to information by state, the IREM White Paper contains the following, general findings:
  • Most states regulate property management by including management functions such as leasing, offers to lease, negotiating leases, renting, collecting rent, etc., as covered real estate activities. In many cases, property managers who do not engage in leasing or renting activities are exempt from licensure. The typical definition of broker also specifies that these activities are being done for another individual for a fee, commission or other valuable consideration. Individuals managing their own properties are generally exempt from licensing requirements.
  • States that license property management by including leasing and renting activities as covered practices also include leasing and renting questions on state exams.
  • Many states exempt on-site residential managers from license requirements as long as they do not engage in leasing activities. A few states require that the on-site residential manager is employed by the property owner. Some states do not require a residential manager to live on-site but limit the manager to working for only one property.
  • Many commissions are looking to address property management under existing real estate broker/agent laws by addressing property management and management functions in administrative rules.
  • Many states are trying to define property management for licensing purposes. Lack of a clear definition was often mentioned as an obstacle to regulation.
  • Common interest association management continues to be considered as an area for regulation, although no trend in licensure activity seems evident.
For information on specific states, check out IREM’s Legislative White Paper: Property Management Licensing Report. You can also check out some of IREM’s other legislative white papers.
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September is Ethics Awareness Month

Do you walk the walk?

The IREM Code of Professional Ethics is a cornerstone of everything the Institute does. Owners, employers and clients know that IREM Members are bound by this strictly enforced code.

All month, we’re honoring this unique commitment to professional ethics.

And keep an eye out on Facebook and Twitter for brief ethics quizzes and opportunities to share your story.

We're celebrating the Institute's 80th anniversary this year, which makes this a perfect time to celebrate the ethical behavior that makes our members -- and IREM itself -- something special.

Not an IREM Member? Learn more about the Institute’s ethics, mission, and membership opportunities.
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Creating Conflict Can Be Good For Business

One of the common myths is that conflict is inherently bad and should be minimized or avoided at all costs. On the contrary, properly managed conflict can lead to greater innovation, performance, and even improved cohesion within a team.

One of the best tactics for managing conflict is “mental jiu-jitsu.” The basic premise of jiu-jitsu, can be defined as “avoid pitting your strength against your opponent’s directly; instead, use your skill to step aside and turn their strength to your ends.” In other words, absorb the energy of your opponent and use it to manage their behavior.

So how do you do that? If pushed, do not push back:
  • When they assert their positions, do not reject them – Ask them to explain their position. How does it achieve their interests (helping to learn more about their real interest)? Why do they think it is a fair and reasonable solution?
  • When they attack your ideas, don’t defend them – Ask them to explain why your ideas won’t help achieve their interests. Ask them to help you understand why they don’t think it is a fair and reasonable solution.
  • When they attack you, don’t counterattack – Sidestep their attack and deflect it against the problem. If someone says, “You’re just being selfish about this,” respond by saying “Well, let’s look at the problems and maybe it will help me understand why you think that way.” Direct people back to the problem, not emotional responses.
To learn more about conflict management, and ideas for improving that competency, check out IREM’s Conflict Management Leadership White Paper.
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Industry Headlines


It's Midnight on Sept. 13 – Do You Know Where Your Leases Are?
Wall Street Journal (09/10/13) Passi, Carlos

On Sept. 13, the comment period ended on sweeping changes to accounting regulations requiring every business to list the value of all leased assets on their balance sheets – from commercial real estate to technology infrastructure. Despite their looming impact, a recent study by IBM and CFO Research shows a whopping 92 percent of companies with revenue of more than $1 billion are not prepared for the changes. These new rules will mean huge, mandatory compliance shifts, translating to as much as $1.25 trillion in off-balance sheet liabilities being added once these rules go into effect, reports the SEC. Real estate, for example, is by far one of the biggest leased holdings today and ranks as one of the top four expenses for roughly 66 percent of companies. Enterprises with global offices, manufacturers renting factory space, retailers operating hundreds of storefronts, telecommunications companies with leased towers -- they will all be impacted by the rules, written and expected to be revised by the U.S. Financial Accounting Standards and International Accounting Standards Boards this year. On the positive side, the new standards present an opportunity for CFOs to capture significant competitive advantage via asset allocation.
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Retrofit Chicago Initiative Makes Progress
GlobeSt.com (09/12/13) Rogal, Brian J.

