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April 15, 2020

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IREM ® headlines

GRESB Opens ESG Assessment, Extends Deadline

GRESB (Global Real Estate Sustainability Benchmark) opened its annual assessment on April 1 and announced that they would extend this year’s deadline for submissions one month to August 1, 2020, due to the COVID-19 emergency.

GRESB assesses the Environmental, Social, and Governance (ESG) performance of real estate investment portfolios. ESG has become an important topic, particularly among institutional owners, as investors evaluate climate change risk and seek assurances that fund and property managers are taking steps to protect their investments.

GRESB had over 1,000 participants in its 2019 assessment, representing over $4.1 trillion in assets under management and more than 100,000 properties across 64 countries.

The IREM Certified Sustainable Property (CSP) certification earns points in the “building certifications” section of the GRESB real estate assessment. Several GRESB participants, as members of the IREM CSP Volume Program, have added the IREM CSP to their property certification strategies. IREM is a GRESB Industry Partner.

After submitting to the GRESB assessment, participant companies receive preliminary benchmark reports on results and have a window to correct mistakes and request additional reviews. After this period, each company’s final results, with scoring and comparisons to a peer group, are available to its investors. Aggregate results are also made public at this point.

As a result of the deadline extension, preliminary benchmark reports will be available on October 1, with final results available on November 1.

To learn more about GRESB, and to see if your clients or other stakeholders participate, visit gresb.com.

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IREM Celebrates Corporate and Social Responsibility with REME Awards

You wouldn’t think two different organizations on different continents and in different industries would have much in common. Yet, IREM recognized a medical center in Brazil and a foundation in North Carolina with REME Awards for corporate and social responsibility.

Southwest Clinical Center, Brasilia, Brazil

When Marcelo Sicoli, general manager of the Southwest Clinical Center in Brasilia recognized the Center’s need for a new roof over the building’s atrium, he hired an architecture firm to develop a plan that would be beautiful, sustainable and environmentally friendly.

Construction began in March, 2017, with the removal of the polycarbonate plastic roofing and seven tons of steel beams shipped off for recycling. They were replaced by a fabric covering supported by a tensile structure, which allowed for improved air circulation, reduced energy costs and less noise. And, the extra fabric was turned into reusable shopping bags to commemorate the building’s new look.

Moreover, the fabric makes an ideal canvas for lighting effects that align with the Center’s mission, such as pink lights in October for breast cancer awareness and blue in November for prostate cancer.

CAHEC Foundation, Raleigh, NC

Corporate and social responsibility in property management covers a broad spectrum of purpose and goals in the built environment. CAHEC Foundation in Raleigh, North Carolina, was honored with a REME Award for the work they do in the affordable housing industry. The Foundation is an affiliate of CAHEC (Community Affordable Housing Equity Corporation), a company that provides affordable housing. But CAHEC Foundation takes it a step further by providing grants that support wellness and education programs designed to serve underserved populations in CAHEC-sponsored communities.

The CAHEC Foundation’s grants are used to fund active lifestyle, wellness, nutrition assistance and disaster relief programs to those who would otherwise not have access to these services.

Learn more here about the award-winning initiatives of Southwest Clinical Center and the CAHEC Foundation.

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IREM Updates on COVID-19

IREM remains dedicated to helping real estate industry professionals navigate the ever-changing situation around COVID-19 with content, education and other industry resources to aid you at the front lines. New resources added to the IREM Coronavirus updates page this week include:

  • New From the Front Lines segments on force majeure lease provisions and earning trust in extraordinary times. Follow IREM on Spotify and Apple Podcasts for new episodes
  • Updates on advocacy initiatives and calls to action, including extensions for 1031 exchanges and opportunity fund investments
  • New on-demand courses open for free enrollment
  • Upcoming industry webinars and links to webinar recordings

For continued updates from IREM, bookmark the coronavirus updates page for IREM’s official statement and new information about COVID-19.

