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February 5, 2020

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IREM ® headlines

IREM Provides Comments on Eliminating Regulatory Barriers to Affordable Housing

In late November, the U.S. Department of Housing and Urban Development (HUD) published a Request for Information (RFI) on Eliminating Regulatory Barriers to Affordable Housing. The RFI sought public comment on federal, state, local and tribal laws, regulations, land use requirements and administrative practices that artificially raise the costs of affordable housing development and contribute to shortages in America's housing supply.

IREM submitted comments that address the ways in which regulations restrict housing affordability. The comments included how the following federal actions could increase affordable housing in the country:

  • Private flood insurance—Reform regulations that encourage private insurance companies to write more flood insurance in flood zones would lower the cost of this product, thereby making the property more affordable.
  • Rent control—Legislation could be introduced that would restrict localities from receiving Community Development Block Grants (CDBGs) if they adopt rent control programs.
  • Improving Housing Tax Credit Programs—The Low-Income Housing Tax Credit (LIHTC) has been a very successful program which produces affordable housing in the United States. IREM advocates to support legislation that would increase the amount of tax credits allocated to each state by 50% over current levels.
  • Supporting incentives to voucher landlords—There are a number of policies housing authorities and HUD can implement that will make the process for voucher tenants more similar to conventional tenants. These include things like security deposits that match those of conventional tenants; quicker inspection times; reserves for damage; and quick response to concerns about tenants’ payments or damage to property.

The complete submission of IREM’s comments can be found here.If you have questions or need further information on the RFI, please contact Ted Thurn, director, government affairs at (312) 329-6021 or tthurn@irem.org.

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Annual Japan Event Applies IREM Education to Business Practices

IREM members in Japan are finding that the CPM designation courses have prepared them to tackle a wide variety of different work in the real estate industry. This became more apparent at the ninth IREM Japan Case Study Presentation event, held last week in Nagoya, Japan. The event was highlighted by Japan’s two newest chapters, the Hokkaido Chapter and Tokai Chapter. There were 88 IREM members and potential candidates in attendance to hear two panel discussions.

At the first, given by the Hokkaido Chapter, audience members heard from four panelists, also IREM members, representing four different cities in Japan’s northernmost island of Hokkaido: Sapporo, Asahikawa, Kitami and Obihiro.

The members gave presentations and tried to persuade the audience that their city was the best suited for investments. Audience members used a smartphone app to vote for the city in which they would most like to invest, and votes were taken before, during and after the presentation. The four members used case studies and the current market conditions to highlight each city’s strengths. While Sapporo, the island’s largest city and commercial center, took the pre-presentation vote, Kitami, whose case was presented by Jay Sato, Executive CPM® for AMO® Firm J. Media Co., Ltd., won in the end.

The Tokai Chapter’s presentation featured two speakers who have expanded the kinds of work they do based on what they learned in CPM courses. Daisuke Hashimoto, CPM®, spoke on limited proprietary rights of land. He noted that the difficulty of handling these rights meant he did not take many cases until a walk-in customer inquired; he realized he was able to use his CPM knowledge to show calculations proving it made logical sense for the customer to sell. This led to referrals, and while the cases take time, they are fulfilling, and not many others in his area are providing similar services.

Soichi Igami, CPM®, presented on energy conservation programs, noting that what he learned in the IREM course Managing Maintenance Operations and Property Risk (MNT402) helped build trust with his owners. One of the key points he mentioned was the use of changes in electricity consumption to solve problems and make improvements

Tokai Chapter President Tetsuya Minoura, CPM®, noted that all of the presenters built a connection with the audience by making them laugh: “I think people in the audience will now want to get to know more IREM members, because we have so many unique personalities.”

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Real Estate Trends Shaping 2020

The New Year started off with good news, says IREM President Cheryl Ann Gray, CPM®, in her latest NREI column. “The economy is pretty much where we left it for the holidays,” she says, “with record low unemployment, high consumer confidence, and the longest period of economic expansion on record.”

