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October 2, 2013
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LEADERSHIP SPOTLIGHT
Energy Efficiency in Commercial Buildings: Tenant Star Update

IREM HEADLINES
Tips on “What to Do After a Flood”
Focus on New IREM Checklist

Aging in Place: Is Your Association Ready for the Next Challenge?
“Tis’ the Season” – For Pop-up Stores
Government Shutdown Updates: from National Association of Realtors and CNN

INDUSTRY HEADLINES
The Slow Death of the Private Office
NYC Enacts 5 Building Resiliency Laws Recommended by Urban Green Council
The Double-Edged Sword of 'Young Professional'
Here's How the Government Shutdown Will Affect Housing
Building Tune-Ups Offer Quick Payback to Save Energy Cash
Free Cable for Building Managers, But With Fine Print
Milwaukee Office Tower to Get Silicon Implant
Austin Council Passes One of Two Rental Registration Plans
ADM to Move Global Team Out of Decatur, Ill.
RICS Presents a Global Road Map for Integrating Sustainability Into Existing Buildings
Virtual Audits Uncover Surprising Trends in Building Energy Efficiency
Retail Rents Ride Tourism Wave
Green Building Should Not Cost More, Report Says
Is Green Building Movement Enough to Revive Use of Heavy Timber for Framing in Construction?
Vt. Turning to Solar Power for State Buildings


 

Leadership Spotlight


Energy Efficiency in Commercial Buildings: Tenant Star Update

The U.S. Senate has started debate on the Shaheen-Portman bill, also known as the “Energy Savings and Industrial Competitiveness Act of 2013” (S. 1392). This bill is particularly important to real estate management and commercial real estate practitioners due to a key amendment that was introduced by Senators Michael Bennet and Kelly Ayotte. The amendment would add the “Better Buildings Act,” to the Shaheen-Portman bill and would recognize efforts tenants make to decrease energy consumption by expanding upon energy-efficient designs in their buildings. Tenant Star is a component of the Better Buildings Act and would connect the tenant and owner of commercial buildings to work together on improving energy efficiency. Investments to cost-effective energy savings measures have great potential of success when a partnership forms and the benefits are not exclusive to one party. One sponsor of the Better Buildings Act, Senator Ayotte stated, “our bipartisan legislation is a common sense, no-cost proposal that would promote greater energy efficiency in commercial buildings.” IREM has been monitoring the Better Buildings Act and Tenant Star and supports the voluntary nature of this legislation. IREM signed onto a coalition letter of nearly fifty industry stakeholders sent on September 11 to all Senate offices. A similar letter went to House members earlier this summer. IREM will continue to monitor the activity of this legislation and push for the passage of the bill and the Tenant Star amendment.

For more information on public policy and legislative issues, check out IREM’s Public Policy & Advocacy Resource Page. You can also learn more about sustainability/green issues on IREM’s Sustainability Resource Page.
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IREM Headlines


Tips on “What to Do After a Flood”
Focus on New IREM Checklist

As the current flooding in the Rockies painfully reminds us, floods are not only life-threatening disasters, but each year cause billions of dollars in property damage. Floods are the most common natural disaster in the United States. Any real estate manager who has endured catastrophic flooding on a property can attest that flooding is one of the worst natural disasters that can occur. While a flood can cause extensive property damage, it can also cause other potential disasters, including electrical outages, which could impede rescue operations, and result in electrocution of occupants. Depending on the type of property, food, fuel, and water contamination or shortages can also occur. Properties with the highest risk of flooding are those located on a flood plain and in areas with histories of flooding. It is wise to check with the local Federal Emergency Management Agency (FEMA) field office to review potential flood risks in your area.

Mindful that cleaning up a flood-damaged property requires a step-by-step approach, with attention to safety, insurance liability, and subsequent impact, the Institute of Real Estate Management (IREM) has developed a disaster response checklist for real estate managers to begin the process of picking up the pieces.

The checklist contains tips on:
  • What to do before and when entering a flooded property
  • Cleaning up
  • Insurance related matters
It also contains general information about floods and flood insurance as well as links to resources/contacts for additional information.

DOWNLOADABLE FREE
IREM Members and non-members can download the checklist What to do After a Flood, cost-free.
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Aging in Place: Is Your Association Ready for the Next Challenge?

In a recent survey, 90% of adults over the age 65 report that they would prefer to stay in their current residences as they age. How will this affect the property management industry and the Condo/HOA segment in particular? Real estate managers need to be aware of the aging population and how to best serve them, now more than ever before.