Last summer, Chicago Mayor Rahm Emanuel took the wraps off his Retrofit Chicago's Commercial Buildings Initiative. The voluntary effort by tenants, managers, and owners of major commercial buildings was aimed at reducing energy use by 20 percent within the first five years of the program. Now, 15 months later, some of the participants have started to report results and draw lessons they hope will make Chicago the most sustainable city in the nation. When the effort was launched, various architectural firms took the lead and began examining specifically how tenants in 224 S. Michigan -- an 18-story class A office tower that is part of the initiative -- used energy and how they could work together to reduce usage.

The historic building was occupied primarily by architects. They felt their deep level of expertise gave them a leg up in the initiative, which initially included 14 buildings containing approximately 14 million square feet. Eighteen more buildings joined this past March. Architects starting holding biweekly meetings in the building and began putting workshops together where they analyzed energy use in IT departments, printing offices, and other sections. In addition, property manager Hamilton Partners installed smart meters on building systems and mechanical equipment. Among the techniques they want building owners and managers to adopt include allowing non-tech staffers to use low-energy laptops and putting printers on sleep mode. Skidmore, Owings & Merrill LLP has already registered an 18 percent reduction and believes it can top the 20 percent goal by the end of the fourth quarter.
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University of Baltimore and Institute of Real Estate Management Collaborate to Advance Real Estate Profession
Newswise (09/13/13)

The University of Baltimore's (UB's) undergraduate program in real estate and economic development has agreed to collaborate with the Institute of Real Estate Management (IREM) to advance the profession through educational and professional development opportunities. A memorandum of understanding was recently approved by the University and IREM. Plans are now in the works to develop dedicated programming, events, and so forth. UB officials will utilize IREM's textbooks and resource materials in its teaching in the program. Meanwhile, the Institute will recognize the University of Baltimore's Bachelor of Science in Real Estate and Economic Development degree as one that fulfills the specified educational requirements for its Certified Property Manager designation. IREM presently has collaborative agreements and relationships with the real estate degree programs at eight other institutions of higher learning -- Georgetown University, St. Augustine's University, Virginia Tech, Ball State University, the University of Central Florida, California State University-Fullerton, Cornell University, and the University of Wisconsin-Stout.

BASF Assesses Sustainability in Own Office Buildings Worldwide
Business Standard (09/12/13)

BASF is currently evaluating its office buildings around the globe with regards to sustainability. So far in 2013, the company has assessed the economic, environmental, and social criteria of seven buildings in Europe, Asia, and North and South America. BASF's assessment method is based on standards of sustainable building labels and on the system of the German Sustainable Building Council. Number one, the general state of construction concerning the basic structure and sustainability of the building are determined. Second, the condition of windows and the energy consumption of the building are evaluated, along with whether lighting and room temperature are adjusted to the well-being of employees. The results are then integrated into a research report that contains recommendations on how the building can be optimized. BASF director Margaret Suckale states, "With this project, we are setting a benchmark for the chemical industry. We are one of the first companies to analyze sustainability criteria of its buildings worldwide." Now, around 150 BASF-owned office properties with a total floor area of more than 1,000 square meters are being analyzed across 50 sites. In the first six months of this year, BASF has office buildings in such far-flung markets as Antwerp; Dubai; Kuala Lumpur; Ludwigshafen, Germany; and Wyandotte, Mich.

