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Real Estate Management News

January 22, 2020

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IREM ® headlines

Are You a Thought Leader? Submit a Proposal for the 2020 IREM Global Summit

Do you have an idea from your business that you want to share with the who’s who of the real estate management industry?

IREM is dedicated to continuous learning and uses its annual Global Summit for delivering contemporary, relevant education to real estate managers at all levels of expertise. And we’re looking for industry experts who want to share their knowledge with property management professionals at this year’s event.

The 2020 Summit will be held October 13-16 at the Sheraton Centre in Toronto and will attract over 800 attendees. If you have a topic idea for a 90-minute education session that you’d like to have considered for inclusion in the event schedule, please submit it here by January 31.

Speakers are typically experts in their fields and have professional experience speaking or facilitating seminars. Proposals will be evaluated by the Summit Advisory Board for overall quality, timeliness, anticipated interest, and speaker qualifications.

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Make Time for Education with the IREM Learning App

Learning is the foundation of professional growth, but requires time and commitment. With the real estate industry rapidly evolving, it’s more important than ever for professionals to stay current on the latest technologies, legislation and developments. IREM has made it easy to keep up, learn new skills, and build your career with the IREM Learning app. It’s free and available for both Android and Apple devices.

Use the app to:

  • Download course content to your mobile device and complete it offline from anywhere, at any time
  • Access your past, in progress, and future course materials, including student workbooks
  • Access your course exams and evaluations
  • Link to your transcript and certificates of completion
  • Access webinar links for on-the-go viewing
  • Join discussion forums to interact with your peers and with the instructor
  • Receive notifications of your upcoming courses

Gain real-life knowledge from industry experts online, offline or in real time—whatever works for you. To download the IREM Learning app, search “IREM Learning” in your device’s app store. More about IREM’s education offerings is available on irem.org.

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Elevating Leaders at the IREM Chapter Leadership Retreat

Effective chapter leadership is essential to expanding IREM’s reach and advancing the real estate management profession. IREM chapters expand our network, engage members at the local level and offer opportunities for IREM members to become more involved in our industry. To promote the professional development of these individuals and support the important work they do, a chapter leadership retreat will be held in Chicago April 20-22.
By participating, chapter leaders will learn to:

  • Elevate their skills in chapter management and operations
  • Collaborate with other chapter leaders to learn best practices and run strong chapters
  • Create consistent alignment between chapter presidents and IAEs by building effective working partnerships
  • Effectively implement IREM’s strategic initiatives at the local level to build membership, and to advance the profession
  • Become a confident leader who succeeds and advances in their career as a real estate manager, and in their role within the chapter

Approximately 400 chapter presidents, IAEs, chapter officers and regional vice presidents are expected to attend. For more information, visit IREM Chapter Leadership Retreat.

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Industry headlines

How to Use Office Lighting to Improve Occupant Alertness
FacilitiesNet (01/15/20) Hounsell, Dan

Facility managers have engaged in a long-standing debate over the proper way to light an office. Different schools of thought have produced different theories on how to best stimulate productivity and alertness in workers while simultaneously meeting energy efficiency standards. Researchers from the Lighting Research Center at Rensselaer Polytechnic Institute and the U.S. General Services Administration recently waded into the debate by publishing a study on the impact of light in worker daytime alertness and nighttime sleep quality. For three weeks, 19 volunteers from three State Department office buildings in Washington, D.C., conducted their normal work with luminaires designed to promote "circadian entrainment" and alertness mounted near their computers. In the morning, the luminaires provided saturated blue light; in the middle of the day, polychromatic white light; and at the end of the day, saturated red light.

The researchers observed that the participants showed more consolidated rest-activity patterns during the study. The results showed that the participants had better circadian entrainment. The morning blue light helped wake participants up and make them alert, while the afternoon red light helped fight off the post-lunch lull. This is reportedly the first study to show that a combination of red light and ambient white light can increase alertness in workers and promote circadian entrainment. The Lighting Research Center previously conducted studies showing that even offices with plenty of daylight do not contain enough light to keep workers stimulated and productive throughout the day.

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Aiming at Wealthy Renters, Developers Build More Luxury Apartments Than They Have in Decades
Wall Street Journal (01/15/20) Parker, Will

New data from the real estate analytics firm RealPage shows that builders in the United States are set to finish more new apartments in 2020 than in any year since the 1980s. In total, approximately 371,000 new rental units are projected to be opened this year, a 50 percent increase over 2019. Some major markets, including Los Angeles and Houston, are expected to more than double the number of new rental apartments this year. And although many developers are grappling with issues surrounding affordability and creating spaces for low- and middle-income families, they are increasingly chasing affluent renters to occupy the new units. RealPage chief economist Greg Willett forecasts that up to 80 percent of the new units will be in luxury developments. "A typical renter can't afford this brand new product," he remarked.

