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May 7, 2020

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IREM ® headlines

IREM Foundation Establishes COVID-19 Relief Fund

Like many people around the world, property managers have felt the impact of the global pandemic, putting the livelihoods and health of our front-line colleagues at risk.

You can help. The IREM Foundation has established a COVID-19 relief fund to support real estate management professionals and their communities. Donors can direct donations to the IREM chapter of their choice, and donations are matched dollar for dollar, up to $1000 per donation. Funds will be used for specific charitable programs, including:

  • Relief funds for members who have been financially impacted by COVID-19, whether by layoff, illness or illness of a family member
  • Member dues support
  • Relief funds for small businesses
  • Relief funds for tenants or residents
  • Any charitable purpose related to COVID-19

Make a difference in your community in these challenging times. Donate now.

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2021 IREM Volunteer Opportunities

Flex your leadership muscle and get involved with IREM. Becoming an IREM volunteer gives you an opportunity to facilitate change by collaborating with your peers on issues important to you and our profession.

IREM is currently accepting volunteer applications through June 15 for the following positions:

2021 Governing Council
Join the 250 IREM members who lead the IREM agenda. Governing Councillors define our goals—strategically, operationally and legislatively.

2021 Committee/Board Member
Join the IREM volunteer community and volunteer for a committee or a board. No matter what your passion is—ethics, finance, or diversity among many others—you’ll find your purpose.

2022 – 2023 Regional Vice President (RVP)
RVPs connect IREM chapters to IREM HQ and our shared values and mission. These are our front-line volunteers who help lead our members into the future of real estate management.

Volunteering with IREM leads to opportunities you may not have otherwise. It opens doors, expands your horizons and taps your talents. Learn more and apply to become an IREM volunteer.

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New Resources for Reopening Your Property—IREM COVID-19 Update

Just as preparing your property for a pandemic takes time, planning and prioritization, so does reopening your property for business. As talk of reopening the economy and getting people back to work becomes more commonplace, IREM put together a comprehensive guide for preparing to reopen your property in a way that ensures tenants and residents are safe while we adjust to life post-pandemic. The resources for reopening your property can be found as an addition to the “Pandemic Guide for Real Estate Managers” and as a supplemental resource. Other new resources added to the coronavirus updates page this week include:

  • New From the Front Lines segments on standard operating procedures and legal considerations for COVID-19 at your property. Follow IREM on Spotify and Apple Podcasts to ensure you get all new episodes
  • Results from a joint survey with NAA on the multifamily housing market
  • New on-demand courses open for free enrollment through Friday, May 15

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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Recalibrating Internships during the Coronavirus Crisis

College students throughout the country ended their spring semester much differently than anticipated—attending class via Zoom from their parents’ homes, completing final projects through online platforms, and having virtual graduation ceremonies. For many of them, the internships they had lined up for the summer have been significantly scaled back or modified or have disappeared altogether. A recent survey of 900 college students by talent-acquisition software company Yello found that 35% of students had internships cancelled, with another 24% of students learning their internships would be virtual.

This aligns with what students in property management programs at Ball State University, Virginia Tech, University of Wisconsin Stout and University of Alaska Anchorage are seeing: Some internships are being cancelled altogether, some are moving forward without change and some are being modified. Among the most common modifications are shortening the intern period by delaying the start date or conducting the internship remotely, either fully or partially. For those companies offering internships in the virtual world, they likely will be structuring them somewhat differently, with a greater focus on short-term projects; more frequent check-ins by mentors; the incorporation of more online training and indoctrination into the organization’s culture; and virtual social networking opportunities.

For some students, an overriding question may revolve around whether they will get academic credit for shortened or modified internships. To respond to this concern, colleges and universities are stepping up to find innovative ways for these COVID-19 internships to qualify for college credit. One example is occurring at Ball State University’s residential property management program, where a plan is in place to supplement students’ internship requirements with other educational activities. Similarly, Virginia Tech’s property management program is providing opportunities for students to take advantage of the summer to enhance their skills through resume-worthy activities.