In this comprehensive webinar on Thursday, October 29, at 2:00 p.m. Central Time, Brian Lozell, CPM, will discuss:
    Demographic information on the aging population
    A glossary of terms with which you should be familiar
    Housing and design trends that will affect us and our buildings
    Additional resources to prepare you for the challenge that lies ahead
Have you ever heard of an SLF? Is your managed association a NORC? Should you have a PACE? Get these answers and much more.
IREM Webinars are always free for members. Register now.
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“Tis’ the Season” – For Pop-up Stores

Halloween conjures up a lot of images of “trick-or-treaters” and other scary thoughts. But, it also provides an opportunity for retail property managers to generate at least some revenue from vacant space.

The National Retail Federation estimates that Americans will spend almost $7 Billion this Halloween season, or about $75.03 per person on costumes, decorations, and other scary items. With that much money being spent, it is no wonder that the last few years has seen a proliferation of Halloween “Pop-up” stores that are open for only a month to six weeks. Even though these are short term leases, they can generate thousands of dollars for property owners.

Unfortunately, if you don’t already have a Halloween Pop-up retailer signed up, you are probably out of luck for 2013. Retailers usually start looking for Pop-up locations about 10-12 months prior to Halloween. They typically look for empty space in a strip mall, shopping mall, or high traffic areas near busy streets. On the plus side, now is a great time to start looking for potential temporary tenants for the 2014 Halloween season.

And, you don’t even need to wait for Halloween 2014. Pop-up stores are becoming a year-round phenomenon, including temporary retail outlets for clothing (Levi Strauss & Co. just opened a Dockers pop-up store in New York), art galleries, food, and even “big-box” stores (like Target). To get an idea of the types of retailers that are looking for temporary space you can check out PopUpInsider.com

For other ideas for filling up empty space, check out the IREM publication Troubled Properties: A Practical Guide for Turning Around Troubled Assets
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Government Shutdown Updates: from National Association of Realtors and CNN

The National Association of Realtors is maintaining a website providing updates on how the government shutdown is impacting the housing industry. HUD/FHA will not make any new loan commitments in the Multi-family Program during the shutdown. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate. Their likely will be delays in FHA processing. FEMA confirmed that the National Flood Insurance Program (NFIP) will not be impacted. Fannie Mae and Freddie Mac will continue to operate normally. For continuing information check out the NAR Government Shutdown Updates site.

CNN has also published a helpful chart identifying what federal offices and agencies are affected by the shutdown.

Industry Headlines


The Slow Death of the Private Office
Fortune (09/23/13) Lewis, Katherine Reynolds

For the past two decades, more and more companies have been shifting to open workspace designs and eliminating dedicated offices to cut real estate costs and encourage collaboration between staffers. CoreNet Global reports that a majority of employers allocate 150 square feet or less per worker, down dramatically from 225 square feet just three years ago. Assigned space is unused 50 percent of the time, notes Richard Kadzis, CoreNet's vice president for strategic communications. Now, as the per-person square footage of the typical workplace continues to shrink, many workers are starting to wonder whether a limit has been reached. Cali Williams Yost, a flexible workplace strategist, remarks, "In open workspaces, it's hard for people to get their work done if it requires uninterrupted concentration and focus. People who have jobs that require private conversations or uninterrupted thinking really struggle."

More than 80 percent of companies surveyed by CoreNet have already adopted an open-space floor plan. For its part, AT&T eliminated offices and consolidated workspace with savings of $3,000 per office for a total of $550 million per year. Meanwhile, Nortel's telecommuting program saves the company roughly $20 million a year in real estate costs. Still, creating a productive workspace is not as basic as tearing out office doors and putting in long rows of benches where employees can connect laptops. The best open floor-plan offices typically include strategically placed quiet rooms for "heads down" work, along with huddle rooms for small meetings or impromptu gatherings, bigger conference rooms, and social areas where further collaboration and innovation can take place. The top designs also feature access to plants and natural light through windows, skylights, and/or creative use of atriums. Kadzis notes that noise is often the most ignored factor in open design. To this end, acoustical engineers should be hired and made part of the design team to consult on such things as white noise and noise-absorbing materials.