According to property owners, land prices are so high that it makes the most business sense to cater to affluent renters with luxury developments. Some analysts said the influx of luxury housing to the market could have a trickle-down effect on less affluent renters. As more prosperous people move over to the newest luxury buildings, they leave vacant their old units, and less wealthy renters can move in there. Other developers are trying to put their feet in both camps by building a significant amount of luxury offerings and more affordable buildings with fewer amenities. Developers may have to offer perks to wealthy renters to get them to sign leases, including one month free rent. At the same time, the decreasing supply of single-family homes means that more people are looking for luxury rentals.

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A New Decade of Experience Retail Dawns Across Europe
Premier Construction News (01/15/20)

Unibail-Rodamco-Westfield suggested in a retail trends report that by 2025, more than 50 percent of the retail space in malls will be dedicated to providing experiences. The report analyzed the retail desires of consumers in the United Kingdom, France, Spain, Germany, Austria, Sweden, Poland, the Czech Republic, Italy, and the Netherlands. According to the report, 81 percent of customers are willing to pay more for experiences than for retail, meaning that investing in experiences is a smart business move for mall developers and managers.

In addition to the prediction about having a majority of experience-oriented offerings by 2025, the report made several other observations about European retail in the next decade. First, consumers would like to see their preferred online-only brands have a brick-and-mortar presence. They are also concerned with sustainability and would like their retailers to pledge to be more environmentally friendly. Finally, European consumers are interested in seeing retailers reflect the personality of the local space rather than show a uniform style.

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8 Tips to Turn Class B and C Offices More Energy Efficient
Commercial Property Executive (01/13/20) Chen, Jackson

According to the Urban Land Institute (ULI), there are eight ways Class B and C office buildings can jump on the efficiency and sustainability train so as to reduce energy costs and improve property value. The first way is to track and analyze the building's performance data on an annual basis, using free tools like the Energy Star Portfolio Manager as a guide. Class B and C offices can also engage a local group to conduct an energy audit of the building. In some instances, local utility companies or city agencies provide funding for such a purpose. Class B and C buildings can also implement low-cost measures and improvements, including upgrading building lighting with LED and optimizing HVAC schedules. Along those lines, building managers can visit the space at night to check whether certain systems are running unnecessarily and can be turned off to save energy and money. A fourth way to improve energy efficiency is for Class B and C buildings to inspect and service BAS and HVAC systems on a regular basis.

These buildings should also consider whether significant improvements are needed for the roof, HVAC, or building envelope. Renovations and alterations would be costly in the short term, but could help save money over the long run by improving energy efficiency. If costly renovations are needed, the buildings can commit all the way and install solar panels or high-efficiency windows to maximize their eventual return on investment. Meanwhile, if building managers are planning other renovations or repositioning their buildings to improve their standing in the local market, they can add energy-efficient measures to the mix. The seventh method suggested by the ULI is to create a tenant guide for sustainability practices. Finally, the eighth method is to incorporate green lease clauses into tenant agreements, asking any occupants of the building to commit to sustainability measures as a condition of occupancy.

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Healthy Occupancy Hinges on Winning the Apartment Amenities Arms Race
REBusinessOnline.com (01/01/20) Williams, Taylor

Apartment renters today are not necessarily interested in going for the newest building. Instead, they are looking for communities that offer the most comprehensive luxury amenities. In the northeastern United States, older properties with popular amenities frequently outperform newer complexes. For example, one upstate New York building that went up in 2010 boasts a state-of-the-art fitness center with equipment from Peloton, a full-on pet playground, and inviting community spaces, and commands more interest and a higher rent than a nearby apartment complex that went up in 2018 with fewer amenities. Many buildings are now making such amenities the norm rather than outliers.

There are several simple things to consider when upgrading amenities to attract more renters. First, developers should remember that the amenities once considered top-of-the-line may now be considered par for the course. This includes free or low-cost WiFi and smart home technology. Owners and managers should also remember that certain amenities never go out of style, including swimming pools and patios. Another consideration is that residents' amenity preferences may also change depending on the age of the tenants in question, so buildings catering to young people should have different amenities than buildings catering to older adults. Moreover, developers and managers should remember that, even in old buildings, it is easy to make subtle upgrades that boost convenience for renters like sprucing up common areas with new paint jobs. Finally, developers currently designing projects should remember that with the pace of change in the tech world, it's best to invest in standalone devices that can be easily replaced later when the technology is outdated.