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Industry headlines

Nearly a Third of US Apartment Renters Didn't Pay April Rent
Wall Street Journal (04/08/20) Parker, Will

The National Multifamily Housing Council (NMHC) has found that nearly one-third of US apartment renters did not pay their April rent during the first week of the month. The data underscores the difficulties faced by U.S. renters as the coronavirus pandemic continues to rock the country. The NMHC found that just 69 percent of tenants paid any of their rent between April 1 and April 5, compared with 81 percent in the first week of March and 82 percent in April 2019. The 69 percent includes renters who paid any portion of their rent, and is not limited to those who paid their rent in full. NMHC researchers said some of the non-paying renters may pay their full April rent later this month.

The Council came to its conclusion after analyzing data from RealPage, Yardi, and Entrata. The properties that were studied for the data tended to be investment grade, and renters tended to be higher-income than the median. In some cases, tenants will be protected by a mixture of local and federal laws. Industry experts have expressed concern that a rise in unpaid rent could set off a chain of events potentially leading to commercial mortgage defaults. The federal government has said apartment building owners with government-backed mortgages can defer their mortgage payments as a result of the COVID-19 pandemic, but that move does not extend protection to all apartment properties.

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What Will Tomorrow's Workplace Bring? More Elbow Room, For Starters
New York Times (04/08/20) Margolies, Jane

As workers across the country remain homebound amid the COVID-19 outbreak, property managers and building designers are looking ahead and brainstorming ways to keep building occupants healthy when the time comes for people to return to their offices. Such property professionals believe that U.S. offices could look drastically different on the other side of the pandemic. In the immediate days following the go-ahead for workers to return to their workplaces, there will likely be enhanced cleaning policies at office buildings, including regular cleanings of door handles and disinfectant wipe stations placed throughout buildings. There may also be limits on how many people are permitted in an elevator at one time, along with other social distancing guidelines incorporated into office life.

With germ hotspots a persistent concern, there may be contactless technology to allow employees access to doors and elevators. In addition, conference rooms may be consciously chosen to allow all meeting attendees sufficient space, meaning that a conference room for 12 people may be used to host meetings of six people. And offices that currently rotate employees from desk to desk are likely to give that practice up entirely, at least in the short term. Finally, it is likely that property managers and office designers will make permanent adjustments to air filtering and circulation systems.

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What Do Luxury Amenities in Buildings Look Like in the Social-Distancing Era?
Barron's (03/30/20) Nicosia, Mareesa

As the COVID-19 pandemic continues to alter daily life, residents of luxury apartment buildings have been adjusting to a new normal. With many states and cities imposing lockdown orders, residents have been urged to stay inside their homes as much as possible, forgoing public spaces and communal amenities even in their own buildings. Property managers across the country have closed such popular on-site amenities as gyms, rooftop gathering areas, indoor golf simulators, children's playgrounds, and dining options in order to comply with social distancing mandates and guidelines.

Doug Weinstein, vice president of the onsite property management firm AKAM, said the coronavirus is "uncharted waters" for property managers. The amenities that once served as powerful appeals for particular buildings are temporarily unusable, prompting people in his profession to try to fill in the gaps. While in-person happy hours and communal gatherings have been called off, some buildings have been holding virtual get-togethers to foster a sense of community. These sessions include online fitness classes, virtual wine tastings, art tours, and dance parties. Some property managers are even running giveaway contests with prizes like gift cards for Disney+, Amazon, and Postmates food delivery.

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How Grocers Can Better Serve Seniors Online
Progressive Grocer (04/08/20) Haire, Chris; Miller, Julie

Current market factors are driving further digitalization of the grocery shopping experience. Grocers can take measures to help seniors, in particular, leverage this trend. One piece of advice is for grocers to offer guides for using online ordering systems on paper to seniors shopping in stores and through e-mail/mailings to older customers at home. Also suggested is providing personalized grocery shelves with likely options in categories that appeal to seniors -- like heart-healthy meals -- and making product data easily accessible online. In addition, supermarket operators can eliminate financial obstacles like fees and added product costs, accept coupons in online platforms, and suggest group deliveries to assisted-living communities.