NYC Enacts 5 Building Resiliency Laws Recommended by Urban Green Council
Paramus Post (NJ) (09/24/13) Fabrikant, Mel

On Sept. 24, the New York City Council enacted the first set of new laws designed to help improve the resilience of the city's buildings and infrastructure in the face of future severe weather events similar to Superstorm Sandy. The laws being enacted implement five specific recommendations of the city's Building Resiliency Board which is led by the Urban Green Council. Among the specific measures are a requirement that new automatic faucets and toilets have at least two weeks of battery backup so that they can remain operation in the event of power failures, and a requirement that new buildings built in flood zones be equipped with valves to prevent sewage from backing up into the building. The new laws also call for the creation of a manual outline construction requirements in flood zones, commission studies on the effects of hurricane winds on existing buildings, and pilot programs testing the use of new road and sidewalk materials that will be able to absorb water and help prevent flooding. These laws amount to 20 percent of the legislative recommendations made by the Building Resiliency Council, though more of the recommendations are expected to become law later in the year.

The Double-Edged Sword of 'Young Professional'
Associations Now (09/13) Bascuas, Katie

The label "young professional" can be both a positive and a negative in the association world. That is according to a group of young professionals who discussed its implications at the American Society of Association Executives' (ASAE's) recent NextGen Summit. Among them was Melissa Walling, director of membership at the Institute of Real Estate Management. She stated, "I think it works to our advantage when we're networking, when we're looking for opportunities. It kind of helps us to stand out because we are accomplished and we are younger." Not so positive was Scott Wiley, president and CEO of the Ohio Society of CPAs, who feels the "YP" term is limiting. He remarked, "It's not inclusive to those new in the profession. You may be a young professional with seven years of experience in the association management profession, and you also may be a new association professional who doesn't fit under the 'young' category because you have less experience, and we exclude them by virtue."

Here's How the Government Shutdown Will Affect Housing
Forbes (10/01/13) Brennan, Morgan

With the U.S. government underwriting, insuring, or owning more than 90 percent of all home loans, there is widespread concern that the federal shutdown will hurt housing -- access to financing, in particular. However, experts say that -- initially, at least -- the mortgage market will not be greatly affected. While the Department of Agriculture is suspending its home loan operations, user fees fund loans guaranteed by the VA and also support mortgages bought and securitized by Fannie Mae and Freddie Mac; therefore, those financing options will not be touched. Also, earlier media reports that the FHA would not be able to endorse any single-family loans have turned out to be false. Although the agency will be working with a skeleton staff, it has confirmed that it will remain open for business. Observers generally concur that housing will be relatively safe from the fallout of a shutdown, but only if the closure does not drag out for too long. "Because we are able to endorse loans, we don't expect the impact on the housing market to be significant, as long as the shutdown is brief," according to a HUD report. "If the shutdown lasts and our commitment authority runs out, we do expect that potential homeowners will be impacted, as well as home sellers and the entire housing market." In the short term, meanwhile, the one problem that the industry could encounter is a longer timetable for processing loans.

Building Tune-Ups Offer Quick Payback to Save Energy Cash
Alaska Journal of Commerce (09/26/13) Brehmer, Elwood

After a summer hiatus, the Renewable Energy Alaska Project restarted its monthly Clean Energy Forum this month with a look at ways to improve energy efficiency and save money in commercial buildings. Ezra Gutschow, a mechanical engineer for Coffman Engineers Inc., gave a presentation that detailed his firm's approach to energy improvements in the workplace. Gutschow says building commissionings assure that all heating, ventilation and air conditioning (HVAC) and lighting system elements in a new building are working in unison to maximize their effectiveness. Meanwhile, he likened a retro commissioning to a vehicle tune-up -- getting everything back to peak working condition after some time on the road. He went on to recommend that a building's operational systems be inspected every five years. A typical large-building commissioning -- either initial or retro -- costs around $40,000. But the investment can be well worth it. A recent retro-commissioning Coffman performed on a 90,000-square-foot office building in Midtown Anchorage found blowers that provide ventilation were running constantly, as opposed to just the 10 to 12 hours when the building is occupied. Adjusting the run-time of the fans reduced the building's annual energy bill by $41,000 in heat and electrical savings.

Free Cable for Building Managers, But With Fine Print
New York Times (09/23/13) Harris, Elizabeth A.

Building managers in New York City have long enjoyed significantly discounted rates with Time Warner Cable in exchange for giving repair crews access when needed and calling the company when problems arise. But according to Tom Hogan, superintendent of a Manhattan condo building, his first contract for Time Warner's Apartment Managers' Program required him to snoop on residents to ensure they were not stealing cable. While the perk has long existed, the company has been formalizing these longstanding deals over the past few years, causing concerns that parts of its program deputize the employees of apartment buildings to carry out the cable company's job, and thus, creating a conflict. "You're an employee of 77 Park Avenue Condominium, yet you're being asked to do all these things for another entity," said William G. Rusch, the condo board president of Hogan's building. "It's blurring the line of responsibility."