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Industry headlines

Simon Property to Reopen Malls and Outlets Across the Nation
Atlanta Journal-Constitution (04/28/20) Elder, Lane

Simon Property Group announced a phased re-opening of 49 of its shopping malls and retail centers that started this past Friday. Its various properties have been closed since March 18 because of the coronavirus pandemic. The re-openings are "based on current state and/or local stay-at-home or closure orders which are subject to change," stated a companywide memo. All mall employees will be required to wear face masks. Shoppers, meanwhile, will be given the option for temperature checks, free CDC-approved masks, and hand sanitizer. In addition, Simon Property will use "traffic measuring technology" to limit patrons to one person per 50 square feet of each mall. There will also be limited seating available in food courts, one-way decals to promote social distancing throughout the various malls, and all water fountains and children's play areas will remain closed.

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3D Office Tours Grow in Popularity as Coronavirus Brings In-Person Visits to a Halt
Chicago Tribune (04/28/20) Ori, Ryan

The Chicago-based real estate technology firm Truss is grappling with significant disruptions to business amid the pandemic. However, even as its biggest source of revenue -- lease commissions -- slows, the company is observing growth and new trends elsewhere. Specifically, Truss has seen a surge of interest in its 3D virtual tours of office buildings, noted co-founder Bobby Goodman. When he founded Truss, Goodman's goal was to help companies find office space without having to take the time to physically tour dozens of buildings. Truss creates a list of possibilities based on parameters like desired square footage, and then helps negotiate with the landlord in exchange for a broker commission.

Since the early days of the coronavirus crisis, Truss has been inundated with requests from office buildings to create 3D virtual tours for prospective tenants. The company operates in Chicago, San Francisco, Los Angeles, Boston, and the District of Columbia, and hopes to continue expanding to more cities when the COVID-19 outbreak subsides. Goodman said the surge in popularity of 3D virtual office tours may be a result of the pandemic changing building managers' views of the industry. "When people are making money in this industry, they don't need to change anything," Goodman remarked, adding that as a result of the pandemic, "people are really interested in getting up to speed on technology products that are out there."

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Five Opportunities for Multifamily Real Estate in a Post-Pandemic World
Forbes (04/22/20) Hightower, Trevor

Trevor Hightower of CraftWork has made five predictions for the future of multifamily housing. First, Hightower predicted there will be more delivery services in the future as apartment renters will accelerate the shift to online shopping. As such, apartment owners and operators should adjust their operations to support widespread receiving and distributing of packages. That must include solutions for perishable goods, as renters increasingly shop for grocery delivery. Hightower also predicted that remote working will become more common during and after the pandemic. Property management could create a new communal workspace in the building to provide an opportunity for renters to work remotely while still preserving their unit as a home base.

Meanwhile, as touchless technology becomes more popular in the age of the coronavirus, Hightower predicted that automated parking spaces will become increasingly common. Apartment buildings that are quick to retrofit and add smart elements will give themselves an edge in that regard, especially when looking to entice prospective renters. Hightower's fourth prediction was that property management will become even more important, putting pressure on building owners to build a strong reputation for consumer-facing service. Finally, Hightower said human connection will likely become more valuable post-pandemic, and management staff should be prepared to plan more social events.

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Macy's to Reopen 68 Stores on Monday -- With Limits on Staff and Shoppers
MSN News (04/30/20) Kapner, Suzanne

Macy’s Inc. reopened 68 stores on Monday, May 4, in states that have loosened pandemic-era restrictions. If infection rates taper off as projected and state and local governments allow it, Macy’s CEO Jeff Gennette expects to have all of the retailer's roughly 775 department stores back up and running within the next six weeks. Once its stores reopen, beauty departments will offer "no-touch" consultations and demonstrations with the option to test products on a piece of paper featuring a diagram of a face. Meanwhile, customers will be required to use hand sanitizer prior to trying on any fine jewelry or watches. Their cases will be regularly sanitized. Also, only a handful of fitting rooms will be open at any given time, and they will also be cleaned frequently. Finally, Macy's employees will not restock items that have been tried on and not purchased for 24 hours. "The same 24-hour hold will be applied to returned goods," notes MSN News columnist Suzanne Kapner.

