Real Estate Management News - 10/11/2017

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October 11, 2017
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IREM® HEADLINES
The Changing Principles of Real Estate Management
Strategic Planning and Budgeting – The Asset Manager Role
IREM’s Global Summit Starts Today
7 Steps to EV Charging -- Webinar
EPA launches first-ever 1-100 water score in ENERGY STAR® Portfolio Manager®

INDUSTRY HEADLINES
Why Office Buildings Should Run Like Spaceships
Adopting Recycling is Becoming Easier and More Desirable in Multifamily
Las Vegas High-Rise Shooting Scenario a Security Nightmare
U.S. Retailers Begin to Catch a Break Following Bankruptcy
When Is a Floor Officially Clean?
Market Pulse for October 2017
U.S. Rents Are Getting More Affordable—as the Renters Get Richer
Why Green Building Matters for HR
Solving the Talent Crunch
Shopping Malls Battered by Online Retailers May Be Offered to Amazon as HQ2 Sites
Using IoT as an Amenity
Largest Rental Housing Search Engine Dedicated to Apartments Near Universities Acquired by Tech Firm


 
 

IREM Headlines


The Changing Principles of Real Estate Management

Simply put, real estate as an industry has evolved. There was a time when real estate management was mostly associated with the physical upkeep and guidance of an asset. While fiscal management was also a component, it occupied less of the real estate manager’s time and focus than say caring for curb appeal. Today, real estate managers are relationship masters and market experts, who help investors understand the marketplace and the community as it relates to their investment. The relationship between owner and operator (or investor and real estate manager) is one driven by value-add. Real estate managers are no longer just physical custodians, but financial architects who create value. The real estate manager plays an integral role in the investment process, while also helping to ensure a quality experience for customers and maximizing returns for their clients. Just as the ownership landscape has changed, so too has the management business. Today’s management professional is more sophisticated, plugged-in, and informed than ever. IREM’s seminal book, Principles of Real Estate Management, is in its seventeenth edition, and has been revisited, revised, and remastered to include the best practices of yesterday and the best tips for today. Whether you are a seasoned professional looking for additional insight or a beginner just starting out, there is something in this textbook for you. Use it as a roadmap to your future success, or as a support tool when you need help along the way.

New and exciting information included in this seventeenth edition includes a transformed marketing chapter with an emphasis on branding and social media marketing, along with new visual diagrams and exhibits, creating a more stimulating read. There are both useful and practical suggestions that will help to inspire and empower you to make changes to your personal and professional approach. There is also additional information about the ownership landscape that is changing, what it means for your business, and how you can benefit from it.

Check out the 17th edition of Principles of Real Estate Management.
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Strategic Planning and Budgeting – The Asset Manager Role

Business plans define where real estate investment management firms would like to take the properties in their portfolios, and budgets allocate the resources to get them there. Dr. Dustin Read’s newest research report (Business Planning & Budgeting: The Role of the Real Estate Asset Manager) focuses on how asset managers use these tools to create value and achieve the investment goals of the companies they represent. The report also provides recommendations for property managers who work with, or aspire to be, asset managers.

The results of the research suggest business planning and budgeting are two distinct, yet complimentary, processes requiring asset managers to not only synthesize investment objectives articulated by portfolio managers and ownership groups into “strategic and tactical guidebooks” for properties, but also work with property managers and leasing agents to ensure the revenue and expense projections included in such plans are realistic in light of market conditions. This necessitates both coordination and cooperation.

Real estate investment management firms that want to engage in business planning and budgeting in a more strategic and comprehensive manner can start by considering their approach to asset management. If they find their asset managers spend much of their time managing property managers, “tweaking” financial assumptions, or negotiating leases, at the expense of continually evaluating and improving the competitive position of the properties in their portfolios, changes may be appropriate.

Property managers who hope to work with asset managers more effectively must recognize that strategic thinking is an important part of their professional responsibilities. Arguably the most direct way for property managers to participate in strategic decision-making is through the operating and capital budgets they prepare for review and approval by asset managers and ownership. Property managers create the greatest amount of value when they understand the investment objectives that led to the acquisition of the properties they operate, look beyond the physical confines of those assets to assess where they sit in the market, and make recommendations to enhance their competitive profile in ways that are accretive to defined financial goals.