Ground Zero Tower Not Yet Nation's Tallest
Chicago Tribune (09/10/13) Kamin, Blair

For several years now, it has seemed a foregone conclusion that One World Trade Center -- the skyscraper that has arisen on the site of the destroyed Twin Towers in Lower Manhattan -- would rise to a symbolic height of 1,776 feet and dethrone Chicago's Willis Tower as the country's tallest building. However, with the 12th anniversary of the Sept. 11 terrorist attacks, new twists in the saga of measuring skyscraper height have raised the unlikely possibility that One World Trade Center will not rank tops No. 1 and that Willis would retain the distinction. This November, the Council on Tall Buildings and Urban Habitat will consider whether to knock more than 400 feet off One World Trade Center's official height due to a technical distinction between spires and antennas. Such a call would disrupt the carefully calibrated symbolism, envisioned by Ground Zero master planner Daniel Libeskind, of a tower rising to 1,776 feet -- a reference to the year the Declaration of Independence was adopted.

According to the Council's rule book, spires can be counted in a building's height but broadcast antennas are superfluous add-ons. Seventeen years ago, that distinction doomed the bid of Willis Tower -- then known as the Sears Tower -- to retain the world's tallest building crown. Instead, council members ruled in favor of the Petronas Towers in Malaysia, whose spires made them 33 feet taller. Even if the Council rules in favor of One World Trade Center, another technicality could upset its appeal to national pride. In 2009, the Council revised its rules to stipulate that a skyscraper's height is measured from the lowest significant, open-air pedestrian entrance to the building's top. The tower's height in feet could end up being 1,781 feet because One World Trade has a secondary, north-facing entrance that is five feet lower than its main, south-facing entrance.

Call Center Debate: Better to Outsource or Host In-House?
Multifamily Executive (08/28/13) Bousquin, Joe

Camden Property Trust is on the leading edge of solving one of multifamily housing's most vexing problems -- answering the phone. After discovering that it was leaving half its phone leads on the table, the Houston-based REIT teamed up with RealPage to roll out a call center solution that has helped augment its in-house call center staff by answering overflow calls and those that come in after hours or on weekends or holidays. Camden has also been bolstering its own internal call center, known as the Camden Contact Center. In September, that operation ramps up to 24/7 availability, with 30 full-time Camden agents answering calls for the firm's 65,000 apartments. Answering 100 percent of its own calls is important to the firm, as the REIT has methodically developed its call center staff from the inside out. The question now is whether this do-it-yourself approach will become an industry norm among at least the bigger players.

Among the proponents of call centers is Joe ¬≠Greenblatt, CEO of San Diego–based Sunrise Management. His firm's 12,000 rental units use RealPage's Level One call center solution. Greenblatt, the Institute of Real Estate Management's President-elect, remarks, "Call centers provide wonderful metrics, call recording, and call sourcing so you can measure ad spend without additional outlay." Since some calls still go to Sunrise staff at the various apartment communities, ¬≠Greenblatt says the result has been a "blended" approach in which a third party bridges the gap when on-site agents become deluged or are simply unavailable. The return on investment for Sunrise has been substantial. Greenblatt states, "At five properties we reviewed in 2012, we closed 62 leases from prospects handled through our call center. With an average rent of $1,284, that equals $79,608 of monthly revenue. The outlay for the service on those five properties was just $1,617 per month."

It Could Have Been Worse: Operating Expenses 2012
Apartment Finance Today (09/13) Anderson, Bendix

According to the "2013 Income/Expense Analysis: Federally Assisted Apartments" report released late last month by the Institute of Real Estate Management (IREM), affordable housing managers overall were spared sharp increases in operating costs during 2012. Fuel prices, however, started to increase again this past summer. For the affordable housing communities covered in the survey, operating costs climbed on average between 2 percent and 3 percent. The numbers show operating costs increasing or decreasing for "idiosyncratic" reasons across various property types -- a major difference from the previous couple of years when cost increases hit nearly all property types. Matthew O'Hara, income/expense analysis manager for IREM, observed, "This year you didn’t have consistency… Each property type is very different." IREM notes that for properties subsidized by the Sec. 202, Sec. 236, and Sec. 8 family programs -- depending on the building type -- operating expenses were either up within a range of $0.30 to $2.28 per square foot of rentable area or down within a range of $0.12 to $1.22 per square foot.

Fire Standard for S.F. High-Rises Ignites Debate
San Francisco Chronicle (09/08/13) Coté, John; Riley, Neal J.