She notes that this bodes well for the commercial and residential real estate sectors, which is good for real estate management. “Indeed, in high times and low, we still need property managers to manage the buildings where we live, work, shop, dine and generally lead our lives.”

But the macro-economic market and the commercial real estate industry are not without their issues. How seriously should these be taken into account? And what are some of the longer-term issues that property managers have to keep their eyes on?

For the answers to those questions and more, read Cheryl’s full column in NREI.

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2020 REME Award Nominations are Open

IREM’s Real Estate Management Excellence (REME) Awards celebrate the achievements of people and companies making a difference in real estate management. Now in its fifth year, these awards have honored the best and the brightest, the leaders, innovators and champions of our profession.
This year we introduce a new category among the corporate awards—IREM Innovator of the Year—to recognize a real estate management company for outstanding innovation and initiatives that elevate the industry. Initiatives can be related to innovations in any of these categories: talent/leadership development, education, marketing, sustainability, or community outreach.

Other awards include:

  • AMO of the Year—recognizes an IREM AMO (Accredited Management Organization) for efforts to advance the profession, support employee professional development, and for outstanding service to clients, tenants and residents.
  • CPM of the Year—honoring an IREM CPM (Certified Property Manager) for outstanding professional contributions that elevate our profession, enhance our communities, and demonstrate a commitment to ethical business practices.
  • ARM of the Year—celebrating the achievements of an IREM ARM (Accredited Residential Manager) for exceptional leadership, dedication to their community, and for making valuable contributions to the future of residential real estate management.

Nominate yourself, someone you know or the company you work for. Submissions will be accepted through June 12, 2020, with finalists announced in August. Winners will be honored at the IREM Global Summit in Toronto on October 16, 2020.

“At IREM, we believe that effective property managers and companies make a difference in the tenant, resident and owner experience. The REME Awards allow us to recognize the amazing work being done across the globe,” says Cheryl Gray, CPM®, 2020 IREM president and head of special projects for QuadReal Property Group in Toronto. “Our goal is to highlight the leaders in property management, to inspire others in our profession, and to continue to drive innovation and progress.”

Read more about the IREM REME Awards, and how you can submit a nomination.

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Industry headlines

Four Digital Marketing Trends to Watch in Property Management
Multifamily Executive (01/30/20) Lawson, Jeremy

Apartment owners and operators are crafting appeals to the newest crop of renters -- Generation Z. Given that Gen Z is the first generation of digital natives, marketers are finding they must be creative. To this end, they should follow four digital marketing developments to appeal to the widest swath of Gen Z renters. First, they should be aware of recent changes to Facebook's advertising system and how the changes impact real estate marketing. Second, they should take advantage of Google's search engine optimization (or SEO) preferences by incorporating marketing videos into user-friendly websites. Adding a section of frequently asked questions can also bolster an apartment community's appeal and credibility to potential young renters.

A third way apartment managers and marketers can improve their appeal to Gen Z is by closely monitoring all online reviews. A property with five-star reviews can command higher interest from prospective renters as well as higher rent payments. But on the flip side, a string of negative reviews can drive prospective renters away, forcing management to drop rent prices so as to entice people to give their building a try. As a result, marketing teams should focus on getting five or six positive reviews on the top search sites each month to drive consistent positive engagement. Finally, managers and marketers should fully embrace automation, allowing online payments, property-specific applications, and appointment scheduling.

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Forever 21 Reaches $81 Million Deal to Sell Its Retail Business to US Mall Owners and Authentic Brands
CNBC News (02/03/20) Thomas, Lauren

Forever 21 on Monday inked an $81 million deal to sell its retail business to a group that includes Simon Property Group, Brookfield Property Partners, and Authentic Brands. Forever 21 confirmed in a bankruptcy court filing that it is seeking approval to name the three firms as the lead, stalking-horse bidders in an auction. Rival bidders will have until the end of this week to make any counteroffers. An auction will be held on Feb. 10 if other bids are made. Forever 21 filed for Chapter 11 bankruptcy protection this past fall. The mall-based apparel chain faltered by expanding too quickly inside and outside the United States, forcing it to close more than 100 locations. It still operated more than 800 stores worldwide as of the end of last year's third quarter.

