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Real Estate Management News

February 26, 2020

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Upcoming Events and Deadlines

IREM 30 Under 30 Applications
Submission deadline extended to February 28, 2020!

Next Gen CPM Leaders Program
Submission deadline is March 15, 2020

IREM Student of the Year
Submission deadline is April 15, 2020


Events

Capitol Hill Fly-in
March 10-11

Accelerators: Live Webinars

Mixed-Use Properties: Ownership Structures and Impacts
2/27/2020

Pro-Tips: Spring Landscaping Essentials to Enhance Your Community and Your Brand
3/3/2020

Becoming a Person of Influence … Moving from Independence to Interdependence
3/4/2020

Introduction to Excel Macros
3/10/2020

Fair Housing: Understanding Familial Status
3/11/2020

CAM Reconciliation Part III: Advanced Level Workshop
3/12/2020

Classroom Course Offerings

Ethics for the Real Estate Manager (ETH800)
3/6/2020 – North Kingstown, RI
3/9/2020 – Omaha, NE
3/13/2020 – Addison, TX

Financing and Loan Analysis for Investment Real Estate (ASM603)
3/9/2020 –Tysons, VA

Performance and Valuation of Investment Real Estate (ASM604)
3/11/2020 –Tysons, VA

Asset Analysis of Investment Real Estate (ASM605)
2/28/2020 – Englewood, CO
3/13/2020 –Tysons, VA

Budgeting, Cash Flow, and Reporting for Investment Real Estate (FIN402)
3/10/2020 – Braintree, MA

Managing Maintenance Operations and Property Risk (MNT402)
2/27/2020 – Houston, TX
3/12/2020 – Holladay, UT

Marketing and Leasing Strategies for Multifamily Properties (MKL405)
3/11/2020 – Kirkland, WA

Managing Residential Properties (RES201)
3/4/2020 – North Kingstown, RI
3/10/2020 – Omaha, NE

Introduction to Property Management (IREM01)
3/7/2020 – Tulsa, OK

IREM ® headlines

Property Managers in the Age of Big Data

“Property management is very much a people business in which personal connections are vital to the interests of both tenant engagement and retention,” says IREM President Cheryl Gray, CPM®, in her latest column for NREI. “Those personal connections have become a lot more meaningful in recent years due to the growing availability of big data.”

Gray begins by pointing to the deliverables big data can provide to help property managers increase their service proposition. Indeed, it is a powerful tool of tenant engagement.

But it is also a double-edged sword, and she quotes James Scott, lead researcher at MIT’s Real Estate Innovation Lab and IREM’s innovator-in-residence, who explains that the volume of data coming our way is exploding as everything, from our lighting and HVAC to door access, gets fitted out with Internet of Things (IoT) sensors, rendering each formerly analog device “a vehicle that can transmit information to the outside world.”

Clearly, big data delivered to our devices provides a powerful tool of tenant engagement. But, according to Scott, “Property managers need to understand the security features of each component. You need to perform due diligence on each device, and understand how each one stores the information it gathers.”

At risk here are issues far more critical than an occupant’s lighting preferences, with data such as names, addresses, social security numbers, bank account and routing information, and credit card access all there for the taking.

The good news here is that there is legislative movement, at both the state and national levels, but more needs to be done, and this by the private sector. As Scott tells Gray in the article, part of due diligence is transparency on the part of property managers, who “are at the forefront of this initiative. We need to remember that we are the caretakers of people’s data.”

Read the full NREI article here.

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A Warm Reception in Any Language

The Japanese word “omotenashi” means hospitality, and it has been strongly associated with the 2020 Tokyo Olympics as the country prepares to welcome thousands of foreign visitors. However, there is a long history of this hospitality that extends into many industries, including property management, and it has informed best practices in the country.

Koichi Ohishi, CPM®, is CEO of Ohishi Corporation in Kitakyushu, a city located in southern Japan. His portfolio includes housing for foreign exchange students.

“Eight years ago Waseda University Graduate School asked if we could help students move in,” Ohishi says, “and we’ve been working with them since then.”