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How Luxury Buildings Are Adjusting for a Future of Social Distancing
Barron's (04/27/20) Smith, Virginia K.

As Americans continue to engage in social distancing practices amid the pandemic, residents and managers of luxury apartment buildings face unique challenges. As such, they are adjusting for a summer of social distancing in several ways. The top priority is keeping the building clean and residents healthy, so establishing a consistent cleaning schedule is a must. Many luxury buildings have also restricted residents from going to communal mail rooms to pick up parcels, instead delivering them straight to residents' units. Building operators have also added security cameras in places like garages. And luxury buildings are generally not allowing new residents to move in for the time being, though that rule, and others, will be relaxed as social distancing measures are relaxed.

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With 100,000 Stores Set to Close by 2025, Mall Owners Face This Legal Hurdle Next
CNBC (04/23/20) Thomas, Lauren

Mall and shopping center owners and operators are preoccupied with getting through the COVID-19 crisis, but another headache could be coming their way: co-tenancy clauses. Under the terms of co-tenancy clauses, tenants at a mall or shopping center are protected in the event of unexpected circumstances out of their control. If an anchor tenant leaves or declares bankruptcy, for example, smaller tenants stand to lose foot traffic and their sales will drop. Co-tenancy clauses kick in to allow those tenants a break in rent, helping them adjust to new circumstances.

As the coronavirus pandemic batters retail, a new wave of department store closures and bankruptcies may be coming. Tom Mullaney, the head of restructuring services at JLL, said his retail clients are closely monitoring the situation. "As majors close and do not reopen, my clients are pulling out their leases," he stated. For malls and shopping centers, a wave of enforced co-tenancy clauses could spell fresh doom, dealing another blow to a sector that had been previously challenged by the rise of e-commerce.

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How Local Touches Create a Sense of Place in an Office
Buildings (04/20/20) Kloepple, Sarah

Office buildings looking to stand out would do well to consider incorporating elements of their location into their interior designs and decor. By incorporating local touches -- either from the neighborhood, city, or state where the building is located -- offices can distinguish themselves from the crowd. That might include incorporating local landmarks into design elements, sourcing local materials for construction, or restoring some of the original features of the building. One simple way to kick off the process is surveying tenants about what local elements they would like to see incorporated into the space. In doing so, building managers can reinforce their commitment to the community while learning more about the preferences of those who pay them rent.

For instance, the design firm NELSON Worldwide incorporated elements of the Old Chicago Main Post Office building when designing the Ferrara Candy headquarters, located in the old post office building. High ceilings are accentuated with vintage mail chutes, and vintage package scales are used for wayfinding. When CLIF Bar bought an Indiana food production facility with the goal of renovating it into a new space, the company incorporated its outdoorsy reputation into the design. Biking decorations adorn the walls and there is a hanging kayak light fixture, creatively nodding to the company culture.

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Companies Bet on AI Cameras to Track Social Distancing, Limit Liability
Reuters (04/28/20) Dave, Paresh

Stores and workplaces eager to avoid spreading the novel coronavirus are equipping existing security cameras with artificial intelligence (AI) software that can track compliance with health guidelines including social distancing and mask-wearing. Several companies told Reuters that the software will be crucial to staying open as concerns about COVID-19 persist around the world. It will allow them to show not only workers and customers, but also insurers and regulators, that they are monitoring and enforcing safe practices. Some technology consultants that advise office building owners and retailers have cautioned clients against introducing new technology at such a chaotic time and investing in tools that may be needed only for a period of months. But buyers expect the technology will work because they already have used similar tools to, for instance, profile shoppers entering stores and find helmet scofflaws on construction sites.

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Apartment Owners Are Worried Increasingly Fewer Tenants Will Pay Rent as Job Losses Mount<
CNBC (05/01/20) Olick, Diana

As the economic impact of the COVID-19 pandemic continues to worsen, apartment residents across the country are struggling to pay rent on time. As of April 26, 91.5 percent of renters in professionally-managed buildings had made full or partial rent payments. At the same time last year, that number stood at 95.6 percent, according to the National Multifamily Housing Council (NMHC). NMHC President Doug Bibby said it was encouraging that many tenants had attempted to pay rent, but highlighted unclear "financial security" and difficulties in securing federal relief as troubling signs moving forward.