The concern for many of America's shopping mall owners has been that a liquidation of Forever 21 would leave them with too much empty store space. Simon and Brookfield rank as two of Forever 21's largest landlords. The strategy of real estate companies acquiring retailers has been successfully used before. Four years ago, for example, Simon and General Growth Properties partnered to rescue embattled teen apparel retailer Aeropostale. Simon's malls have almost 100 Forever 21 stores.

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Seattle to Test Paying for Commercial Building Efficiency Through Long-Term PPAs
Utility Dive (01/28/20) Walton, Robert

Seattle City Light, a municipal public utility, is taking applications until March 30 for an energy efficiency pilot targeting commercial buildings. The utility will pay for energy savings via 15- to 20-year power purchase agreements (PPA) that allow for more extensive retrofits with longer payback periods. An initial tranche of 15 buildings will be accepted to the Energy Efficiency as a Service (EEaS) pilot. Eligible buildings need at least 50,000 square feet of space in Seattle City Light's service territory and a plan to achieve reductions of 25 percent relative to their baseline electricity usage in the past 12 months.

In 2019, the Seattle City Council unanimously approved the utility's request for a 30-building program based on the previous Metered Energy Efficiency Transaction Structure (MEETS) pilot developed at the city's Bullitt Center. Seattle's new EEaS pilot is "trying to address the split incentive between landlords and tenants," says Rob Harmon, who oversees the MEETS Accelerator Coalition and helped design both MEETS and the newer pilot. Craig Smith, Seattle City Light's customer energy solutions director, says, "The design allows them to purchase energy efficiency for their building as they would any other energy resource, at a similar price."

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With More Young Renters Than Buyers, Apartment Boom Continues
Dallas Morning News (01/27/20) Brown, Steve

Apartment industry professionals expect the current apartment boom to continue into the near future as more young people prefer renting over owning. Just last year, builders broke ground on more than 381,000 multifamily housing buildings across the country. The National Association of Home Builders (NAHB) has projected that construction will continue to increase in 2020 and 2021. Dallas-Fort Worth currently ranks as the top apartment market in the country in this regard, with more than 40,000 new units currently under construction.

Young people continue to rent mainly because of financial constraints in other aspects of their lives, said NAHB analyst Danushka Nanayakkara-Skillington. More than 75 percent of new, young households opt to rent, in part because of ever-increasing student loans and auto loans. Nanayakkara-Skillington said that as young people concentrate on paying those loans off first, they shift homeownership to the back burner.

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How NYC's Tech Boom Will Impact Real Estate
Forbes (01/31/20) Chamoff, Lisa

With major tech companies set to bring new jobs to New York City, commercial real estate experts are predicting that the city's office market could transform in the near future. Amazon, Facebook, and Google are expected to bring as many as 20,000 jobs to Manhattan by 2022, shifting the tech center of the city from the Flatiron district to Hudson Yards and Chelsea. Facebook has agreed to lease approximately 700,000 square feet for 14,000 employees this year, and Amazon recently announced plans to lease office space for 1,500 employees in the fourth quarter of 2021.

With thousands of new workers expected to hit the city, residential real estate is on track for a significant change, too. Wendy Arriz, a broker with Warburg Realty, said young Manhattan residents flock to trendy neighborhoods downtown. But Robert Rahmanian, co-founder of real estate brokerage REAL New York, said the workers could be attracted by the convenience of living close to their offices in neighborhoods like Hell's Kitchen, Hudson Yards, and Chelsea. Martin Eiden, a broker with Compass, believes many tech workers could leave Manhattan altogether for apartments in Brooklyn and Long Island City in Queens.