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Walgreens Brings Cooler Screens' Technology to 50 Stores Ahead of Wider Rollout
Drug Store News (01/10/20) Salazar, David

Following a successful pilot program, Walgreens is deploying a digital merchandising platform from Cooler Screens to 50 stores in Chicago. Cooler Screens offers a proprietary digital merchandising platform that replaces traditional cooler doors with Internet of Things-enabled screens. Surveys from the six pilot stores found that more than 80 percent of surveyed shoppers thought the Cooler Screens technology made it easier to find products and that the products were more appealing. In addition, more than 90 percent preferred it over traditional cooler doors. Cooler Screens said that its platform does not gather nor store personally identifiable shopper information.

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Fake Snow Is in High Demand. Just Don't Ask How It's Made
Keene Sentinel (01/11/20) Martín, Hugo

Sunny, warm Southern California has taken to celebrating the winter months with fake snow, including popular fake snow displays at shopping malls, theme parks, and other tourist attractions. Fake-snow entrepreneurs have refused to disclose their processes or shed light on the ingredients that go into the snow. Mike Giles, president of Global Special Effects, said his company's fake snow recipe is as closely guarded as Kentucky Fried Chicken's famous 11 herbs and spices. Meanwhile, the malls and other places that make use of the fake snow have also declined to divulge what goes into the snow, not wanting to shatter the illusion of real snowflakes in Southern California. Indoor and outdoor shopping centers in the region have for almost 20 years made use of fake snow, and it has only grown more popular in recent years as technology makes fake snow closer and closer to the real thing.

Julie Jauregui, senior vice president for retail operations and leasing for Caruso, said fake snow helps set her company's retail centers above the competition. "The consumer has a number of choices where they can shop, and we want to make our experience the best," Jauregui said. Meanwhile, Stephen Siercks, the senior director of entertainment for Universal Studios Hollywood, pointed out that snow is an essential part of holiday celebrations that dominate theme parks and other attractions over the winter. Fake snow works well because its soapy composition evaporates almost on contact, meaning that there is little risk of people slipping and sliding on wet ground.

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Mall Owners Making Green a Bigger Part of Their Business
Real Estate Weekly (01/15/20) Mollot, Sabina

Shopping center owners are taking steps now to reach sustainability benchmarks before laws come into effect mandating that the goals be achieved. But a recent industry panel discussion highlighted how owners and operators believe that their tenants must help them reach ambitious waste and energy management goals. At the International Council of Shopping Centers (ICSC) New York Deal Making conference last month, industry executives discussed the best ways to achieve sustainability goals with tenants' help. Jessica Tomaz from waste management company Recycle Track Systems suggested that mall managers hold regular meetings with their tenants, providing updated sustainability metrics and brainstorming best practices to improve. Chris Brown of the Institute of Market Transportation said that third-party reps, like Tomaz, should play a role in those meetings to keep the peace between landlords and tenants, who may have contentious relationships based on past events.

Brown also argued that owners should clearly define their waste and energy management expectations for tenants before leases are signed. His comments were echoed by Jeff Bedell of Macerich, who said the mall REIT has already started doing that and has received no pushback from tenants. Bedell specifically brought up Local Law 97, a New York carbon emissions law that could impact 50,000 buildings in the state by 2030. He acknowledged that retrofitting older buildings to be more efficient may be costly, but is ultimately preferable to getting hit by significant penalties for failing to follow the guidelines established in Local Law 97. Prada was touted as an example of a luxury brand that has made a public commitment to sustainability. The company in November took out a $55 million business loan with interest rates that can fluctuate depending on how many environmentally-friendly policies it puts into place.

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Twin Cities Office Rents Jump, Even as Vacancy Increases
Minneapolis/St. Paul Business Journal (01/10/20) Halter, Nick

CBRE revealed in its fourth-quarter Marketview report that the average asking rent for office space in the Minneapolis/St. Paul markets saw a marked increase in 2019. By Dec. 31, the average asking rent per square foot in the Twin Cities hovered at $15.59, a 4.5 percent increase over 2018. CBRE senior Vice President Brandon Megal said office landlords were driven to increase rent because of the growing demand for renovated buildings with state-of-the-art amenities. Owners and operators are acquiescing to those demands by updating their buildings, but in exchange they are increasing rent for tenants. Megal said buildings that provide amenities related to sustainability, health, and wellness "will continue to see increased deal velocity through 2020."