The students are 20-22 years old, many are visiting Japan for the first time, and only 10% speak Japanese. “This requires us to work very closely with university staff. We are dedicated to these students as they put together their paperwork, during the move in, and with any advice they need afterward.”

Ohishi provides the example of a building called “Sanpia Iseioka,” an eight-floor, reinforced concrete building with 62 units built in 1990. Each unit is 236 square feet and has two residents. The building is half a mile from a research campus made up of Waseda University Graduate School, Kitakyushu University, and Kyushu Institute of Technology.

The Ohishi Corporation’s work goes beyond simply leasing and maintaining the building. “We give them advice for living in Japan, such as how to throw out trash. We take them to the bank to set up accounts as well as to government offices, where we help them fill out paperwork. They also don’t know their way around when they’ve just arrived from their home countries, so we drive them from campus to the apartment.”

Ohishi notes that visual instructions can be helpful. “We have a manual with photos that helps them learn how to pay their rent. Throwing out trash, in particular, can also cause problems because of cultural differences, so it’s crucial to provide detailed explanations.”

A little “omotenashi” can go a long way to bridge the gap between cultures and make new residents feel instantly at home.

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Planning for Property Management Success

Leading a successful business relies on establishing solid plans—business plans, development plans and succession plans to name a few. Property management businesses are no different, as Tiffany Jackson, CPM, CAM, relays in the Jan/Feb issue of JPM, where she describes her experience launching her own property management company, Compass management. “If it takes you six months to a year to complete, it will be worth it once you launch,” according to Tiffany. Invest plenty of time developing your business plan, she advises.

The planning doesn’t stop once the doors of the company are open—and neither does the learning. Leading a successful property management company means being able to set best business practices, leverage talent by placing people in the right roles, and even developing a strategy for your own personal growth, all the while looking ahead to know how to adjust these elements for a bright future.

IREM recognizes the importance of property management companies having a solid foundation, which is the basis of IREM course, Leading a Successful Property Management Company (BDM603). The course is required for AMO accreditation but has plenty to offer for anyone at the helm of a company or ready to venture out and blaze their own trail in the business. A classroom offering of BDM603 will take place May 13-15 in Chicago, so attendees will get the added value of exchanging ideas, strategies, and perspectives in person with their instructor and professional colleagues who all want to drive their firms towards excellence.

Learn more about this exciting offering and register here.

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Industry headlines

Bed Bath & Beyond Boss Tries to Declutter Stores
Wall Street Journal (02/18/20) Kapner, Suzanne

Mark Tritton, the new CEO of Bed Bath & Beyond, has unveiled his plan to revitalize the struggling retailer. Tritton spent his first 100 days as CEO focusing on ways to declutter and provide a simpler experience for shoppers. He took can openers as his case study, cutting down the different types of can openers in stock from more than a dozen to three to test whether sales would rise. When customers were faced with fewer choices and less "can-opener clutter," sales indeed rose. Tritton concluded from that experiment that too many options can spark "purchase paralysis" in consumers, who are overwhelmed by large amounts of products and end up not making purchases at all. Tritton said he would expand on that conclusion by cutting inventory by more than 10 percent this year.

Tritton is also pushing for several other major changes. He wants to widen the aisles at Bed Bath & Beyond stores, providing more space for shoppers and reducing the sense of cramped claustrophobia that can arise in narrow aisles stacked with too many products. Tritton said the retailer would continue offering promotions and coupons, but the policy would be adjusted to reduce overlap and enhance clarity. "Customers don’t want to do the math," he remarked, adding that prices would be more clearly marked under the new Bed Bath & Beyond system. Tritton also said he wants to ensure that all locations have WiFi and a "buy online, pick up in store" service by the end of 2020.