Check out the full report.
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IREM’s Global Summit Starts Today

The IREM Global Summit starts today and goes through Friday. There is still time to attend this event, which brings together industry professionals from all facets of the industry and from across the globe

The Global Summit delivers a one of kind, contemporary conference experience for commercial and multifamily property and asset managers. In addition to over 35 education sessions and events, don’t miss out on the much anticipated keynote sessions with John Foley and the Industry Leaders Lunch featuring volunteer leaders from BOMA, NAA, and CCIM on stage with the 2017 IREM President Mike Lanning, CPM.

Check out the full schedule of education sessions and events.
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7 Steps to EV Charging -- Webinar

According to a recent Bloomberg study, electric cars will outsell fossil-fuel powered vehicles within two decades as battery prices plunge. Electric cars will be as cheap as gasoline vehicles in less than a decade, but charging infrastructure may cause bottlenecks to growth. The growth in electric car sales will create both opportunities and challenges for real estate managers.

To learn more about whether adding EV charging stations make sense for you property sign up for IREM’s webinar “7 Steps to EV Charging”on October 25, 2017. John Kalb, founder of EV Charging Pros, will detail 7 simple steps that lead to a decision about EV charging. You will learn about what information is required, how to assess that information and formulate a plan for your property. He will review industry trends, business models and case studies.
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EPA launches first-ever 1-100 water score in ENERGY STAR® Portfolio Manager®

This week, EPA launched the new 1-100 water score for multifamily properties in ENERGY STAR Portfolio Manager. Consistent with the approach for the 1-100 ENERGY STAR score, the EPA 1-100 water score allows multifamily owners and managers to see how their property’s water consumption compares to similar properties nationwide.

While all building types can benchmark water use in ENERGY STAR Portfolio Manager and track performance over time, this is the first 1-100 water score available for any building type. The score is based on data from the Fannie Mae Energy and Water Market Research Survey, and was developed by EPA’s WaterSense® program, in partnership with ENERGY STAR. Visit EPA 1-100 water score for multifamily properties for details.

Improve efficiency with help from WaterSense -- Multifamily properties with 20 or more units can use the 1-100 water score to identify high- and low- performing properties across their portfolio, to replicate best practices and target low-performers for improvement. EPA’s WaterSense program is developing a comprehensive set of multifamily water efficiency resources to help owners and managers cut water costs. Download the first of these water efficiency best management practices and assessment tools.

Register for a no-cost webinar to learn more -- Join EPA on Wednesday, October 18, at 1:00 PM ET for a no-cost webinar to discuss the score development process, see a demonstration of how to generate the score in Portfolio Manager, and discuss how multifamily owners can use this new water performance metric to help identify opportunities for water savings.

IREM is proud to be a 2017 ENERGY STAR® Partner of the Year
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Industry Headlines


Why Office Buildings Should Run Like Spaceships
Wall Street Journal (10/08/17) Mims, Christopher

The newest office buildings have a lot in common with spaceships. Architects, engineers, and scientists are starting to view our workplaces as sealed structures that must actively manage their internal environments, while mitigating pollution and other hazards that are the cost of doing business in many of the world's most economically productive cities. Such major cities as Beijing, Los Angeles, and London regularly experience air so bad their citizens are warned to stay indoors. Office buildings with sealed windows are typically the norm, but that can lead to other health hazards. For example, volatile organic compounds -- emitted from furniture and carpets -- combine with the carbon dioxide we exhale to create an environment that has the potential to make occupants sleepy and not as sharp as they need to be for productivity. Office optimization is about productivity, or getting the most out of every worker. As environmental sensors become widely available, indoor air quality is now something building managers can track and manage.

Nevertheless, many offices have high levels of carbon dioxide. The worst offenders are meeting rooms, where carbon-dioxide levels can reach 3,000 ppm. Engineers and architects are looking at a range of measures to assess the environment of office spaces. Temperature, humidity, light, and even noise and odors are within reach of a profusion of cheap sensors, states Arjun Kaicker, head of user parametrics at London-based Zaha Hadid Architects. Beyond air quality, research has discovered that getting the office temperature wrong can indeed have consequences for worker productivity. Some office managers have opted to employ new technology to create individualized "thermal bubbles" for each staffer. Finally, when it comes to light, it isn't just about having enough, but also the right kind of illumination. A nice window view can increase productivity and the exposure to daylight can boost. But if views and sunlight are in short supply, shifting the color "temperature" of office LED lights from yellow to blue can boost workers' ability to concentrate.
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Adopting Recycling is Becoming Easier and More Desirable in Multifamily
Property Management Insider (10/04/17) Blackwell, Tim

Contracting with a waste management vendor is the first step apartment owners and operators should take in getting the ball rolling on community recycling. But the presence of recycling bins isn't always enough to get residents involved. The success of any apartment community recycling program comes from within. Managers and leasing staff are key to community wide participation. Susan Holley, Community Waste Disposal's Director of Business Development, remarks, "It takes promotion from the management company's onsite personnel. Many residents want recycling." Holley works with Dallas/Fort Worth-area apartment properties to launch and manage recycling programs. In recent years, more apartments are embracing programs that recycle materials instead of sending them to landfills. Holley adds that it is residents who are driving many properties to work with waste management firms to repurpose glass, plastics, aluminum cans, and other materials such as newspapers and boxes.