Grocers are additionally advised in their search design process to prioritize a conversational user interface with voice input, while minimizing keyboard input. Another way of helping is to leverage trust in the store and its staff by having personnel recommend the online service during senior hours. Finally, grocers could add bundled meals as an option for shoppers to choose items on their lists and pilot technologies like digital shelves that connect online list planning to guided in-store experiences.

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Office Electricity Consumption Plummets Following Pandemic Restrictions
Commercial Property Executive (04/08/20) Grecu, Veronica

For several weeks, office workers across the United States have performed their jobs from home as public health officials urge lockdowns and social distancing measures amid the coronavirus pandemic. After three weeks of widespread remote work, statistics have emerged showing the impact on commercial electricity use. Hatch Data analyzed building data streaming from energy meters and property equipment over a four-week span, studying fluctuations in electricity consumption for more than 400 million square feet of office space across the nation. Hatch then compared the pandemic statistics to the pre-pandemic statistics in order to identify trends in electricity consumption.

According to this research, the data shows that commercial office electricity consumption decreased 22 percent during the four weeks leading up to April 4. Consumption dropped fastest in states that adopted early stay-at-home orders, spurring building owners and managers to adjust electricity usage and building operations. Hatch observed the biggest regional decline in the Northeast, where consumption dropped 23 percent. In the West and South, consumption dropped 22 percent, on par with the national average. In the Midwest, consumption dropped 19 percent. Hatch said it could take an additional two weeks to study changes in electricity consumption in the eight states that have not yet issued lockdown orders.

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3 Tips for Managing an Empty Building During COVID-19
Buildings (04/06/20) Kloepple, Sarah

With non-essential office workers working from home, tenant occupancy has plummeted at a number of buildings across the country. That means many property managers are being tasked with managing and monitoring a building that is largely empty of occupants. Matt Ganser, the executive vice president of engineering and technology for Carbon Lighthouse, said it can be tempting for building management to shut down equipment and "ride out the storm," but they should ignore that impulse and keep operations going.

Property managers overseeing a building with minimal occupancy because of the pandemic should change their set points and operating procedures to be reflective of a low period and not a complete shutdown. Moreover, controls and control sequences should match any altered building hours. Managers are urged to consistently check their set points for HVAC controls, lighting controls, and hot water and lower them more as needed. They should also double-check that emergency systems are up to date. In particular, fire detection and suppression systems should be checked to ensure that they are working at optimal capacity. Finally, property managers should consider taking advantage of this slow period by analyzing current building operations and identifying where improvements can be made.

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Could Experiential Offerings Save the Shopping Mall?
Pymnts.com (04/01/20)

More and more shopping mall owners are making adjustments to survive in the age of the pandemic. Taubman Centers has pinned its hopes on its rent guidelines, refusing to stray from them. Simon Property Group, meanwhile, has cut its workforce to save cash. Mall operators nationwide are faced with difficult decisions just to get through the pandemic, let alone engineer a rebound in business when life settles into a traditional routine again. Some industry observers suggest malls owners should take this opportunity to reinvent themselves for post-pandemic times.

After all, changes in consumer habits will likely linger even after the end of the pandemic. If malls want to attract customers, they will likely have to pivot from retail-dominated spaces to amenity-driven spaces. This means further beefing up their entertainment offerings, their recreational offerings, and their experiential-based-shopping offerings. Bloomberg's Andrea Felsted said mall owners and retailers should work together to get through the slow period caused by the virus, fostering an atmosphere of collaboration that can help when business as usual returns.

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Rent is Increasing More in This North Broward City Than Anywhere Else in the Country
Miami Herald (04/08/20) San Juan, Rebecca

According to a recent RentCafé study, Pompano Beach in Broward County, Fla., had the highest rent increase in the country over the past year with an average 11 percent increase. RentCafé collected data for listings of apartment properties with over 50 units across the 260 largest metro areas in the country. Researchers said an influx of about 1,600 high-end apartments in Pompano Beach drove up rent, as did demand and inventory for multifamily housing. "The spillover effect caused by the high rates in Fort Lauderdale and other pricey rental markets in the area is visible, as more and more renters try to relocate to less expensive cities," said one researcher. Rent increased in other cities across the region. Aventura, for instance, saw a 8.9 percent year-over-year rent hike last month.