Amid intense lobbying, San Francisco is set to drop a requirement that skyscrapers have refill stations so firefighters can recharge their air tanks during a blaze. For almost a decade, the city has required that new high-rises have the air refill systems -- a move made after Los Angeles firefighters spent over two hours lugging 600 air cylinders up 10 flights of stairs during a 1988 high-rise fire. Three years later, a trio of Philadelphia firefighters died from smoke inhalation after running out of air while fighting a 38-story building blaze. The air tank refilling systems, currently in 20 San Francisco buildings, have yet to be used during a fire. Furthermore, some firefighters do not trust them, despite receiving praise from national experts.

Now, San Francisco Fire Chief Joanne Hayes-White wants to permit high-rise developers the option of installing either the air replenishment system or a reinforced, specialized elevator for firefighters, which could ferry crews, evacuees, and equipment including air tanks. Hayes-White remarks, "We honestly believe that the fire service elevator offers more flexibility." Developers will bear the cost of either approach. Most have opposed the air system requirement, contending it safeguards a monopoly for the dominant player in the market, San Carlos-based Rescue Air Systems. The Building Owners and Managers Association of San Francisco has lobbied for years to change the air-system requirement.

P&G Slices Energy Bill With Smart Building Project
Cincinnati Enquirer (09/10/13) Coolidge, Alexander

Using a pilot program by Jones Lang LaSalle (JLL), Procter & Gamble has been able to slash its utilities bill at its headquarters and other key buildings by as much as 16 percent. Dubbed IntelliCommand, the program has utilized a "smart building" computerized system to monitor and manage energy use 24 hours a day, seven days a week in a dozen of P&G's buildings totaling 3.2 million square feet. As a result, the consumer products giant has managed to recoup its investment in the program within the first three months, saving 4,400,000 kilowatt hours or 10 percent. Results were especially strong at the company's technical center pilot site, where energy costs were reduced 16 percent. Larry Bridge, P&G's global facilities and real estate governance manager, remarks, "By converting to a smart building system that uses predictive analytics to detect building performance abnormalities before they occur, we not only achieved energy savings in our corporate real estate portfolio, but we also improved building equipment reliability and the physical comfort of our employees." Besides P&G's headquarters campus, other buildings that used IntelliCommand ranged from its global health care headquarters facilities to a key technical center to a major mixed-used complex that included both offices and manufacturing operations.

Real Estate Survey Shows Broad Support for Biking and Walking Commutes
Washington Post (09/09/13) O'Connell, Jonathan

The days when office and retail property developers haggled to get as many parking spaces as possible included in site plans may soon come to an end, especially in major metropolitan areas like the Washington, D.C., region. In a poll conducted by the D.C. chapter of the Urban Land Institute, 96 percent of respondents said their market would benefit from more people walking or biking to get to work. Meanwhile, 86 percent said they expect that trend to become significantly more popular in coming years. Lisa Rother, executive director of ULI-Washington, noted that more commuters -- at least in areas where other options were available to them -- were opting not to drive to work. However, in some cases, she said local governments needed to catch up to the trend. Only 49 percent of survey respondents said local governments were doing enough to support biking and walking. Suggestions for improvement included more bike lanes, sidewalks, and trails (49 percent); increased public and private funding (22 percent); and employer-based incentive programs (10 percent). Rother forecasts that more owners and managers of office properties in urban areas will offer more incentives for bike commuters, in particular, including on-site bike repair stations and private bike rentals for building occupants.