In recent years, a growing number of apartment properties across all classes have started viewing recycling programs as a perk. In 2015, for instance, recycling was among the top five community amenities in the National Multifamily Housing Council/Kingsley Apartment Resident Preferences Survey. "One reason for wider implementation is because more cities are making recycling mandatory," the article's author notes. A second reason is most Americans now want to take part in programs with the younger generations fueling that request. Apartment communities with successful programs constantly remind residents to participate through messaging in community portals, regular, bulletins and periodic newsletters. "The biggest thing is to promote on site," Holley concluded. "We have one community that reminds residents what can be recycled and what can't be recycled."
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Las Vegas High-Rise Shooting Scenario a Security Nightmare
Associated Press (10/04/17) Long, Colleen; Hays, Tom

From two broken-out windows of the Las Vegas Mandalay Bay Resort, Stephen Craig Paddock had an unobstructed view to rain rapid-fire bullets into a country music festival below, with few places for people to hide. In places like New York and Chicago, where big events are planned in city streets in the coming days, police sought to reassure jittery residents of some of the precautions they are taking to prevent just such a scenario. New York City's police boss says that regularly includes sharpshooters with binoculars on rooftops scanning nearby building windows for potential threats, helicopters circling above with snipers of their own, and detectives making security sweeps of nearby hotels. David Katz, CEO of Global Security Group, which conducts active-shooter training around the world, noted "the answer only really is, if there's a sniper, there's a counter-sniper."

Chicago Mayor Rahm Emanuel, whose son was among the 45,000 runners in the city's annual marathon Sunday, said emergency officials, including federal authorities, have conducted roughly a dozen workshops to talk through various scenarios. Perhaps the most stark example of the crowd-building dynamic is in New York, where the city's 36,000-officer department regularly goes on high alert for such events as the New Year's Eve Times Square celebration, the Macy's Thanksgiving Day parade, Monday's Columbus Day parade, and even some Yankees games. For such events, the NYPD puts officers with body armor and high-powered weapons around the perimeter, sharpshooters on nearby rooftops to scan the windows of other buildings for threats, and cops with bullhorns on the streets instructing gawkers in nearby buildings to keep their windows closed. The NYPD also has a program to train thousands of private businesses and employees, from janitorial staff to building security personnel, on how to spot explosives or tell a golf bag from a gun case.
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U.S. Retailers Begin to Catch a Break Following Bankruptcy
Reuters (10/06/17) DiNapoli, Jessica; Rucinski, Tracy

An unexpected helping hand from creditors, landlords, and vendors is allowing more U.S. retailers to stay in business following bankruptcy with most of their stores and employees in the fold. The new approach marks a turning point for the beleaguered sector, which has seen at least 19 brick-and-mortar retail chains shut down the bulk of their operations since 2014. This could spell a slowdown in the decline in brick-and-mortar retail jobs, which fell by more than 100,000 this year, as more than 6,000 stores shuttered under increasing pressure from competition among traditional retailers as well as e-commerce firms such as Amazon.com Inc. Jeans company True Religion Apparel Inc. and perfume wholesaler and retailer Perfumania Holdings Inc. are set to emerge from bankruptcy with at least some of their stores in operation. These chains will follow a path blazed by Payless ShoeSource, which in August emerged from bankruptcy while keeping more than 3,400 out of its 4,200 stores worldwide.
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When Is a Floor Officially Clean?
Buildings (10/05/17)

Unpredictable weather in many parts of the country has made it impossible to accurately assess what cleaning a facility management staff will need to keep their building's floors clean every day. To help building owners and operators protect their floors from weather-wear, Cintas Corporation has compiled a floor cleaning checklist to help keep floors clean, protected and in top condition. Step one is to schedule periodic deep cleans. Floor deep cleans use cleaning chemicals, dwell time, and high-pressure steam to sanitize and remove buildup and accumulation of dirt and grime. Step two is to implement a matting program. Businesses without proper entrance matting will have a difficult time keeping floors clean and hazards such as dirt and precipitation at the door. A third step is to perform daily cleaning. To this end, management should consider using floor mops with an on-board cleaning chemical reservoir, like a pulse mop, to quickly clean up spills throughout the day.