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Suffolk County Proposes Law to Protect Apartment Residents from Secondhand Smoke
News 12 Long Island (02/20/20)

New York's Suffolk County is considering whether to restrict secondhand smoke in apartment complexes and condominium buildings. While smoking is already banned near schools and businesses, the county currently does not have any laws on the books prohibiting smoking in multifamily housing. One law being considered by the county would be an absolute ban on all smoking in apartments, while the other would ban smoking in areas like balconies or patios. Some observers praised lawmakers for considering the law, urging them to ban smoking in apartment buildings. Paulette Orlando, who works with the Tobacco Action Coalition of Long Island, said it is time to protect nonsmokers from unwanted secondhand smoke. According to Orlando, smoke can travel through "cracks in the walls' electrical lines, plumbing, and ventilation systems," exposing all residents to smoke whether or not they partake in the habit.

Others, including legislators, remain hesitant about the law, pointing out that it could disproportionately affect apartment [and condo] residents with a tobacco addiction and limited mobility. "I don't want to penalize people who own their own home and can't smoke outside," said Dr. William Spencer, a physician and a legislator for the 18th District of Suffolk County. Orlando countered Spencer's argument by pointing out that nonsmokers with limited mobility are currently disproportionately affected by secondhand smoke. "What about that person who is disabled in a wheelchair who wants to breathe clean fresh air?" she asked. Suffolk County's Health Committee will receive the proposals at the end of this month, and the full legislature will vote on them in March.

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Pier 1 Files for Ch. 11 Protection
Furniture Today (02/17/20) Engel, Clint

Early last week, Pier 1 Imports filed for Chapter 11 bankruptcy protection as it pursues the sale of the business. To facilitate an orderly sale process, the long-struggling retailer entered into a "Plan Support Agreement" with the majority of its term loan lenders. It will use the process to complete the previously announced closing of up to 450 stores, including all of its Canadian locations. Pier 1's 30 biggest unsecured creditors have claims totaling nearly $30 million. The retailer has lined up commitments for approximately $256 million in debtor-in-possession financing from Bank of America, Wells Fargo National Assn., and Pathlight Capital. Following court approval, it expects the financing, "together with cash flows from operations, to provide ample liquidity to support continued operations and the sale process," according to a company statement. The deadline to submit bids for the business under the supervised sale process will be on or around March 23.

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A Quiet Respite in a Bustling Open Workplace
New York Times (02/18/20) Margolies, Jane

When open-plan offices came into vogue, barriers broke down inside office spaces and privacy became less of a concern. That trend has continued to proliferate, as JLL estimates that some 70 percent of U.S. offices now have some sort of open-plan layout. Open plans have helped companies cut costs by reducing the amount of space each individual employee needs. But workers have voiced objections, pointing out that quiet spaces are still essential when reviewing important legal documents or calling clients. As a result, offices are increasingly incorporating ancillary spaces intended to provide quiet areas to hunker down, work, and/or make sensitive phone calls. These spaces can take the form of prayer rooms, wellness rooms, libraries, phone booths, mini meeting rooms, or even just alcoves tucked away from the heart of the office. Other ancillary spaces include mothers' rooms and meditation rooms.

At first glance, it may seem that the rise of ancillary space is a condemnation of the open-plan layout. But while walls are indeed going back up in offices, experts rejected the conclusion that such quiet spaces represent a return to the offices of the past. Private space in the past was a privilege extended to senior executives and leadership of a given company, whereas now the ancillary spaces provide quiet and privacy to anyone seeking time alone.

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The Cities American Renters Are Migrating to and From in 2020
Multifamily Executive (02/14/20) Garvett, Symone

Apartment List's recent Rentonomics report sheds light on the current state of renting and residency across the country, identifying the cities that are retaining renters, attracting renters, and repelling renters. According to Apartment List, Denver is the city renters expressed the most interest in over the past year. Chris Salviati, who wrote the Apartment List report, said Denver's popularity was due to its "thriving job market," which made the city so attractive that renters are willing to overlook high rents. Rounding out the top five hottest cities were Baltimore, San Diego, Tampa, and San Francisco. Salviati's report implied that Baltimore's popularity could be partly attributed to its proximity to Washington, D.C., making it a more affordable living option for renters who commute into the nation's capital for work.