A 13th-Floor Condo? No Such Luck
Wall Street Journal (09/06/13) P. M1 Tanaka, Sanette

Although most people do not believe the myth that the number 13 is unlucky, not even 5 percent of mid- and high-rise residential condo buildings in Manhattan and Brooklyn have a designated 13th floor. In new construction, the decision to omit the 13th floor occurs well before groundbreaking, with property developers and marketers discussing floor layouts in the initial planning meetings. In those instances when the 13th floor is omitted, developers work off two sets of plans: technical ones that show a 13th floor and marketing plans that do not. Kevin Maloney, a principal at New York-based Property Markets Group, comments, "If there's even a 1 percent risk that someone won't like it, then why would you do it? It's a simple change to the numbers. It also makes a building seem a little bit taller, which is important in New York. You get an extra floor." In the Big Apple, older buildings and co-ops are more likely to feature a designated 13th floor. The exact number is difficult to calculate, since co-op information is not made public, reports Pete Culliney, director of research and analytics at CityRealty.
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Domino's Sets World Record for LED Lighting Efficiency
Buildings (09/13)

Vanguard Energy Services NJ and Independence LED state that a Domino's Pizza location in Dover, N.J., has completed the most energy-efficient restaurant lighting retrofit in the world. An Applebee's eatery in Newtown, Pa., previously held the record. The Domino's eatery increased energy efficiency by installing LEDs that use only 50 watts per fixture. Domino's has vowed to utilize LEDs that use 44 watts per fixture for future energy efficient projects. With more than 10,000 Domino's locations around the globe, the projected savings is to be massive: $24,000 annually and $250,000 over LED life.

Gaining Efficiency in Real Estate Property Management by Offering Generation-Appropriate Payment Channels
National Real Estate Investor (08/24/13) Pierce, Nancy

In an increasingly competitive rental housing market, using resident demographics and preferences to strategically choose payment channel offerings enables apartment managers to enhance their resident experience, improve accounts receivable management, and save money. In order to be successful in any service industry, firms must be efficient and tightly manage their costs. A major challenge for apartment managers has been a shifting of generational demographics among their residents. Meeting the needs of existing and prospective residents often differs based on age. A 2012 J Turner Research survey explored online apartment search patterns, behaviors, and preferences across apartment communities owned by 10 different firms.

The study found that seniors are more wedded to paper checks than any other generation. The younger that residents are, the more comfortable they tend to be with electronic payment solutions. While some Baby Boomers still cling to paper, more of them are moving to electronic bill payment. As for the Millennial Generation, it’s no exaggeration to point out that some in this youngest adult demographic have never even written a check. Consequently, managers targeting this very big segment of potential residents should consider offering payment alternatives that take into account Millennials' desire for flexibility, convenience, and their utter fearlessness when it comes to using online payment channels. The most recent Federal Reserve Payments Study revealed that the number of checks written each year was decreasing at a rate of nearly 6 percent a year. Meanwhile, electronic payments volume was rising at more than 9 percent a year. Accepting electronic payments can help managers boost their working capital by converting rent payments into available cash faster. In addition, it can help apartment managers reduce bank costs, as financial institutions are pricing their services to incentivize greater use of more efficient electronic payments. Finally, electronic payments provide an important tool for reducing payment fraud.

10 Green Building Processes Being Adopted in 2013
EcoSeed (08/27/13) Vollf, Andrea

More green building techniques and practices are being adopted as concern for the environment and the green building industry grows. Commercial building owners in several cities are now required to disclose the green building performance of their buildings to all new tenants, buyers, and the public. Meanwhile, municipalities are making green building codes official and enforceable in many areas of the country, and many green buildings are now managed in the cloud. Many municipalities also have a goal of creating net-zero buildings by 2030 through the use of renewables such as solar power, which will continue to grow, as will third-party financing partnerships to provide funds for large rooftop systems on warehouses, big box stores, and homes. In addition, net-zero and carbon reduction goals will force universities, government agencies, hospitals, and corporate owners to require green building designs and construction teams. Green retrofits, such as retrofit LED lighting, and other green innovations will grow rapidly, driven by economic considerations. Homes are trending toward smaller, high-efficient buildings that require less space, fewer materials, reduced energy requirements, more efficient heating and cooling, and tighter building envelopes. Mandates will compel building designers, owners, and managers to implement water conservation technologies such as more efficient plumbing fixtures, rainwater recovery systems, and new onsite water technologies. The new LEED v.4 gives credit for avoiding certain chemicals, igniting a trend toward requiring environmental and health product declarations, which will create competition among building product manufacturers to make disclosures of chemical ingredients available.



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