Step four is to use the correct dilution for cleaning chemicals. Experience has shown that incorrect cleaning chemicals or the wrong dilution may not clean as well as intended and may actually cause floors to be slippery or sticky. Finally, upgrade your building's cleaning tools. One consideration is to use a dual-chamber mop and bucket system rather than a traditional mop and bucket when cleaning floors. That's because dual-chamber systems separate dirty mop water from the cleaning chemical solution, thus preventing dirt from being mopped back onto floors.
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Market Pulse for October 2017
Multi-Housing News (10/08/17) Fu, Jing

According to HUD and the U.S. Census Bureau, starts of multifamily buildings with five or more units -- measured at a seasonally adjusted annual rate -- fell 17.1 percent in July 2017 to 287,000 following an 8.1 percent increase the month before. Over the last year, starts of five or more unit buildings decreased 35.2 percent during July, the fifth consecutive decline. The NAHB's Multifamily Production Index (MPI) bounced back to trend in 2017's April-through-June period. The MPI measures builder and developer sentiment about current conditions in the apartment market on a scale of 0 to 100. The index is scaled so that any number above 50 indicates that more respondents report positive conditions than report conditions are getting worse. In this year's second quarter, the MPI increased eight points to 56 -- the highest reading since 2015's third quarter. Finally, NAHB's Real Rent Index rose during July by 0.1 percent. Over the last year, NAHB's Real Rent Index has climbed 2.1 percent.
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U.S. Rents Are Getting More Affordable—as the Renters Get Richer
National Real Estate Investor (10/05/17)

According to a recent report from New York University’s Furman Center for Real Estate & Urban Policy, the share of households considered burdened by high rents is on the decline. However, the dynamics driving improved affordability remain a mixed bag. Among the reasons for the shift is that wealthier households are increasingly likely to rent, enabling apartment owners to hike prices without raising the risk that their residents won't be able to pay. To be sure, the number of households that spend 30 percent of their income on rent and the share that spend half their income on rent are still historically high. Twenty-one percent of households earning at least 120 percent of the area median income rented in 2015 versus 15 percent a decade earlier. Families with kids and households where at least one member has a Bachelor's degree also became more likely to rent over the course of the past decade.

Not all cities benefited from better affordability. Of 53 metros areas with at least one million people, one in three recorded an increase in the number of cost-burdened households. Fifty-nine percent of Miami renters spent at least 30 percent of their income on rent -- the highest in the country. One big positive from the report is that rental affordability improved across an array of income levels, with the rent-burden rate declining fastest for households earning between 50 percent and 80 percent of their area median income. Those earning less than half their median area income saw more modest improvement. There's presently a shortage of more than 7 million housing units affordable to the poorest U.S. households, concludes the National Low Income Housing Coalition.
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Why Green Building Matters for HR
SHRM Online (09/27/17) Powers, Melanie Padgett

Sustainable building design impacts human resources in positive ways, with a 2016 Harvard University study finding that employees in green-certified buildings exhibited significantly higher cognitive performance and much lower sick-building symptoms than those in noncertified buildings. HR professionals and CEOs increasingly are on the same page as they plan construction and renovation projects that follow LEED principles, and sustainability can range from offering employees fresh food in the cafeteria to replacing harsh cleaning products to reconsidering space to optimize access to quality views. "Even if they're not looking to retrofit their building or get a new building, HR can be involved in working with facilities on space planning or office design to encourage collaboration, to help boost employee engagement by figuring out how to maximize daylighting," says the U.S. Green Building Council's (USGBC's) Ashley Fowler.