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How the Transition to Green Construction Drives Business Growth
Boss Magazine (01/24/20) Welles, Holly

The rise of sustainable construction in recent years is an effort to protect the environment in the face of rapidly changing climates. According to a U.S. Green Building Council survey, respondents expect 60 percent of their building projects through 2021 to be green-based. While construction companies are set to benefit from building sustainably, building owners and homeowners will enjoy better energy efficiency and lower maintenance costs. The transition to sustainability will allow construction companies to practice energy-efficient techniques and create resource-conscious facilities. Modifying existing buildings -- commercial and residential buildings account for 40 percent of U.S. energy usage -- is also important. Retrofits and renovations are a great starting point, considering the installation of green modifications in an existing structure will likely be cheaper than building a new one.

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Reading Lifts Ban on Studio Apartments, Eliminates High-Rise Storage Requirement
Reading Eagle (PA) (01/28/20) Long, Jeremy

The Reading City Council in Pennsylvania last week passed two zoning amendments eliminating a storage requirement for high-rise apartments and lifting a ban on studio apartments. The council passed both measures by a 5-1 vote, with Councilwoman Melissa Ventura dissenting in both cases. Until the vote, Reading had a requirement that high-rise apartments have at least 50 square feet of storage space. Developer Alan Shuman, who proposed both amendments, states that storage space is an in-demand amenity for apartment residents, but pointed out that Reading has few high-rise apartments. Shuman has previously argued that the council should either overturn the high-rise requirement and "let the market decide" or extend the requirement to cover all apartment buildings, a move that would likely spark protest.

Shuman also made a persuasive argument on the amendment concerning studio apartments, pointing out that such smaller units can "provide graduate and student housing, as well as faculty housing downtown." Under terms of the new amendment, a studio apartment must contain a complete kitchen, sleeping quarters, a separate bathroom, and a separate closet. Ventura, the lone dissenter, said she believes most renters in the city need more space than a studio apartment would offer.

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Bar Louie Files for Bankruptcy, Closes One-Third of Its Restaurants
WBAL (Baltimore, MD) (01/27/20) Valinsky, Jordan

Bar Louie announced last week that it has filed for bankruptcy and will be closing one-third of its restaurants in the process. The chain, known for its burgers and cocktails, estimated that it will emerge from Chapter 11 in 90 days. In total, Bar Louie is shutting down 38 of its locations, including several in Ohio, Michigan, Wisconsin, and Colorado. Bar Louie locations can often be found in or near shopping malls, which have struggled themselves as shoppers are increasingly attracted by e-commerce and other retail options. Bar Louie is not the only eatery to face challenges as foot traffic at shopping malls decreases. Competitors, including the Cheesecake Factory, have reported stagnant sales as shoppers eschew the mall.

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Five Smart Home Tech Hacks for Existing Apartment Buildings
Multifamily Executive (01/23/20) Bousquin, Joe

As smart technology continues to transform multifamily housing, owners of existing apartment buildings may be fretting over how to compete with their newer counterparts. It may be costly, but ultimately necessary, to evaluate the building's existing network and wiring, including gauging the electrical wiring within the walls. Older apartment buildings are also investing in smart locks to appeal to today's renters. Colin Wiel, chairman and chief technical officer at Mynd Property Management, said smart locks are relatively inexpensive, but can "breathe new life into older apartment buildings."

After installing smart locks on apartment front doors, managers of older buildings should next consider investing in smart thermostat and lighting technology. The advanced technology will not only impress renters, but also help them save money on electric bills. Older apartment buildings should also consider introducing a concierge app, giving all the luxury and convenience of a true concierge without the price tag of actually employing one. Renters can use concierge apps to schedule package pick-ups and complete other time-saving tasks. Finally, before taking any of these steps, managers of older apartment communities should give existing residents as much advance notice as possible to minimize disruptions when the time comes to install smart technology.