Milwaukee Office Tower to Get Silicon Implant
Wall Street Journal (09/25/13) Sadovi, Maura Webber

The design for what will be Milwaukee's tallest new office building in over two decades combines a couple of motifs that often compete: a high-rise exterior typically associated with staid finance and law firms and a large, open interior popularized by California's Silicon Valley. Northwestern Mutual Life Insurance Co. is erecting the $450 million, 32-story tower on its existing downtown campus near Lake Michigan. Once finished, Northwestern Mutual's curved glass tower will be the state's biggest single-tenant office building. Regarding the new tower, Milwaukee Mayor Tom Barrett said, "It's a sign that the economy is starting to come back."

In addition, Northwestern Mutual's tower shows how new workplace-design ideas often associated with high-tech firms operating out of converted industrial buildings are taking hold far away from Northern California. Companies from a wide array of industries are looking to make their work spaces more collaborative, with many eschewing private offices in favor of open space. Dan Jessup, an office broker in Milwaukee with Jones Lang LaSalle, remarks, "What we're seeing is a demographic shift where a newer generation prefers to be in an urban setting and that's coinciding with the national trend toward more collaborative space."
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Austin Council Passes One of Two Rental Registration Plans
Austin American-Statesman (09/27/13) Coppola, Sarah

In Texas, the Austin City Council unanimously approved a proposal this past week to require apartment communities and other rental properties to register with the city and be inspected regularly. According to council members, the goal is to better track and impose penalties on those properties with unsafe or unsanitary conditions. The plan, which was crafted by Council Member Bill Spelman, will require both multifamily and single-family rental properties that are cited for several health and safety code violations in one year to register with the city and be inspected periodically. The Austin Apartment Association was among the groups that backed Spelman's plan. The city currently requires only short-term rental homes -- a small segment of rental properties -- to register. Furthermore, inspections and enforcement of safety codes, such as an apartment community's structural stability, are only done after residents lodge complaints with the city.

ADM to Move Global Team Out of Decatur, Ill.
Wall Street Journal (09/23/13) Kesmodel, David; Peters, Mark

Archer Daniels Midland Co. (ADM) has decided to relocate its global headquarters after more than four decades in Decatur, Ill. The move will enable senior executives to travel more easily and the company to better recruit and retain top talent. Officials in Chicago -- about 180 miles from Decatur -- confirmed the Windy City is in the running for ADM's new home. So far, ADM has declined comment on which cities are indeed under consideration. Management has only said the company needs to be based where executives can travel more efficiently to meet with customers and other ADM staffers around the globe. In addition, it wants a location where executives' family members can find ample career prospects. ADM ranks as one of the world's biggest agriculture companies.
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RICS Presents a Global Road Map for Integrating Sustainability Into Existing Buildings
Europe Real Estate (09/20/13)

The Royal Institution of Chartered Surveyors (RICS) recently published its "Sustainability: Improving Performance in Existing Buildings" guidance note, which offers building professionals best practice guidance on how to make their properties resource efficient throughout their entire life cycle -- from location, design, and construction to operation, renovation, and demolition). RICS officials agree that there is increasing political and financial support for green initiatives and corporate social responsibility worldwide. Within commercial real estate, this has led to a long list of benefits and drivers for building occupiers, owners, and investors to assess and improve the sustainability of their spaces.

Chartered surveyors are in a very strong position to advise clients, especially on the investment potential of sustainable buildings. RICS members are urged to follow the list of measures and best practices mentioned in the new guidance note as these recommendations meet a high standard of professional competence. Zsolt Toth, External Affairs & EU Liaison Manager at RICS Europe, comments, "The publication of this guidance note responds to both legal and market needs, as it establishes standardized approaches to sustainability within the refurbishment process and practice. . . . This becomes especially relevant given that governments are incrementally implementing stricter and more comprehensive environmental regulations as illustrated by the forthcoming EU Communication on sustainable buildings."