On the other hand, certain cities proved less popular with renters. The report identified a handful of cities that are sliding in popularity and struggling to retain rental households. Detroit is one such city, with just 18.2 percent of its inbound searches coming from outside its metro area. Renters are actively looking to leave other cities, including Orlando and Riverside, Calif. But Orlando also has a high percentage of inbound searches, suggesting that it is not experiencing a population loss so much as a population change.

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Galleria Park Owner Spending $13 Million to Update Offices, Attract Creative Tenants
Houston Chronicle (02/18/20) Schuetz, R. A.

Galleria Park, a pair of Houston office buildings, is getting creative to fill its vacant space after losing two major tenants. When the companies IHS and Telecheck moved out, the buildings faced a 70 percent vacancy rate. The Teachers' Retirement System of the State of Illinois bought the office park and set into motion a plan to revitalize the buildings, which were constructed in the 1970s, to attract new tenants. The property manager, Lincoln Property Co., has been tasked with overseeing the revitalization project. "One challenge that we face is that a lot of brokers have forgotten about this space," acknowledged Lincoln Property Senior Vice President Charlie Giammalva.

Lincoln Property has taken several steps to put Galleria Park back at the forefront of the Houston office market. The company hired landscape architecture firm OBJ to transform the exterior. Where there was once a circular driveway, there is now a green space complete with cafe-style seating, outdoor couches, bocce ball courts, ping-pong tables, and a WiFi connection. The amenities continue inside, where construction is underway on several coffee shops and restaurants. There are new conference rooms in the basement, providing meeting spaces for any office tenant seeking such a room. The basement is also home to a fitness facility and locker rooms complete with showers. Marie Wyatt, marketing coordinator for Lincoln Property, said the diverse amenities should especially appeal to millennial workers.

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Corning Teams With Qualcomm for 5G mmWave Indoors
FierceWireless (02/20/20) Fletcher, Bevin

Corning and Qualcomm are partnering to develop millimeter wave 5G indoor systems for large companies. Corning says the systems will be the first to deliver 5G New Radio non-standalone capabilities indoors over millimeter wave spectrum. The system will also use Qualcomm's 5G small cell chipsets and software, its FSM100xx 5G RAN platform and Corning’s virtualized RAN architecture. The system is being designed for use in such buildings as office complexes, shopping centers, hospitals, and hotels. The two companies say the system will be available on a limited basis beginning this year, but will be commercially available in 2021.

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ShopCore Properties Adds Commercial Solar at Shopping Centers Coast to Coast
Environmental Leader (02/20/20) Nastu, Jennifer

ShopCore Properties is building commercial solar projects on its properties across the United States in a bid to reduce its environmental footprint. ShopCore recently finished its first solar installation, a 240-kilowatt rooftop system at the Gilroy Crossing Power Center in California -- a shopping mall that's home to such stores as Kohl's, Target, and Barnes & Noble. ShopCore projected that Gilroy Crossing would produce roughly 360,000 kilowatt hours of electricity in its first year of operation. The company has three more solar projects in the works located in California and New Jersey. ShopCore is partnering with the commercial solar developer Safari Energy to develop and install the solar projects. ShopCore owns over 20 million square feet of commercial real estate across the country, a significant portfolio that could eventually be equipped with solar installations to boost efficiency. For its part, Safari Energy said it has developed or acquired more than 400 solar projects nationwide.

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Brookfield Flips on Renewable Energy at 6 NoVa Offices
Commercial Observer (02/18/20) Loria, Keith

Brookfield Properties confirms that it has converted six of its Northern Virginia office buildings to 100 percent renewable energy. Greg Meyer, executive vice president of Brookfield Properties for the Washington, D.C. region, said multiple factors influenced the company's decision to make the move to clean energy. "As real estate owners, we are responding not only to our conscious, but responding to our investors, employees and tenants, all of whom have an interest in this," he explained. Three of the six buildings are located in the Washington, D.C., suburb of Arlington, and the other three are in nearby Reston.