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Malls 2.0: Town Centers Will Reshape Buffalo Niagara's Retail Landscape
Buffalo News (01/25/20) Christmann, Samantha

The Buffalo-Niagara, N.Y., market is looking to revitalize its retail sector by transforming retail-only malls into diverse town centers. Inspired by the success of similar projects across the nation, mall owners in this region are planning to diversify their offerings and create mixed-use spaces that can function as a central space within smaller markets. These plans include significant overhauls of the current mall layouts, with some retail spaces torn down to make way for offices and residential units. Some malls are looking to introduce green spaces and enhance their reputations as luxury destinations. The mall owners hope the mix of retail, residential, and work space will create a welcoming atmosphere akin to town centers. With permanent residents occupying the apartments, mall owners believe they will not have to rely as heavily on retail sales as they did in the past.

Eastern Hills Mall is one of the shopping centers in the Buffalo-Niagara market looking to transform itself. The mall has a long-term revitalization plan, with the final steps in the updates not scheduled to be finished until 2040. But now, the owners are hard at work securing financing and tenants for the $250 million project. Under the new plan, the mall will become the Eastern Hills Town Center and will incorporate office space, residential units, boutique retail space, restaurants, venue space, and senior housing. The nearby Boulevard Mall also has an ambitious revitalization plan, with owner Douglas Jemal looking to rename it Boulevard Place and "de-mall" the shopping center. Jemal has not disclosed many details of his plan, but he is reportedly looking to break ground on the mixed-use transformation this spring. Finally, Northtown Plaza is set to become a lifestyle center with upscale tenants and plenty of green space.

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A Developer Wants to Add Housing to Baltimore County Shopping Centers, But the Community Stands Opposed
Baltimore Sun (01/27/20) Boteler, Cody

Kimco Realty is interested in adding housing to five of its retail properties in Baltimore County, Md., but has encountered pushback from the community. Kimco, which owns and operates a dozen large shopping centers in the county, is looking to create what it calls attractive, mixed-use developments by blending housing with retail at five of them. The firm is still in the early stages of drafting proposals, but the housing could consist of three or four floors of apartment units above ground-floor retail. Kimco is hoping to get the zoning changes approved at the next Comprehensive Zoning Map Process (CZMP), the time when Baltimore County residents can apply to alter zoning on any piece of land.

But the plans have indeed sparked some community backlash. Baltimore County Councilman David Marks, who represents the Towson and Perry Hall suburbs of Charm City, has expressed concerns about the impact the mixed-use developments would have on local public schools. "I am very concerned, given our current school overcrowding," he recently remarked. Meanwhile, residents attended a community meeting earlier this month and argued that adding apartments to the Kimco properties would make traffic congestion on roads even worse.

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Sacramento Could Prohibit Converting Apartments Into Short-Term Rentals
ABC10.com (01/22/20) Gomez, Mayde

Sacramento officials may soon prohibit the conversion of apartment buildings into short-term rentals. City Councilman Steve Hansen recently revealed that an investor came to him and proposed turning a new apartment building into short-term rentals or a hotel. Hansen refused that suggestion, saying it would not make sense to take housing out of the current pool and convert it to short-term rentals. He then introduced a proposal that would prohibit converting apartment buildings into short-term rentals without city permission.

Hansen said the ordinance was necessary to "stop this bait and switch" whereby investors come in discussing an apartment building before turning heel and looking to short-term rentals, instead. Hansen said anyone proposing a hotel from the get-go is fine, but housing for the city should not be suddenly removed to create a short-term rental option. The Sacramento Housing Alliance supports Hansen's bill. According to the alliance, converting to short-term rentals "threatens our progress" on solving the housing crisis. Other municipalities in Northern California have already introduced restrictions and regulations on short-term rentals.

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