Virtual Audits Uncover Surprising Trends in Building Energy Efficiency
The Energy Collective (09/19/13)

Over the past several years, the small number of startups developing virtual energy auditing services have cumulatively analyzed more than 1 billion square feet of commercial buildings. While virtual audits are not yet an industry standard, they continue to gain acceptance. Virtual audits offer a faster, lower-cost way of targeting efficiency opportunities. With so many properties now getting the virtual auditing treatment, firms are finding some interesting trends amidst all that data. Retroficiency has released its own report after taking a sample of 500 commercial buildings. It found five important trends. Number one, high-potential buildings offer significantly more savings than low-potential buildings. Second, traditional metrics for measuring energy intensity are not great tools for gauging savings. Third, end-use consumption does not necessarily correlate with savings potential. Fourth, extending a payback period can offer a lot more savings. And, finally, saving energy and reducing carbon emissions can be two separate strategies.

Retail Rents Ride Tourism Wave
Crain's New York Business (09/22/13) Pasquarelli, Adrianne

The number of tourists visiting New York City has skyrocketed 38 percent during the past decade. An estimated 52 million visitors will spend over $37 billion this year alone, twice the amount of 2003. Such gains pale in comparison with those reaped by the city's retail building owners over the same period, especially those in the prime tourist haunts. Along the half-mile of Fifth Avenue running from 49th to 59th streets, for instance, average asking rents per square foot have more than doubled to just over $3,000 -- the highest in the country by a wide margin. On lower Broadway in SoHo, meanwhile, average asking rents for the most prime spaces have soared 133 percent to $700. Those gains dwarf the 26 percent rise in average retail rents in Manhattan since 2003. Now, retail property owners in the outer boroughs are starting to reap the rewards. Average retail rents have tripled along the Fulton Street Mall in downtown Brooklyn. Such numbers will likely continue to rise, fueled by an expected growth in the number of visitors to 55 million by 2015. Richard Hodos, a broker at CBRE Group Inc., concludes, "The tourists keep coming. [As a result], there is still an incredible amount of new designers and new kinds of businesses here or from overseas looking to open a store in New York."

Green Building Should Not Cost More, Report Says
Environmental Leader (09/13/13)

M&G Investments has released a report that discusses the return on investment associated with using green building methods when constructing or retrofitting commercial buildings. The report noted that green building methods will not necessarily cost more than traditional construction and renovation methods so long as cost strategies, program management, and environmental strategies are taken into consideration from the beginning of the project.

The report also noted that the upfront costs associated with using green building methods are being driven down by the increased maturity of the green building supply chain. The growing availability of people who are skilled in green building methods, as well as the increased availability of the tools that are used in these methods, also are helping to reduce upfront costs. In addition, the report noted that any extra construction costs associated with the use of green construction are generally outweighed by the reduced energy costs associated with operating green buildings, usually within a reasonable period of time. However, the report also noted that green building projects need to be supported by strong project management and leadership as well as "robust" commissioning if such projects are going to deliver value.

Is Green Building Movement Enough to Revive Use of Heavy Timber for Framing in Construction?
Equipment World (09/23/13) Grayson, Wayne

Although timber has not been used consistently for framing a building since the rise of concrete and steel after World War I, there is a growing movement among "green" designers to bring back its use. Industry officials expect to see more projects like the Bullitt Center in Seattle, a recently completed, six-story office building composed of four floors of Douglas fir beams and columns atop two-stories of reinforced concrete base. There is also a steel beam core for reinforcement. Called “The Greenest Commercial Building in the World,” the Bullitt Center is built to last 250 years. Besides having carbon-reducing benefits, timber also looks better, according to supporters such as Brian Court, an architect with Seattle's Miller Hull Partnership. Speaking in an interview with the Minneapolis Star Tribune, Court said there is “a huge movement right now” and a “kind of awakening, sort of the rebirth of timber.” Even after being milled and installed in a construction site, Court says, the energy necessary to create timber materials is "virtually offset by the sequestered carbon inside it," compared to the amounts of energy needed to generate concrete and steel.

Vt. Turning to Solar Power for State Buildings
Times Argus (09/12/13)

Vermont has decided to use solar power to run 10 state office buildings, including all seven of its prisons. The deal between the state and AllEarth Renewables entails solar installations that will serve the prisons as well as the Pavilion Office Building in Montpelier, where Gov. Peter Shumlin's offices are, and state office complexes in Brattleboro and Bennington. In some cases, these installations will provide 100 percent of the electricity for the buildings. According to Shumlin, the project furthered his long-term goal of getting 90 percent of Vermont's energy needs from renewable power sources by 2050. He states, "There is no cost to taxpayers for this investment. It will save taxpayers about $1 million, which is not only smart in terms of managing taxpayer resources, but smart energy policy." It is important to note that the installations will not go on the rooftops of the different buildings. Instead, where possible, the units will be installed near the facilities.



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