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Investors Saw Office Buildings as Safe. Not During This Pandemic
Wall Street Journal (04/07/20) Putzier, Konrad

One month into the coronavirus pandemic, U.S. investors are dumping shares of major office real estate investment trusts (REITs) . At the start of the outbreak in the United States, the owners of office buildings with long-term, stable leases believed they could be a promising option for skittish investors, banking on office buildings' reputation as safe holdings. But the pandemic has battered the economy and made it difficult even for stable long-term occupants of these buildings to pay their rent, forcing office landlords to negotiate lower rent prices and jeopardizing the buildings' reputation for investors.

With the value of commercial mortgage-backed securities in freefall and new lending almost entirely cut off, office building owners must look for ways to overcome their debt and emerge from the pandemic competitive and strong. At the same time, there is a risk that companies will stop signing new leases for office space while the pandemic creates widespread economic uncertainty. In Manhattan, for example, office leasing volume fell by 46.9 percent in the first quarter when compared to the 10-year quarterly average. Rent payments, meanwhile, are far from guaranteed with many small firms struggling to pay amid business disruptions.

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Kimco Realty Launches Program to Help Tenants TAP Into Needed Aid
Main Line Times (04/10/20) Ilgenfritz, Richard

Kimco Realty is launching a new program to assist tenants in applying for state and federal loans to help their businesses survive the coronavirus pandemic. Kimco officials said the Tenant Assistance Program (TAP) is designed to assist tenants in finding and applying for such loans in the hopes that those businesses can one day return to business as usual. Kimco Realty owns more than 400 shopping centers nationwide. Late last week, the company posted on its Facebook page that its TAP had expanded to two dozen states since its launch last Monday. In addition, Kimco is working with various law firms to assist tenants that need legal help with government-sponsored disaster relief loans. The law professionals will assist in preparing and submitting applications.

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COVID-19 Crisis Brings New Visibility to IoT and Building Air Quality
TechRepublic (04/08/20) Shacklett, Mary

Workers across the country have been urged to work from home amid the coronavirus pandemic, reflecting fears that the virus would spread quickly through the air and on surfaces in crowded workplaces. To be sure, air quality in offices has been a problem for a long time. The Environmental Protection Agency (EPA) in 2018 said Americans spend up to 90 percent of their time in buildings with pollutant concentrations up to five times higher than the outdoors. Carbon monoxide, particulate matter, mold, radon, asbestos, pesticides, ozone, and more have been found in office buildings.

The poor air quality in office buildings is responsible for so-called "sick building syndrome," characterized by a worker suffering from a nagging cough or cold that cannot be easily explained. According to mCloud Technologies President Barry Po, "Many times this can be traced back to the air quality in the buildings in which they work, which can contain two to five times as many viruses and contaminants than what is outdoors." Po's company uses sensors in offices to measure the amount of carbon dioxide in the air. That information is then used to tailor and optimize HVAC systems, making offices as healthy as possible for workers.

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Deep Learning Cuts Costs in Building Control
Pacific Northwest National Laboratory (03/23/20)

Researchers at the Pacific Northwest National Laboratory (PNNL) and KU Leuven in Belgium have demonstrated that deep learning could clear a path for wider adoption of Model Predictive Control (MPC) in buildings by tackling cost and implementation challenges. Physics-based MPC has proven effective in buildings. Field testing conducted by KU Leuven University in an office building in Belgium showed energy savings of up to 50 percent. MPC also improved thermal comfort in the building by keeping the temperatures "closer to prescribed bounds," which can improve occupant productivity and well-being.

Deployment of MPC in a large swath of buildings has not been possible due to high installation costs. Every building is unique, requiring its own custom physics-based model and, in some cases, dedicated hardware. A research team has developed an approach that overcomes the computational challenges of MPC, using physics-based MPC to train deep learning neural network models. Team member Jan Drgona of PNNL is hopeful the sector will soon be on track to "achieve a generic solution that is broadly available to the building control community."

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