The six properties will use 100 percent hydropower generated by dams located in Virginia. The dams can provide the renewable energy 24 hours a day, seven days a week. Meyer said Brookfield jumped at the opportunity to shift gears from fossil fuel-generated electricity to renewable energy sources. Brookfield's sustainability strategy includes plans to responsibly implement clean energy throughout the D.C. area, and the Northern Virginia clean energy initiative satisfies that strategy. The buildings will have to be rewired, Meyer noted, but there will be no changes to how the buildings actually operate.

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Retailers' Secret to Success? Evolve. Just Ask Macy's and Nordstrom
Forbes (02/12/20) Morgan, Blake

Savvy retailers looking to maintain a traditional brick-and-mortar presence are transforming themselves to remain competitive in the digital age. Some 9,300 physical stores closed in 2019, prompting big brands like Macy's and Nordstrom to embrace new methods of success. Nordstrom, for example, has long touted its wide selection of brand name items. But in a new bid to reinvent itself, it is expanding into second-hand items. Nordstrom recently launched its See You Tomorrow second-hand shop at its flagship New York City location and online. The company's foray into such sales comes as women are increasingly looking to previously owned clothes when making purchases. An estimated 56 million women bought second-hand clothing in 2018, spurred at least in part by a desire to boost sustainability in consumer habits.

Macy's took a decidedly different approach in its attempt to boost sales and growth. The retailer recently announced it will close 125 of its department stores over the next three years. Most of the store closures will be in underperforming locations, an indication that Macy's is shutting down weaker stores to prioritize its selection at more popular locations. Macy's also said it would move its headquarters to New York City and reorganize its internal structure to maximize convenience and profits. Over time, the company's goal is to create smaller stores outside of shopping malls, providing shopping locations closer to where consumers live and work.

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Are Floating Office Buildings the Answer to Rising Sea Levels?
Wall Street Journal (02/18/20) Putzier, Konrad

Developers are increasingly turning to waterborne structures as anxieties increase over global climate change and rising sea levels. Koen Olthuis, who works at a Dutch architecture firm specializing in floating structures, said putting buildings on water can be useful in overcrowded cities with restrictive zoning. Floating apartment complexes can, for example, alleviate housing shortages without suffering through long pre-construction waits as space is found and considerations worked out. Cities at risk due to rising sea levels can also benefit from floating buildings. Miami developers may become more interested in putting buildings on water than on land, given that the floating buildings will rise and sink with the sea while buildings on land are at mercy of frequent, destructive flooding.

Thus far, most floating buildings have resembled sophisticated houseboats. But some developers are hard at work on multi-story apartment and office buildings, illustrating the wide potential of floating buildings. RED Company, for instance, is working on a three-story office building in Rotterdam's harbor, spanning 54,000 square feet. That building is expected to be the new headquarters of the Global Center on Adaptation (GCA) and will feature attractive amenities, including a floating swimming pool. The GCA helps guide countries, companies, and organizations through the risks posed by climate change. GCA Chief Executive Patrick Verkooijen said floating buildings are an example of resiliency in the face of climate change.

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Skanska to Build $60 Million Sustainable Office Tower in Sweden
Commercial Property Executive (02/17/20) Murray, Barbra

Skanska has announced plans to develop a climate-neutral office tower in Malmö, Sweden. The Stockholm-based company has named the 150,700-square-foot project Hyllie Terrass. Part of the Sweden Green Building Council's pilot study on ZeroCO2 certified buildings, the 12-story structure will be developed with a net-zero climate impact. The property will also qualify for LEED and WELL certification and will sit within close proximity of various forms of public transportation. The project is befitting of Hyllie, widely regarded as the most sustainable district in Malmö -- a city that plans to be fully carbon neutral by 2025. Savills projected late last year that office-based employment growth will increase by 1.6 percent in Malmö through 2025, meaning Skanska has timed the construction well. The building is on pace to be ready for occupancy in the fourth quarter of 2022.

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