Even as rent increased in the Twin Cities, vacancy jumped from 17.8 percent to 18.5 percent. Over the course of 2019, Minneapolis/St. Paul recorded just under 200,000 square feet of positive absorption, a significant decline from 2018's total of 800,000 square feet. The 394 Corridor remains one of the more popular markets for commercial space, with a vacancy rate of 13.4 percent. It and the North Loop are two of the most expensive markets, with average rents of $18.11 and $18.19 per square foot, respectively. Rent in the northwest metro area and downtown St. Paul was less expensive, with average rent around $11.17 and $12.82 per square foot, respectively.

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Today's Tech Priorities: Multifamily Residents Want Connectivity
Multifamily Executive (01/01/20)

The amenities arms race in the multifamily housing market has seen apartments introduce a number of luxurious programs, services, and amenities. But apartment residents continue to value connectivity above all else. A recent survey of both apartment operators and residents conducted by DISH Business found that 81 percent of people think technology services are important in keeping residents satisfied. But 67 percent of property owners and managers said they could be doing more to upgrade their technology offerings. Residents' tech habits have changed considerably in recent years. Although 56 percent of people still have cable, streaming services have become the dominant player in tech, with 84 percent of people now subscribing to at least one such site. Given that streaming relies on Internet connectivity, a strong and consistent signal has gone from a luxury to an expectation.

Meanwhile, the WiFi must connect to a range of devices at the same time. The DISH study found that people watch their streaming shows on numerous devices, including laptops, smart TVs, and phones. Josh Rowe, director of product and business development at DISH Business, said apartments have mainly been "static" in their telecommunications offerings over the past few decades even as residents' telecommunication preferences changed very quickly. "There’s a little bit of a gap between what operators deem as important and what renters put a priority on," Rowe remarked. In the DISH survey, residents indicated that they preferred their apartment buildings to directly offer and manage Internet, TV, and data services.

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Nearly Every Mall Store Is Struggling. Then There's Bath & Body Works, with 40 Quarters of Growth
Press Democrat (01/14/20) Bhattarai, Abha

The rise of e-commerce has coincided with a period of distress for shopping malls across the United States. Bath & Body Works, though, has consistently shown growth through the roughest of rough patches. Analysts said they have observed 40 consecutive quarters of growth for the retailer, which sells scented lotions, shower gels, and candles, but had no immediate explanation for why the 1,600 Bath & Body Works locations have succeeded where many others have failed. Sucharita Kodali, a Forrester analyst, pointed out that in many ways, the cards seemed stacked against Bath & Body Works. "It's a mall merchant -- that alone should have spelled doom. And it's selling commodities that are broadly available elsewhere, often for cheaper. But somehow Bath & Body Works has figured out how to appeal to the masses," Kodali remarked.

John Morris, a senior analyst at D.A. Davidson, went so far as to say that Bath & Body Works' success is an indicator that "the mall is not dead." According to Morris, the retailer has succeeded in large part because it constantly rotates through its roster of shower gels, hand creams, and other products. With new scents available regularly, there is a reason for devotees to keep returning. Moreover, Bath & Body Works appeals to shoppers of all ages, from pre-teens looking to spend their allowance to older adults in search of a "nice pick-me-up." Neil Saunders, managing director of GlobalData Retail, said Bath & Body Works was shrewd to keep bright, airy decorations up in all store locations, because it stands out against its often-gloomy mall neighbors. Nicholas Coe, CEO of Bath & Body Works owner L Brands, recently said that the retailer stands apart from the crowd because it has a unique combination of prestige and affordability.

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The Innovative Design of One of the World's Largest Net-Zero Buildings
GreenBiz.com (01/09/20) Cimons, Marlene

United Therapeutics has said that its new headquarters in Silver Spring, Md., known as the Unisphere, is the world's largest net-zero building. According to Thomas Kaufman, director of corporate real estate for the company, United Therapeutics CEO Martine Rothblatt made it a priority to emphasize net-zero design from the beginning of the project. "She felt very strongly that you cannot achieve net-zero as an afterthought. It has to be a mandate at the beginning that drives every single decision," Kaufman explained. In the end, the Unisphere turned into a 135,000 square foot building using traditional net-zero elements like solar panels and LED lights in conjunction with more advanced technologies.

The Unisphere includes thousands of devices and sensors feeding into a central computer that can make adjustments automatically throughout the building. For example, in the summer months, the computer can darken the windows and open them slightly so as to let fresh air flow through the building. Meanwhile, deep geo-exchange wells below the building help regulate temperature by providing heat from the earth in the winter and storing heat from the sun in the summer. Jared Loos, an architect with building designer EwingCole, revealed that the structure is laid out in such a way that natural daylight provides lighting in a majority of spaces. Unisphere visitors can learn more about the building's energy use by observing animated elements throughout the property, including a centerpiece energy wheel in the atrium that indicates whether the building is making or using energy at any given time.

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