USGBC is a model for the HR sector, having earned platinum LEED certification for its Washington, D.C., headquarters. The building maximizes daylight and air quality with a design that emphasizes energy efficiency and sustainable construction. LEED performance is tracked on a display in the main lobby. In addition, the headquarters' workspace eschews cubicles abutting windows and uses ergonomic workstations. HR pros can adopt sustainability principles at minimal expense by gradually transitioning to green design.
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Solving the Talent Crunch
Multifamily Executive (10/06/17) Castenson, Jennifer

Nationwide, apartment developers and property managers are facing the very pressing issue of talent acquisition and retention. At the recent Multifamily Executive Conference, Cohen-Esrey Real Estate President and CEO R. Lee Harris moderated a panel of industry professionals to talk about this topic. Village Green CEO Diane Batayeh explained her company's three-pronged approach to staffing, which includes projecting Village Green as a people organization disguised as a property management firm. Village Green wants its employees to come to work happy about what they do, so it looks to hire for character first and then build a culture around that trait. Village Green also makes its brand known to potential job seekers by hosting job fairs to which the firm has top executives in attendance. Lela Cirjakovic, executive vice president of operations at Waterton, says it's crucial to maintain a strong online reputation, because that's the first place most new talent will seek you out. The panelists concurred that people typically don't go to college for property management and often "stumble" into the profession, so recruiting via college career programs generally isn't a good option. Some universities, though, are launching real estate curricula that may change that.
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Shopping Malls Battered by Online Retailers May Be Offered to Amazon as HQ2 Sites
Chicago Tribune (10/06/17) Day, Matt

Amazon will have a plethora of choices when it picks the site for its second headquarters. In an ironic twist for a company that helped introduce the world to Web-based retail, a few of those options may be defunct shopping malls. Property developers from Arizona to the nation's capital are indeed suggesting malls as prime locations for Amazon's next headquarters. After all, malls are typically quite large, big enough on their own to meet the space requirements Amazon laid out for its second home base. In addition, they tend to be located within close proximity to highways, population centers, and airports that Amazon detailed in its wish list of characteristics for what it calls HQ2.

Another advantage is easy availability. Indeed, increasingly, shopping centers are vacant. After overly ambitious store building and borrowing during the pre-recession boom years, retailers have been shuttering stores at a record clip. That's laid low many of the malls that house them. Oliver Chen, who monitors retail for Cowen & Co., expects the closure of at least one-fifth of the roughly 1,200 U.S. shopping malls still in operation. "We had a situation where so many malls were developed, and too many stores opened," he stated. "Now there's this digital consumer shift, which is happening faster than people expected. It's survival of the best ones." Cities and states must cobble together bids prior to Amazon's Oct. 19 HQ2 deadline.
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Using IoT as an Amenity
Multi-Housing News (10/02/17) Moorman, Felicite

There is a seismic shift occurring in apartment and campus housing communities driven by residents' expectations. The amenities that used to attract prospective renters to a property are no longer exceptional, but expected. Technology has become the main differentiator between multifamily properties and their competitors. "Millennials and student housing innovations are clearly driving the push for Technology as Amenity in multifamily," the article's author writes. Smart apartment features are becoming increasingly common, such as keyless entry and apps for thermostat scheduling, lighting control, and more. Integrating energy control and access provides a faster return on investment for property managers, with features such as maintenance requests and package management.

Technology is benefiting residents, as well as apartment owners and managers. And while there is an opportunity for properties to garner revenue lift via rent hikes, there is something that is equally as important. Using the Internet of Things (or IoT) saves property managers time, which means an increase in net operating income for owners. Additionally, Generation Y is growing increasingly uninterested in car ownership and have embraced public transportation, Uber, Lyft, and other ride-sharing programs. Consequently, when looking at apartment building amenities, the concept of garage or premium parking spots is no longer regarded as a top amenity.
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Largest Rental Housing Search Engine Dedicated to Apartments Near Universities Acquired by Tech Firm
MultifamilyBiz (10/03/17)

Last week, 365 Connect -- a leading provider of marketing, leasing, and resident technology platforms for the apartment sector -- acquired uCribs, the largest search site dedicated to apartments near universities. The purchase will expand the reach of 365 Connect into off-campus housing markets nationwide, adding millions of rental apartments to its marketing platform. One of the most unique housing search engines in the industry, uCribs enables renters to search for apartments based on the location of their college. With Generation Z renters top of mind, uCribs curates its own property listings by working directly with apartments owners and operators and select data partners to provide a one-stop shop for its users.

With its data capture infrastructure, uCribs measures housing trends across university campuses, sharing insights with its growing audience who want to understand the off-campus rental housing market. Kerry W. Kirby, 365 Connect's founder and CEO, stated, "As the demand for data-driven marketing tools is rapidly increasing, uCribs will add valuable market insights to our platform in an underserved sector. This acquisition aligns perfectly with our strategy to bring efficiency to the multifamily housing industry by consolidating marketing, transactional, and service components into a unified solution." The purchase builds on a data exchange partnership the two companies developed over the past year.
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