Walker & Dunlop, one of the country's largest commercial lenders, focuses mainly on apartment buildings. Chief Executive Willy Walker said company employees get in contact with renters almost daily. "Quite honestly, it's a waiting game to see what May and June and July rent roles look like," he remarked. He expressed concern that renters will be unwilling to put a significant percentage of their budget toward housing when government unemployment relief subsides.

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Malls Face Catastrophic Hit in Canada With Unpaid Rent Surging
San Antonio Express-News (04/27/20) Alexander, Doug

The COVID-19 pandemic has exacerbated strains on Canadian retailers, leading to a surge in missed rent payments that could prove catastrophic for malls. Just 20 percent to 25 percent of tenants of Canada's enclosed regional malls paid rent in April, according to JLL Canada. The numbers were slightly better for big box shopping centers and community strip malls, though they still missed rent payments from almost 50 percent of their tenants. Tim Sanderson, the head of retail for JLL Canada, said he has "never seen anything as catastrophic or as impactful in a negative way in our business" as the coronavirus pandemic.

Malls and shopping centers were already under pressure in Canada after two years of weak sales, rising property taxes, and increasing popularity of e-commerce. The COVID-19 pandemic has shut down all but essential stores, worsening the pressure facing retailers and malls. JLL Canada predicted that vacancy rates could rise from 2.3 percent at the beginning of 2020 to the 6 percent to 8 percent range by the end of the year. Canadian government interventions promise to alleviate some of the strain, but experts predicted the pandemic and subsequent shutdowns will significantly change retail.

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C&W Korea to Provide Social Distancing-Friendly Office Model
Korea Herald (05/03/20) Ji-hyoung, Son

The commercial real estate firm Cushman & Wakefield's Korea office said in early May that it plans to introduce a social distancing-friendly office guide to help companies return to work in the aftermath of the COVID-19 pandemic. As stay-at-home restrictions are slowly easing, Korean businesses are looking to pivot away from the remote work model that has dominated the last few months and return to a traditional office schedule. Cushman & Wakefield has developed a "Six Feet Office" concept to help with the transition back to office work. The protocol has been tested at Cushman & Wakefield buildings across the world since last month.

The Six Feet Office concept incorporates visual boundaries, like colored carpets, to direct the flow of traffic within an office, ensuring that people do not get too close to one another. Plexiglass shields provide further protection for workers from airborne germs. Richard Hwang, managing director at Cushman & Wakefield Korea, said the concept would be available to anyone interested in applying it to their office space. The confirmation came shortly after Cushman & Wakefield published a separate guidance on how building owners and their occupants in South Korea can reopen on the other side of the pandemic.

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Cash Pours Into Distressed Real-Estate Funds as Investors Aim to 'Play Offense
Wall Street Journal (04/21/20) Grant, Peter

Investors are pouring billions of dollars into new real-estate funds that buy distressed debt backed by shopping malls, office buildings, and other commercial properties that are suffering significant losses of value during the ongoing coronavirus crisis. KKR & Co., Kayne Anderson Real Estate, and Terra Capital Partners reportedly are among the firms that have closed or are raising distressed funds from wealthy families, sovereign-wealth funds, and others aiming to profit from the upheaval. These firms are focusing on real-estate debt being dumped on the market by troubled real-estate lenders, among others, and the opportunities have materialized so quickly that firms are raising cash at a pace that would have been inconceivable before the pandemic.

Other big investors like pension funds and endowments, for now, are being more tentative about pushing into the distressed commercial real-estate space. Data from Preqin show there were a record 939 commercial-real-estate funds worldwide raising money in early April, targeting $297 billion. Even after lockdowns ease and people begin to return to work, the commercial property sector is expected to remain under severe stress as crowds are unlikely to return to malls in significant numbers, apartment owners in some states will face rent strikes, and demand for office space is poised to fall if millions of workers continue to work from home.

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